In tough economic times, smarter ways of doing business should not be overlooked.  Human capital analytics is one of those smarter ways.
 
In last month's newsletter, we wrote about how Circuit City's 2008 demise has been attributed in part to its disastrous decision to lay off 3,400 of its most experienced sales people and replace them with lower-wage employees.  Had Circuit City deployed the discipline of human capital analytics, the outcome might well have been different.
 
Human capital analytics is the process for using quantitative methods to transform data relating to employees and groups of employees (such as their attributes, skills, development, costs, productivity) into actionable business intelligence that can help to drive and improve an organization's key business outcomes.
 
This month, we thought we'd explore some organizations that have used human capital analytics to their advantage.  It is probably no surprise that Google - known for its innovative, data-driven practices - also applies these practices to the people side of its business.
 
For example, starting in 2006, Google conducted an extensive survey on a wide range of characteristics of its long-time employees. The company then linked the data to multiple measures of desired outcomes (including employee reviews and measures of contribution to the company as a whole). The resulting analysis yielded specific insights on employee traits that were tied to better performance in a variety of specific job areas, and moved the organization to target job applicants with those characteristics.
 
Similarly, Google recently began to analyze data from employee reviews, promotion, and pay histories to identify which of its employees are most likely to quit (getting "inside people's heads even before they know they might leave," according to an HR executive at the company), and working proactively to address their concerns before they take steps to leave.
 
By using existing data both to identify potential new hires who are most likely to contribute to organizational success and to retain valuable existing employees who might be inclined to leave, Google is using human capital analytics to drive its continued business success.
 
In a radically different business - professional sports - some successful baseball and football teams have been using human capital analytics to optimize their payroll and create a tangible, winning advantage from the "intangible assets" of their players.  (For additional description in this area, see Davenport and Harris, Competing on Analytics: The New Science of Winning.)