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HR Analytics:

Why, What & How

Laurie Bassi

April 18, 2013

Why?

Human capital management drives value creation

Analytics drives better HCM

Employee surveys have tremendous (but typically under-utilized) potential to create actionable business intelligence

Big data & predictive analytics are coming to the “people side” of business

Role of intangibles has risen dramatically

Intangibles drive value

Human capital is the source of all intangibles

Human capital management is now an essential organizational competence

Analytics is now an essential HR competence

Market to Book Ratio

1980 2012 1.1000000000000001 2.29

Intangibles as % of Market Value

1980 2012 9.0000000000000024E-2 0.56000000000000005

We’ve invested on this insight for over 10 years

Companies that use HC analytics outperform

Example: Common sense can lead to very wrong conclusions

Why? Opportunity Plus Necessity

Opportunity

Technological advances have greatly reduced the cost of doing analytics

Necessity

As HCM has emerged as one of the few sustainable sources of competitive advantage, decision-making by gut and intuition is grossly inadequate

What & How?

What picture best describes analytics?

It’s not about reporting, dashboards or complex math.

It IS about data-derived insights that drive better decisions.

Fundamentally, analytics is about:

Asking better questions

Putting together disparate pieces of data to produce actionable insight

Example:

Identify the human drivers of

business results

Examples:

WHO	USED ANALYTICS TO	RESULT #1	RESULT #2
Payroll provider	Improve leadership development	Significantly increased leadership effectiveness	4 percent more productive workforce and a $20 million improvement to the bottom line
Telecom company	Improve customer service	Over 10% increase in service productivity	More than $40 million in operating profit improvement
US DoD corporate university	Reduce scrap learning	50% reduction in wasted investments	Hundreds of millions of dollars in cost savings for American taxpayers

Examples provided by Knowledge Advisors

4 Step Process

The Economic Imperative

Statistical linkage

to results

Fact-based prioritized

recommendations

Insightful, easy-to-understand reports

Smarter

employee

surveys

Step #1 - Asking the right questions McBassi People Index®

Typical employee engagement surveys are too narrow - not up to the task of creating actionable business intelligence.

A more innovative version of Step #1 McBassi Good Company Assessment

Good Employer

Good Seller

Good Steward

Business Results

Includes all elements of MPI, plus additional measures of “Good Company”

- Diagnostics

- Outcomes

Step #2 - Statistical linkage analysis

Depending on specifics of data, there are three primary statistical methods for linking people factors and business outcomes:

Multivariate analysis

Correlations

Comparison of means/t-tests

Analytics is the “missing link” that enables you to identify the top human drivers of your business results.

Example of unified analysis database

Actionable Insights

Customer

Satisfaction

Attainment

of Financial

Targets

Managers’

Profiles

Engagement

Onboarding

Exit & 360

Surveys

Learning &

Development

Profiles

Turnover

Two major types of business intelligence analysis

Creating insightful reports from your employee survey

Conduct statistical linkage analysis based on outcomes collected in the survey itself

Engagement (including intent to stay, willingness to refer a friend)

Support for customer service

Etc.

Ongoing (post-survey) analysis of the drivers of business results

Make decisions now that will ultimately make possible statistical linkage analysis based on “hard” outcomes (collected outside the survey), even if that’s not part of the first round

Turnover

Sales

Cost containment

Customer satisfaction

Etc.

Step #3 - Identifying areas of opportunity

This step systematically combines information about the

top drivers of business results with measures of relative weakness.

Top Drivers

Areas of Weakness

Top Areas of Opportunity

Example: Common sense can lead to very wrong conclusions

Step #4 - Insightful reporting

Highly visual, easy-to-understand reports serve as a

catalyst for change

One of the most important lessons we’ve learned: less is more when it comes to reporting and recommendations – tell what’s important, not everything you know

Avoid “data dumps”

Focus on simple reporting that makes it easy for busy managers and leaders to know what actions to take.

(Sample portions of) report elements

So What?

The “people side” of the business has become too important to be left to guesswork and intuition

Companies that use analytics wisely will continue to outperform their competitors that don’t

Analytics helps us speak the language of business – it elevates our function

It helps firms operate in the “sweet spot” – the intersection of sustainably profitable & enlightened management of people

Best Practices

Pitfalls to Avoid

Best Practices

Learn to think of your organization as a “naturally occurring experiment”

Start small and build credibility

In the early stages, focus on solving immediate problems

Have the end in mind and build an infrastructure to support it

Collaborate with other analytic groups within your company

Build/buy analytics competence within HR

Provide the right level of executive leadership support

Engage a leader who has an analytics understanding, passion, and interest

Avoid

Using analytics to “prove HR’s worth”

Assigning this mission to a lower level technician

Confusing:

Data dumps with insight

Benchmarking with analytics

Allowing the perfect to become the enemy of the good

Resources

Useful resources

Good Company

Bassi, et al.

Analytics at Work

Davenport, et al.

Drive

Pink

Predictive Evaluation

Basarab

HR Analytics Handbook

Bassi, et al.

Investing in People

Cascio & Boudreau

The Business of Learning

Vance

Free Resources

McBassi Articles

How to Create More Value From Employee Surveys (Talent Management, September 2012)

Other briefs & white papers: mcbassi.com/free-resources/

Knowledge Advisor Resources

Talent Analytics Module—June 2013

What is Talent Analytics and Why Do We Measure?

Talent Development Reporting Principles

centerfortalentreporting.org/

Laurie Bassi

[email protected]