Thursday, 19 May 2016

#HRTechMENA and the Analytics of Not




One of the most interesting comments at HR Tech MENA yesterday was in a panel when moderator, Abdulhussain Tejani, suggested that as well as selling business cases HR needs to get better at expressing the costs of not doing something.

I agree and think this is a core opportunity for HR analytics as this provides a powerful new opportunity to businesses to understand the capabilities of their workforces, the way these capabilities support their business performance and the activities which develop the requires capabilities.

Analytics should therefore help people get the support and experience they need; organisations to maximise the value of their workforces; and therefore the Dubai and other economies to receive the additional  investment required to boost national productivity.

This is important as Dubai and other countries in the region and elsewhere are finding business particularly challenging at the moment given the low oil price (and yes I know it's Abu Dhabi which has the oil).

But there is also an opportunity in the 'analytics of not.'  Often the cost of doing something is clear, but the cost of not doing it is not.  This distorts investment towards sub optimal approaches.  Analytics should help restore the balance towards doing what is in the employees, organisations and countries' favour.

One example is the cost of recruitment.  Analytics are already helping lead organisations towards forming external talent pools of pre-identified, pre-qualified individuals who they can bring onboard quickly once there is a vacancy.  This helps reduce time to hire and increases quality of hire too.  It can also minimise what can be significant business costs - for example, in reduced customer satisfaction or lost revenue.

In fact, for a few organisations at least, analytics has shown the cost of carrying a vacancy is such that it can be better for the business to recruit in advance of its specific replacement or growth needs.  Either a business will have a vacancy by the time a person joins, or the organisation can give the new hire a short-term project until a vacancy arises.  Even then the cost involved in carrying the excess headcount can be less than is saved by avoiding a job vacancy.

Put another way, there is a cost involved in more proactive recruitment but there is an opportunity cost involved in remaining reactive too.

Similar findings can be found in learning and development.  For example some UAE organisations may be concerned about the cost and effort involved in taking on more women but what is the cost of not employing and training them?

Analytics will help us understand the costs of skill gaps in a workforce and should show more employers the benefit of working with their employees to provide better skills development and hence boost organisational and national productivity.

The basic method of undertaking this analysis is to start with the business and HR strategy and specify objectives and measures at each of the levels described in my book, 'Strategic Human Capital Management', namely inputs, activities, outputs and outcomes, and the final business results.

Once this measurement setting process has been completed, organisations can then analyse the different costs involved in distinct levels of activity, producing different outcomes and varying business results.

My expectation, as more businesses start to invest in workforce analytics, is that many of these organisations will be surprised by the 'costs of not.’

The use of analytics should therefore start to move the Dubai and other economies, as well as many people's working lives, in a more positive direction.



Notes:

I'll be speaking about the above approach to analytics at ATD ICE on Sunday.

Andrew Marritt refers to the potential significance of 'not' in this post too.


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