In your business, can you answer the following questions?

“Who are the people most critical to my organisation’s success?”

“Do I have the right people to complete an upcoming project?”

“Am I providing staff with rewards and development which fit their personal motivations?”

“Do I know which employee compensation and benefits programs drive higher retention?”

By leveraging data & analytics you not only are able to understand and optimise employee behaviour, but more importantly align it to business performance and drive up both productivity and profits.

Welcome to the emerging practice of Human Capital Analytics (HCA): where HR practitioners who have constantly sought to be strategic business partners can now use a data-driven approach to transform their hiring and talent management practices.

Is it big data?

HCA is often spoken in the same breath as Big Data; in reality it has very little to do with Big Data. Using employee and workforce related data is about knowing how to contextualise it, using the right frames of reference to solve the business challenge.

Within talent management HCA begins by mapping the organisational challenges along the continuum of the employee life-cycle, from the recruitment stage to the final departure, and perhaps re-hiring stages.

Beginning in the recruitment phase, how does any organisation improve its accuracy of selecting the right person for the right job, or expand the selection pool beyond what it’s immediately familiar with? Are there specific attributes that more accurately predict cultural fit? Are there specific traits or competencies that are more deterministic of high performance? When is an employee most at risk of attrition? Do employees respond differently to rewards and benefits, and do these rewards impact business productivity?

HCA answers these questions with data and analytics. Internally we have found that the characteristics of a person (captured partially through personality/motivation/leadership appraisals) account for up to 30% of performance success, while the internal work environment accounts for up to 50%, and the external competitive environment rounds up the remaining 20%.

A magnificent tree

Consider the analogy of a magnificent tree that has been growing over the years. The ‘success’ of the tree is dependent on the quality of the seed (i.e. its characteristics), the quality of the ground that it’s been planted in (i.e. the internal work environment), and the forest that it stands in with its fauna and flora ecosystem that at times competes with the tree’s development, and at times supports it (i.e. the external competitive environment).

To underscore the importance of the internal work environment, our work on sales productivity revealed that the sales incentive schemes of many organisations were sub-optimal, preventing even their average performers from reaching their personal full potential.

Best Practices

So here’s a tip on how HR practitioners can begin the HCA journey: solve the difficult problems first.

Hire or engage the necessary specialist resources, and get it done inside of 6 months. Addressing a difficult problem brings the added benefit of surfacing material data gaps and ways in which they can be closed.

Data foresight and interpretation are the key drivers of a good HCA function. We often have more data than we realise. For example, have you leveraged the information found in entry and exit interview transcripts, office ingress and egress behaviours, training outcomes, project assignments and outcomes, and team participation to gain new actionable insights on talent development?

HCA is truly powerful when HR leaders have co-ownership of both the strategic decision-making process as well as the resulting outcome.


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