From information to insight

Effective use of HR analytics can be the difference between prospering and failing in today’s turbulent economy, according to global member-based advisory company CEB


With ever-increasing dynamic business needs, an organisation’s workforce needs to be change-ready to be able to take on new ways of working.

Executives expect, on average, they will need a 20 per cent improvement in performance over and above current levels to meet their business objectives. Moreover, the vast majority of companies will have to realise these gains by relying on their current workforce – not by hiring more employees.

Yet there is a problem here. Some 80 per cent of employees CEB surveyed say their workload has already increased over the past three years and 55 per cent say they cannot handle the level of stress associated with their job for much longer, even as things stand.

Organisations therefore need to evaluate their existing workforce and identify gaps in the talent pool, as well as assess likely future requirements. Leaders will need to confront difficult realities and ask themselves two critical questions: can we achieve our business goals with our current staff and capabilities; and is our existing talent base ready to become our next generation of leaders?

For those in HR and talent management, these are particularly timely questions made more challenging by an absence of reliable data. Despite significant investments in “big data” tools, HR leaders are still not able to generate insights for business partners that are deemed trustworthy or useful to their talent decision-making processes.

Even where data exists, many organisations are either failing to use tools effectively or not using them at all when they make critical human-capital decisions. CEB data shows around 75 per cent of staff decisions are still being made based on gut feeling and instinct.

Framing the potential impact of HR analytics is critical. Organisations that are really good at both analytic sophistication and business application can expect to see a 6 per cent improvement in gross profit margin, which translates into an $18.9-million saving for every $1 billion in revenue, according to CEB’s research.

Companies that are able to turn their information into insights are focusing on improving the judgment of their people and how they apply what they learn from data to business concerns

“HR analytics play a vital role in impacting business outcomes for growing organisations,” says Eugene Burke, chief science officer at CEB. “The ability to analyse greater volumes of complex workforce data and translate into meaningful metrics, which answer crucial questions for business partners, can’t be understated. It is a must-have for organisations that want to remain competitive in today’s work environment.”

Nevertheless, only 44 per cent of HR professionals use objective data to make decisions around the talent agenda, while just 24 per cent feel they have an understanding of the potential of their workforce. Only 41 per cent use assessments to identify high-potential employees – an area in obvious need of improvement given organisations’ remit to generate maximum productivity from the workforce.

Clare Moncrieff, senior director at CEB, says a major issue is that many organisations feel the HR data they have is not relevant. “HR is still grappling with its ability to provide strategic data to the business on its workforce and is ill-equipped right now to take advantage of big data,” she adds.

Encouragingly, though, there is a widespread recognition of the need to improve. Some 74 per cent of organisations say they want to better their talent management capabilities, while 95 per cent of senior HR leaders intend to increase investments in data over the next two years.

But Ms Moncrieff warns that there is a danger organisations will feel the need simply to increase the level of analytical sophistication or technology they apply to data. “Those are not bad, but they’re not the highest-impacting elements,” she says. “Companies that are able to turn their information into insights are focusing on improving the judgment of their people and how they apply what they learn from data to business concerns.”

As organisations look to the future, there is greater demand for quality and trusted data. “HR analytics is increasingly central to all the work HR leaders are doing, especially engagement, succession and performance management,” says CEB’s Mr Burke. “Organisations that are increasing their analytics impact are seeing significant outcomes in all those disciplines.”

Mr Burke says that a leading organisation in this area can expect to see double-digit improvements in critical talent outcomes, such as employee performance, quality of hire and engagement – returns that may be the difference between prospering and failing in today’s economic climate.