How well do organisations truly understand what drives performance among their workforce? The answer: not really very well. Does management know why one salesperson outperforms his peers? Do they understand why certain leaders thrive and others flame out? Can they accurately predict whether a candidate will really perform well in the organisation?
“The answer to most of these questions, is no,” says Josh Bersin, founder and principal at Bersin by Deloitte. “The vast majority of hiring, management, promotion and rewards decisions are made on gut feel, personal experience and corporate belief systems.”
Today, as many companies prove the power of analytics, a new race is under way to gain a competitive advantage by understanding all elements of the workforce. “Now is the time to focus on talent analytics,” Bersin underlines.
Talent analytics is the use of measurement and analysis techniques to understand, improve and optimise the people side of business. However, its main concern is not with merely gathering data on employee efficiency. Instead, it aims to provide insight into each process by gathering data and then transcending the figures to make relevant, holistic decisions about how to reach business goals.
Many companies investing in advanced talent analytics are seeing the payoff, according to High-Impact Talent Analytics: Building a World-Class HR Measurement and Analytics Function, a Bersin by Deloitte study. Yet, among all organisational challenges studied by Deloitte, people analytics presented the second-biggest overall capability gap for organisations, trailing only the need to build better leadership.
Organisations have thousands of data elements about their people: demographic data, performance data, job history, compensation, mobility, assessment and training, to name a few. These figures can be correlated and matched to many different types of business data to support companies in understanding profiles and behaviours. Advanced talent analytics is helping achieve better talent outcomes in terms of leadership pipelines, talent cost reductions, efficiency gains and talent mobility. Nonetheless, Deloitte states that still too few organisations are actively implementing HR analytics capabilities to address complex business and talent needs. What seems to be the problem?
Organisations are still new to this discipline, and many suffer from poor data quality, lack of skills and a weak business case for change. While people analytics programmes can deliver a high ROI, HR leaders have difficulty building an integrated plan, the Bersin by Deloitte study explains: “More than 80 percent of HR professionals score themselves low in their ability to analyse – a troubling fact in an increasingly data-driven field.”
Data and analytics are key to solving many organisational issues, such as engagement, retention, leadership, learning and recruitment. Companies that excel in talent and HR analytics can position themselves to out-compete and outperform their peers in the coming years. Without early, substantial investments, however, HR leaders will find the function progressively challenging. Companies should therefore make a serious commitment to this discipline, search for robust solutions from their core system vendors and hire people into HR who have an interest and background in analytics and statistics.