Sunday, 26 February 2012

The Five Most Important HR Analytics

 

   I’ve been down in Johannesburg for a few days, delivering a workshop on HR metrics and analytics. And it was analytics, not too surprisingly (as this is such a rapidly becoming an extremely important and popular topic), which gave rise to the most interesting discussion in the workshop.

For me, both HR metrics and analytics need to cascade from a company’s HR strategy / strategic risk assessment. The analytics a particular company will want to use will therefore depend upon its context and strategy, and in particular on what questions about how HR impacts the business will be most useful for it to answer.

I think that this is actually a fairly common view held by a good proportion of commentators in this area. And I think most of the participants on my workshop understood this too, but I was still pushed to provide a list of best practice analytics.

I’m not keen to do this, as I worry that many companies will simply add to their lists of generic metrics with these generic analytics and hence completely miss the opportunity to align with their business and HR strategy and therefore to maximise their impact on the business.

However, I like to do what my clients, and workshop attendees, want, and this is such a rapidly developing area, I don’t think any of us have a fully developed understanding of how this field will evolve. So here you go:

Oh, one more thing. I’d already explained that I think the most important metrics, and therefore analytics too, are those focused on the outcomes created in the human capital value chain. And they obviously need to be focused on the higher levels of value in the value triangle (I’ve written about these models before). Therefore the ‘best’ analytics will most likely be those focused on these areas highlighted above.

Let’s start at the very stop in the ‘creating value’ space:

 

1. Creating value in human capital

Many organisations will have some element of human capital, probably around engagement / passion / pride / wellness (/ love?) that they know they need to develop, not just to meet short-term business needs but to support their ongoing success.

The most useful question to ask about these capabilities will relate to how they can best be further developed, and because the drivers of engagement can vary significantly within any one organisation, should be analysed by segmented groups. However, the important thing to note is that to create value through engagement, rather than simply to use it to support business needs, the segmentation shouldn’t be about organisational unit / level etc, but type of individual, ie using a range of demographic or sociographic factors to identify groups of individuals with similar –graphics who can therefore be engaged in a similar way. Doing this will help a company target its engagement activities much more effectively.

 

2. Also social capital – the greatest new opportunity

I had already explained in the workshop why I think social capital is often one of the greatest opportunities for developing new organisational capability in a business (because in most organisations, how people work together is more important than the quality of the individual involved; and also because this area receives so little attention in many organisations).

The broadly equivalent tool to the engagement survey is a social network analysis, However, once again to make this an ‘analytic’ rather than simply a measurement, I suggest that this needs to be used together with other measures of activity to understand correlations and ideally causations between these.

Doing this can help answer questions such as what type of people are most able to be effective facilitators of a community, and also what else makes communities and networks work effectively.

 

3. Sources of performance

Moving down to ‘adding value’, the next main opportunity is probably to better understand what leads to good performance – looking at how a range of actors from leadership, organisation design including length of management spans, competencies and general career factors eg tenure, numbers of promotions etc, impact upon employees’ performance. A good example of this in a retail environment would be modelling an onboarding programme against impact on sales per square foot.

 

4. Leadership performance

A build on this could be analysis of what makes the leaders of an organisation effective, and also perhaps of what effective leadership looks like in the first place.

 

5. Human capital supply chain

Widening this out, many organisations will want to review how they are doing in providing the right people with the right competencies at the right time in the right place, eg whether they are optimising their selection of the 5 or 6 Bs (buy, build, borrow, balance, bind, bounce) appropriately and integrating across the approaches that they use.

Note this analysis will link to an organisation’s workforce planning, but I also think it takes place at a bigger and broader level than this.

 

Even with this focus, there are still a broad range of analytical approaches available to organisations (from correlation and causation analysis to complex models of organisational dynamics) and it’s even more difficult than the above to recommend the particular tools an organisation should use. My advice would simply be to probe as deep as you need to go to answer the question you’ve defined based upon the above.

 

 

 

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