HR Seeking to Tap High Potential of Talent Analytics

By Bill Leonard Nov 20, 2013

Although talent analytics and “big data” appear to be the wave of the future, human resource professionals are struggling to find the best uses for the analytics tools. A report released Nov. 7, 2013, by the United Kingdom’s Chartered Institute of Personnel and Development (CIPD) concluded that a combination of silos, skills gaps and suspicion among managers is preventing HR departments from effectively using talent analytics.

“Big data and talent analytics can help HR take a more forward-focused and evidence-driven approach to workforce planning, talent management and people development,” said John McGurk, head of CIPD Scotland and author of the report, Talent Analytics and Big Data: The Challenge for HR. “But, as HR seeks to engage with this combined people analytics challenge, there is concern about the reliability and credibility of its data, obstacles posed by existing structures and systems which work against the sharing of data [i.e. silos] and capability gaps [i.e. skills].”

The huge potential of talent analytics and the ability to process millions of data points that can help business leaders make decisions based on objective statistics are well-known. Talent analytics is developing into an offshoot of the bigger trend of using big data to map out business strategies. The CIPD research and a similar study from the management consulting group Accenture concluded that a growing number of businesses have turned their big data analysis inward to understand and predict the direct impact that HR processes and talent management initiatives have on business outcomes.

Researchers for Accenture found that the way HR departments use talent analytics and the actual effect on organizations’ strategic planning varied widely.

“Companies are at different points along their journey to a better return on their talent analytics investments,” noted the Accenture report, titled How Well Do You Know Your Workforce? “Where companies are now is a function of not only the maturity of the organizations’ data environments but also the analytics tools being used, level of available analytics skills, and the ability to push insights into key processes and decisions.”

The CIPD report drew similar conclusions but found that many HR professionals seemed to lack the skills and capability to use talent analytics effectively.

“HR’s people analytics capability is patchy,” said McGurk. “Even those professionals whom we consider to be at an advanced level are reluctant to say they are pushing the boundaries. Most are still defining their approach towards metrics, with a focus on ensuring that key HR data on businesses drivers and costs are reliable and consistent.”

Both reports concluded that HR practitioners should focus on developing their analytics skills, as these can provide HR with the expertise to interpret workforce data streams and use that information to develop effective talent management strategies.

“In addition to offering significant organizational improvements, talent analytics is giving HR executives not just a seat at the table but the basis for strategic discussions with the C-suite based on substantive insights provided by hard numbers and the ability to more accurately predict the likely business outcomes of different talent initiatives,” the Accenture report said.

By using talent analytics, employers can, for example, compare the performance of full-time, part-time and contract workers. According to the Accenture research, the analytics tools can then help businesses get an accurate picture of the real costs of employing full-time or contract workers and then compare those costs directly with performance metrics, such as productivity and client satisfaction.

“With this type of talent analytics approach, a company can often deploy a new workforce segmentation strategy with the potential of increasing productivity and delivering better customer satisfaction while saving millions of dollars,” the report states.

According to both reports, HR practitioners should concentrate on improving basic reporting capabilities throughout their organization. Good and accurate data flow is crucial to talent analytics. Once an HR department has data it can rely on, the information can be used to change and improve the organization’s recruiting, training and retention initiatives.

“Ultimately, the goal is to develop more advanced analytics capabilities that enable companies to optimize performance and even predict which workforce changes and investments are likely to produce the best results,” the Accenture report concluded.

Bill Leonard is a senior writer for SHRM.

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