Recently, a few readers have sent questions regarding HR analytics. Like any paradigm shift, the level of understanding, commitment, as well as utilization of these new techniques and tools varies by leader, team, and organization. For those of us that have already “bought into” the idea of using data to model human behavior, the move to analytics makes perfect sense since it offers the next level of explanatory and predictive precision. For those of us that opted to “wait and see,” the time to act appears to be upon us. As markets become more competitive as well as complex, business intelligence not only provides for competitive differentiation, but also significantly increases the success rate of growth strategies. The convergence of affordable technical resources, more accessibility to proven approaches of analysis, and greater understanding of behavior now allow organizations to employ predictive as well as prescriptive tools.
What does this mean for those of us not using analytics already? We are about to join the party. Just as measurement expanded into almost every occupation and industry over the last few decades, analytics continues to expand in a similar fashion. While in most cases, it started as a project or small program in one area of most organizations, it now possesses its own standing. Most innovative organizations have analytics teams or even functions. The next step will be the expansion of analytics into most functions and areas as a regular tool. An interesting article on the continued diffusion and the associated challenges for change management appeared in Computerworld.com earlier this month (http://www.computerworld.com/article/2837078/analytics-for-the-rest-of-us.html). Given the importance and growing utilization of analytics, we will spend a few posts discussing what is going on with HR analytics and how they might be useful to you.
As a first step, how do you define analytics? Like many innovations, the strength of the proliferation of the term matches its ambiguity and lack of definitional consistency. Put simply, analytics encompass a set of tools, practices, and technologies utilized to analyze data on customers, employees, or other groups in order to enhance strategic decision-making for improved performance. With the increased availability and accessibility of data, analytics arose as a method of extracting meaningful insight and actionable intelligence in a real-time fashion from this new resource. As a result, the utilization of analytics not only changes the tools we use and the insight that we have, it has changed the way we think about our internal operations and the external environment.
Based on our understanding of analytics, what is the definition of HR analytics? HR analytics encompass a set of tools, practices, and technologies utilized to analyze data on employees or workers in order to enhance strategic decision-making for improved human capital performance. HR analytics focuses us on the human capital element of the organization as well as related processes, behaviors, and outcomes within the organization as a whole. The most valuable contributions of HR analytics allow us to understand how people produce tangible results as well as the factors that lead to positive change in the future. As a result, HR analytics combine the following key elements:
• Methodology for posing human capital-related questions and seeking valid answers;
• Approach for linking data for various sources inside and outside of the organization (metrics, surveys, outcome data);
• Set of statistical techniques for identifying relationships, causation, and potential actions; and
• Standards for quantifying the return on investment in human capital.
Our next post will delve more into the value of analytics and how we arrived at our current state.