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A key difference between high- and low-performing companies is that the former don't just collect HR data for compliance reasons or out of habit, they put it to use to improve company practices, according to a report released Dec. 12 by the Institute for Corporate Productivity (i4cp).
Moreover, the report said, senior HR officials and the HR department as a whole at high-performing companies are much more likely to receive, analyze, and act on workforce metrics than is the case at their low-performing counterparts.
The report, HR Analytics: Why We're Not There Yet is based on a survey of HR professionals at 102 employers.
Cliff Stevenson, a senior human capital researcher at i4cp and lead author of the report, said the researchers distinguished high-performing organizations from low-performing ones by posing “a number of questions to each respondent about how their organization's overall performance and performance within their market compares to other organizations over the last five years. Then, based on those responses, an MPI (Market Performance Index) score is given to each company.”
The most dramatic difference between the high- and low-performers appeared when the researchers asked who receives workforce metrics results. In the high-performing group, 81 percent said HR leaders receive them and 52 percent said all of HR receives them, while corresponding figures for the low-performers were 33 percent and 20 percent.
“Survey responses indicate that [high-performers] leave metrics to the HR department--and it is HR's responsibility to determine the action plans from that data,” the report said, suggesting that this “may point to a more robust, analytics-savvy HR function in more successful companies.”
Almost equally dramatic are the differences in the reasons why high- and low-performers collect HR data. Almost all the high-performers use the information they gather for strategic planning (96 percent) and/or evaluating programs or establishing the need for a program (91 percent). Only about half the low-performers cited these uses (47 percent and 59 percent, respectively).
On the other hand, low-performers were more likely than the high-performers to have to meet legal or compliance requirements with the HR data they collect (94 percent versus 77 percent), “which points to a reactive and tactical culture” in the former group, the report said.
“Simply focusing on doing what is currently necessary often means that activities critical to ensuring stability in the long-term, such as strategic planning, get short shrift or are overlooked altogether,” the report said.
More high- than low-performers said they ensure data accuracy by conducting checks for internal consistency, using automated processes, and having companywide standard definitions. High-performers were also more likely to collect greater numbers of different metrics--67 percent of the former collected six to 20 or more metrics, while 74 percent of the latter collected just one to six metrics.
There is room for improvement even among the high-performers, according to the report.
For example, “lack of employees with relevant skills and training” is a challenge for more than one-third of the high-performers (36 percent), while more than half the low-performers also find this to be a problem (56 percent).
“When leadership does not see HR data as a priority, the trickle-down effect is that budgets are lower, time is not given to data analysis projects, and employees with the correct skills are not brought in to focus on these efforts,” the report authors wrote. “To overcome these challenges, leadership must understand the role and use of modern HR analytics and be the role model for using them to improve performance.”
By Martin Berman-Gorvine
For a summary of the report, go to http://www.i4cp.com/trendwatchers/2012/12/12/five-ways-high-performance-organizations-use-hr-analytics.
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