HR Analytics How-To's Part II: How to Get Started
Human capital management is now an essential organizational competence. (Chapters 5 and 6 of Good Company contain a synthesis of some of the hard-nosed economic evidence on why this is so important.)
Nevertheless, most HR functions continue to struggle to be seen as truly strategic. Why? In our work with clients, we have learned over and over again that the answer is typically the absence of analytics, which results all too often in an HR strategy based instead on guesswork and intuition. That's a pretty weak foundation for managing an organization's largest asset and biggest cost.
HR Analytics helps organizations make better decisions on the "people side of the business" and in turn helps HR to become more strategic in focus.
The four essential steps involved in HR Analytics are as follows:
Step #1 - A "smarter" employee survey
Traditional employee engagement (or satisfaction) surveys are simply not up to the task. As we've mentioned before, while engagement is necessary for producing great results, it's hardly sufficient. Employee surveys need to capture employees' assessments of critical organization-level factors such as work processes, hiring processes, and informal learning. These factors are big drivers of business results, but are typically less related to engagement/satisfaction. For this reason, they are under-measured in most employee surveys.
Step #2 - "Linkage analysis" to business outcomes
Next, statistically link the data from your smarter employee survey to data on desired outcomes, including customer satisfaction measures, sales, cost containment, turnover/retention, 360 degree feedback, and more. This enables you to identify with precision the human drivers of those outcomes, and allows you to make organizational recommendations with confidence.
Step #3 -A rigorous, fact-based process for identifying the best areas of opportunity
To identify the most important areas of opportunity for improving business outcomes, it is necessary to statistically combine two pieces of information: (a) measures of relative strength and weaknesses (from Step #1) with (b) measures of the statistical importance of each of the various human drivers of business outcomes (from Step #2). You want to focus on those items that are both weaknesses and important drivers of outcomes. Don't set budgets and priorities without considering both dimensions.
Step #4 -Make your recommendations insightful and easy-to-understand
Getting to Step #3 is a huge step. But unless you learn how to most effectively communicate the findings from your analysis, you'll miss out on the full advantage of this breakthrough. Avoid data dumps and the temptation to share absolutely everything you know. Hone in on the findings and implications that are most important, and focus on those. Communicating simply and compellingly is as much art as science - but it's a skill that's critical if you're going to succeed in bringing HR Analytics to your organization.
