Wednesday, February 27, 2013

Real Analytics for Real Business Partners

I am pleased to have two awesome guest bloggers this week.  Scott Mondore, PhD and Shane Douthitt,PhD. They are the authors of two bestsellers on talent management and HR Analytics (Investing in What Matters: Linking Employees to Business Outcomes and Business-Focused HR: 11 Processes to Drive Results) and the managing partners of Strategic Management Decisions, the only talent management platform with integrated business outcome analytics.  So, in other words, not only are these guys my friends, but they know what they are talking about!!

It has taken almost 20 years for HR analytics to become an overnight sensation. There is a huge opportunity for HR to use its biggest advantage (data about all employees) to show its impact on the business. But before analytics becomes a poorly-defined, consultant-driven topic (see employee engagement), it is important to get out in front and set some clear parameters for HR Analytics:

HR analytics must be show a connection to business outcomes (e.g., sales, quality)
If we only look at analyzing HR data in a silo, then there will be no business impact. We have to start showing how employee data drives relevant business outcomes.  We know that our business partners don’t really care about things like days to fill or engagement.  We must do a better job of connecting people focused data to what our customers (i.e., business leaders) are focused on (business outcomes).

Analytics CANNOT be limited to “slicing-and-dicing” HR data
We all know what this will mean: MORE REPORTS! We have to end this end-of-the-month, mad dash for numbers that are mostly meaningless to our business partners.  Simply creating prettier reports or slicing HR focused data in a different way, is NOT going to get our internal clients excited about HR.

Analytics must be true cause-effect and predictive
To make it through the c-suite gauntlet of analytics pushback, we can’t be armed with gap analyses and correlations. Too many holes can be poked into these types of methodologies—use structural equations modeling to get as close as possible to cause-and-effect and allow your team to demonstrate a strong expected ROI calculation. Don’t let the statistics scare you—there are plenty of grad students that can help you and costs of using consulting firms for this work are dropping.

Analytics must be reported and actionable to all front-line leaders
There are plenty of analytics companies that tout the ability to work with data and produce beautiful charts, pictures and PowerPoint slides. However, the impact of analytics will be limited if your front-line managers aren’t shown exactly what they need to be working on that has a business impact AND the specific actions they should take to make it happen. Fancy PowerPoint’s for the CEO are nice but will not add front-line credibility for HR.

There are no magic metrics
The metrics that you track should be based completely on the HR business drivers that you uncover in YOUR organization. What works at Google may not work at your organization. We need to move away from only looking at HR Efficiency metrics and actually look at HR Impact metrics. Ask yourself these questions when building your HR scorecard/metrics:
  • Can I articulate why this metric really matters to the business? 
  • Do I know what a good number should be (not based on generic benchmarks! 
  • Can I articulate the business value of moving this number 
  • Why would senior and front-line leaders care about this metric?
Show your actual impact/ROI in 6-months to a year later
Making predictions with strong methodologies are nice, but taking action on what drives the business and showing the actual ROI after implementation is where the real rubber meets the road. Showing the change in your business driver and the corresponding change in business results is the most straightforward way to show real ROI.

Making it happen:
You don’t have to boil the ocean and look at all of your HR data right out of the gates to have an impact. The lowest hanging fruit are Performance Management and Employee Surveys. For Employee Surveys, line up the data (store-level, unit-level etc) with the key business outcome(s) that you want to drive. Use the appropriate stats methodology and this will tell you the exact survey items that will have the biggest business impact! Create the initiatives and show the ROI. If you use a survey vendor, make sure that they can do this analysis AND they provide these analytics in all manager reports. Remember, a fancy c-suite PowerPoint will have limited impact.

For Performance Management, make sure that you collect competency ratings during the review process. Then, align the competency ratings with the important business outcomes. Follow the same steps from the employee survey process.

You will be a real business partner when you start bringing people strategies to drive sales, profits etc with the evidence to back it up. Make the evidence practical and actionable for front-line leaders, and you will be the HR Rockstar!

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