Leveraging People Analytics for Enterprise's Competitive Advantage

People are one of the key factors in creating competitive edge for enterprises. However, until late HR and CxOs never had opportunities such as data sciences and advanced analytics techniques to work together to radically improve employee productivity and retention. According to Gartner, by 2018, 25% of large organizations will incorporate social employee recognition and rewards into their performance management processes. Exploitation of analytics that measure various aspects of employee activity will be critical in helping organizations improve business results.

HR analytics could transform workforce data into useful business intelligence and predictive power. Also, important people related decisions backed up by right set of data points could create a great competitive advantage for the organization. For instance, if you want to enter a new market, or come up with a new product or technology, it is important to get the right set of people to do it. The team could be formed or hired based on HR data points (HR analytics) to perform the goal successfully. Or even people data could be used to streamline processes to drive productivity and thereby boost business growth. Such people decisions are more credible since they are based on empirical evidence and not simply on ‘gut or experience’.

Lots of companies have started using workforce analytics for resolving business issues and addressing challenges through innovative ways. This predominantly holds true for global organisations. Some organizations just take a dip by implementing dashboards and reports that are generated from the HRIS system that gathers data from few sources. However, the mavericks who have reaped huge benefits have taken bold steps.

One such case in point is Black Hills Corporation, a 130-year-old energy conglomerate, which doubled its workforce to about 2,000 employees after an acquisition. Black Hills Corporation had multiple challenges — an aging workforce, the need for specialized skills, and a lengthy timeline for getting employees to full competence — there by creating a significant talent risk. In fact, forecasts showed that, within five years, the firm could lose 8,063 years of experience from its workforce. To prevent a massive turnover catastrophe, the company used workforce analytics to calculate how many employees would retire per year, the types of workers needed to replace them, and where those new hires were most likely to come from. The result was a workforce planning summit that categorized and prioritized 89 action plans designed to address the potential talent shortage.

Google is another stellar example of using Human Capital analytics for making people related decisions. Some of their initiatives include - building retention algorithms for predicting probable exits, identification of characteristics for great leaders through Project Oxygen, creating hiring algorithms to predict which candidates have the highest probability of being successful after being hired etc.

Wells Fargo uses predictive analytics in their hiring & selection process to hire employees who will be better able to meet its performance requirements, fit into its corporate culture and more likely to stay longer in the organization. After Wells had bought over Wachovia Corporation, they wanted to standardize some of their HR processes including recruitment; they worked along with an analytics company to come up with a customised solution using data to increase the predictability of quality hire and efficiency.

While it takes time to build these capabilities for an organization, for those HR professionals who are making a beginning or trying to make a more analytics – centric HR function, three things are critical:

Change – Bring about a changed ‘mindset’ to use more data for decision making rather than just by intuition or experience. It is important to create a data-driven culture and make it as a part of the organisations DNA. The HR thought process has to be changed from the traditional employee life cycle and focus more on correlating employees to a set of outcomes or metrics which help address real time business challenges like sales performance, customer satisfaction.

Commitment – To make this initiative a success, leadership commitment plays an important role. The top management including the CEO should be convinced on the power and benefits of analytics to be able to facilitate this change. The HR leader should be encouraging and committed to building a culture of analytics in the team.

Capability – The HR leader also needs to upskill the team members to appreciate and contribute towards analytics. Though data scientists, architects and analysts would be required to carry out the mining, data sourcing, for application of modelling techniques, HR plays an important role to understand the data, especially the people aspect and build the appropriate storylines. HR team also needs to collaborate more with the business and analytics experts to be able to address business challenges by using HR analytics.

People Analytics, in that sense, is a huge opportunity for HR to use data to show how it adds value to the business and also create competitive positioning. Moreover, it’s a great way for HR to engage with the business at a strategic level.


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