Ever since we launched the HR Analytics course this month, we have been inundated with questions from students and HR professionals/managers (in mostly mid-sized companies). The questions came in varied shapes and sizes but the gist was this, “Is it worth investing in HR analytics? Can it truly build a more effective, empowered and engaged workforce that will add value to the larger organization and impact the bottom line?”
Yes definitely. That’s the simple truth. Successful companies already know and acknowledge that human capital is the key to maintaining competitive advantage. Why not then use analytics to spear them ahead and drive business strategy? Why not then use data to make human capital decisions that impact business results?
Here are some key areas HR analytics can be used to improve a company’s performance:
•To identify the right candidate for a job vacancy.
•Identify which top performers are at risk for leaving the organization in the foreseeable future? What are the factors that will help retain them?
•Identify successful employees who can be nurtured for succession planning?
•Find out which departments are running too lean while, which other departments are overstaffed.
•Are there any Leadership/Talent Gaps and what gaps can we predict in coming years?
•Evaluate your HR initiatives like training programs or incentive programs and find out how they will improve performance and employee engagement? Will it impact other functions like sales, marketing, finance or operations, consequently impacting the bottom line?
•Analyse Accident claims to find out what factors and which people are likely to create accidents and submit claims?
•In relation to Customer satisfaction and retention, what talent factors of those engaging with the customers drives higher levels of customer satisfaction and retention?
The bottom line is that a company cannot be successful until its workforce decisions are backed by data. Some examples of successful companies that are using HR analytics are:
1. Google: Google seems to have really understood the importance and value of HR analytics. Almost all their People/talent decisions are backed by data and analytics. Their Project Oxygen analysed their internal data to quantify what effective managers do. They discovered that essentially effective managers have eight key behaviours. They developed a management training program that incorporated these eight behaviours which led to positively better manager quality.
2. Mindtree: Mindtree uses HR analytics tools extensively in Turnover modeling, Risk assessment and management profile and productivity index. HR analytic tools has helped them predict employee turnover for the next 90 days and enabled them to create usable insights from data analyses that are fed into the forecasting model for the hiring teams (vacancy-based hiring). These tools are also used for high-risk employee management, using multiple policies of retention, preferences etc. For example, for any opportunity inside the company, the high risk employees get to go for them first. (Information Week)
3. Microsoft: Microsoft develops statistical profiles of likely leavers (hires straight from college in certain technical roles, for instance, who had been with the company for three years and had been promoted once, but not more than that). Based on these insights, the company then initiated several HR interventions like, assignment of mentors, changes in stock vesting and income hikes. As a start they focussed on two business units with particularly high attrition rates, and were able to reduce those rates by more than half in each case.
4. Xerox: Xerox’s 150 US call and customer-care centers employ about 45,000 people. Up until 2010, Xerox filled these positions through traditional methods like interviews, typing tests, and other basic assessments, while the final decision lay with the hiring managers who used her judgement to make the selection. However they have since moved to an online evaluation that incorporates personality testing, cognitive-skills assessment, and multiple choice questions based on how an applicant would handle specific job-related scenarios. An algorithm analyzes responses and factual information from the candidate’s application, then produces color coded ratings. This Hr analytics initiative immediately improved the quality of hires, reducing attrition by 20% initially, and increasing promotions over time. Xerox still interviews all candidates in person before hiring them, but some hiring managers don’t even want to bother with that. They just want to rely on the tests.
5. ConAgra Foods: ConAgra Foods Inc. used predictive analytics software to find which key employees were likely to leave and why. The company looked at operations with high turnover and those with low attrition and examined 200 factors that might have contributed to employees leaving. The company discovered that pay wasn’t one of the top ten factors. Instead, the amount of internal recognition employees received was more strongly correlated with retention.
Thanks to Timo Elliott for allowing us to use his cartoon.