“The average human has one breast and one testicle” – Des McHale
This cheeky quote sums up the value of data when data means everything without insight. Big data is everywhere – but too much data, with too little insight, results in little impact. Research is now showing us that the “big data” trend is struggling to demonstrate a return on investment for this very reason.
Data-driven decision-making is showcased in business functions such as finance (naturally), marketing, sales and customer service – and technology is taking this craft to a whole new level. At a very basic level it has always been relatively easy to report and reflect on what has happened in the business – using “hindsight”. We have also found that technology has increased expectations around the analysis and monitoring of what is happening right now across the business… and why – an immediate “insight”. If that was not enough, we are now seeing a new wave of complex predictive analytics around what can happen based on available data – apply “foresight”. This is intelligent data of high business value.
So What Do We Make of HR Analytics?
The investment businesses make in their human capital (can we please just call them people?) is often the biggest and most important. So how well do we really understand the true impact people have on business performance and the positive influence of human resources interventions on the performance of people? This is the job of HR. Talent metrics are endless in supply and some popular types are time to fill, new hire success rate, recruitment cost per hire, retention rate, training hours per full time employee (FTE), performance ratings, remuneration/market ratio, engagement score and operating revenue per FTE. And workforce dynamics can be broken down into various demographics – such as age, tenure, gender, ethnicity, location – for even deeper insight.
Prioritise The Value Of HR Metrics
The risks lie in measuring the wrong things – focusing on the inconsequential many and not the consequential few. Essentially it is what you do with the data that really matters – HR analytics should be about the “journey” towards a culture of effective data-driven decision-making and continuous improvement.
Be strategic and prioritise key metrics based on a genuine assessment of business needs and those which have the biggest influence on business performance. Are you losing key talent? Taking too long to fill positions? Experiencing difficulty identifying future leaders? Dealing with low morale? If these are the pertinent questions that require insight then they should also be prioritised when it comes to measuring what matters. Some of the best HR analytics are the simplest.
It is important for HR to apply judgement to data – there should be a story behind the numbers to provide context and insight. Be prepared to have an opinion and you can be assured of a “seat at the table” when it comes to decision-making.