‘Pots of Gold Everywhere' in HR Analytics, But Business Case Must Be Made First

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By Martin Berman-Gorvine

May 20 — “There are pots of gold everywhere” in the burgeoning field of HR analytics, but many employers are failing to even look for them, Jeff Higgins, CEO of the Human Capital Management Institute, said in a May 20 webinar sponsored by the Conference Board.

He added that opportunities for big return on investment “are all over the place,” with examples including productivity gains, reduced costs, predicting who will be a sales star, demonstrating the return on investment of sales training, establishing the optimal location for talent growth, better employee engagement leading to more revenue, sharp drops in voluntary turnover and quantifying the return on investment of internal versus external hires.

And yet, a recent survey by Deloitte University Press showed just 8.4 percent of companies with strong HR analytics capabilities, 35.5 percent that have it under active development, 15.1 percent still planning how to proceed, 34.5 percent with limited capabilities and 6.5 percent not even considering it at present.

How can this be so if, as Higgins asserted, HR analytics are “certainly leading to, and increasingly becoming, a competitive advantage?”

According to Higgins, part of the problem is lack of management buy-in. HR has to get past executive indifference—“the ‘so what?' and the ‘now what?' ” he said. In many instances where HR doesn't know how to present the data it has gathered to management, the latter may appreciate the information, “but does not use it to make any decisions.”

Further, Higgins said, “data integrity and quality is a huge issue—garbage in, garbage out.” As a related matter, “the No. 1 obstacle HR faces is lack of standards,” unlike in accounting, which uses generally accepted standards.

Yet another problem is that “everybody’s measuring what’s really easy to measure,” Higgins said. “Our recommendation is don’t just look for your car keys where the light is good and it’s easy,” like the 85 percent of companies Softscape recently found to be measuring retention and turnover. More difficult to measure items that aren't so popular, like time savings (21 percent), return on investment and onboarding effectiveness (both 28 percent) may be more rewarding, he indicated.

Other best practices Higgins offered for making use of HR analytics are:

• develop a good partnership between HR and finance;

• solve business issues before tackling HR problems;

• find the talent needed to execute your plans;

• “focus on questions rather than answers or available data”;

• “aim small; seek out quick wins,” including defining formulas and publishing key performance indicators;

• integrate workforce data with financial, customer, operations and other business data; and

• tell a complete story, with strong numbers, good visual charts, stories and “real-world examples from the business.”

 

To contact the reporter on this story: Martin Berman-Gorvine in Washington at mbermangorvine@bna.com

To contact the editor responsible for this story: Simon Nadel at snadel@bna.com