From an outsider's perspective, predictive analytics can seem like a complicated, cloudy black hole of math jargon and time-consuming data tracking. But insiders know it's a tool that—when used correctly—can drastically change the success and functioning of an HR department. In their new release, Predicting Business Success: Using Smarter Analytics to Drive Results (SHRM, 2018), authors Scott Mondore, Hannah Spell, Matt Betts and Shane Douthitt decode how to work with data and outline how to use predictive analytics to benefit not just your HR department but your company as a whole.
Broken down into clear, easy-to-understand sections of key principles, guidelines and planning charts, this book takes readers step by step from an introduction to data analytics vocabulary through to the basics of succession planning. A fundamental aspect of utilizing data analytics to its fullest capabilities includes knowing exactly what data and metrics HR professionals should be paying attention to, according to the authors. Here are four guiding principles for business-focused metrics:
- There are no magic metrics that work for everyone. The authors emphasize that metrics need to be chosen and utilized based on the specific needs and characteristics of your organization. You may hear great things about a certain data analytics system that other companies are using, but plenty of differentiating factors—such as industry or company size—may contribute to it not working for your own. "Although a lot of HR leaders get excited about what the latest Silicon Valley company is doing differently in the realm of HR and measurement, it is important to remember that all organizations are different in many ways," the authors write.
- Every element on the scorecard must be directly linked to business outcomes. In other words, don't waste time analyzing something that has no impact on business results. Effective business-focused metrics "allow you to understand exactly which HR processes, attitudes, skills, competencies, and the like drive actual business results," according to the authors. When choosing data to measure, especially data that you plan to track consistently, be deliberate in what you choose.
- HR efficiency metrics serve important internal purposes but are of little interest to senior business leaders. Be sure to track external metrics that professionals in your company outside of HR will value. Consider what the C-suite cares about when approaching your analytics plan. While you should certainly be tracking internal HR metrics for the benefit of the HR department, it is also key to broaden your scope. As the authors put it, "If you are just reporting internal efficiencies, then HR will continue to be a cost center (not a profit center) that can only show value by cutting costs, programs, and overhead."
- Benchmarks don't mean a whole lot. The authors advise against basing decisions on benchmarks. While it's fine to track them, the information they impart can be ineffective or misleading. It is important to remember that a benchmark is essentially an average and that basing decisions on "average" can stifle results.
This book is approved for SHRM recertification credit. After reading the book and successfully completing the related activity, you will receive 3 professional development credits (PDCs).
Katie Wattendorf is an editorial intern at SHRM.