Transformation Solutions Blog

Talent Analytics — The Key to Strategic HR

July 3rd, 2014

Big data is becoming a mainstream strategy in many business functions and HR is playing catch-up.  Many companies are still struggling just to get basic reporting right.  In some instances, they may not even know exactly how many people work for them, in what jobs, and in what regions.  In a recent study by the Institute of Corporate Productivity (i4cp), Human Resources lags in analytical skills when compared with other organizational functions.

So why stir things up by discussing talent analytics?  Because HR can’t engage in strategic discussions with the C-suite without substantive insights provided by hard numbers.  According to Josh Bersin, companies that are ahead of the game in this area are doubling their improvements in recruiting, tripling their leadership development capabilities and enjoying 30% higher stock prices than their peers.

Mark Twain said it well: “Data is a lot like garbage; you need to know what you are going to do with it before you start collecting it.”  So you need to be able to answer the most important and fundamental question regarding talent analytics:  What should we measure about our workforce?

Our current reality is that the most commonly measured workforce metrics do very little to help HR professionals and business leaders achieve real insight into maximizing their human capital investment.

Let’s start with recruitment.  Often HR measures cost per hire and time to hire.  While these may be helpful to measure the efficiency of the HR department, these measures do absolutely nothing to ensure the real business goal is met –the organization has the best people to achieve its business goals.  New hire performance and first year turnover rate are metrics that will yield more useful information to the business.

Retention is another common metric.  Often this is reported as the percentage of employees who leave divided by average headcount during a given period of time.  While there is no question that turnover can be extremely harmful to an organization, reacting to a broad metric like total turnover can lead to misplaced energy.  In fact, sometimes higher turnover rates are associated with better performance.  To really use turnover as a meaningful metric we have to recognize that the impact of turnover is not the same for every employee who leaves, because not every employee is of equal value to the organization.

To excel at talent analytics HR professionals need to act like detectives, looking at all of the evidence before drawing conclusions about why things are happening and what the best solution might be.  Our first step is to change the focus from reporting tactical, rear-view metrics to implementing predictive, forward-projecting metrics that will enable HR to play a more pivotal role in their organization.