Statistically, the total cost of a workforce represents nearly 70 percent of operating expenses for Fortune 500 companies. The real value in talent analytics is revealed when the HR professional is able to forecast talent demand, highlight a decrease in total compensation expenses next to an increase in performance and revenue, do performance appraisal, and become more effective and efficient to maximize stakeholders’ value.
The linkage between Finance and HR is one of the most critical factors in transforming how the business views the contribution of their people. So, the question to be asked before starting to move is "What objective evidence will show us that we are accomplishing our goals?" With workforce planning and analytics, organizations can assign staff across the group's projects on timely schedule. Being able to find the gap in the supplies (internal/ external) and the forecasted demands saved a huge amount of time efforts and money for all stakeholders. It served as a vital tool in recruitment- exit interviews with turnover rates, compensation and benefits, performance appraisal and led to wise investment in training.
If people are a company’s most valuable asset, companies cannot afford to ignore the analytics of their current or future workforce. HR analytics are finally starting to get some attention and should be a huge growth field in the coming years. Any company that ignores their HR analytics will be shooting themselves in the foot! Established workforce analytics takes time and patience while getting the collection correct, cleaning the data, and setting up automated feeds from the data source systems. However, the time and energy is worth the effort if it can achieve the expected result. Workforce information can be used to determine talent movements, benefit preferences, reward program acceptance and cost - just to name a few of the benefits.
Companies need to craft a 3-year analytics plan before they can achieve meaningful analytics result. Expectations of a faster turnaround in most cases doesn't yield great outcomes. Three-year analytics plan is practical to achieve the tangible result: (1) Year 1: Analytics Implementation phase: Define the requirements and identify the right software. Implement it and communicate aggressively such that it is used by all employees and managers. (2) Year 2: Data integration phase: Refine the data metrics being collected and integrate external data, such as financial or production data. Year 3: Communication phase: Teach managers how they can use the different dashboards and reports and help them inculcate these in their daily decision making and planning. We have found that most companies start getting significant payback in the third year onwards in improved and data-based decision making, higher visibility and greater transparency at all levels.
A person having an analytical ability can achieve his/her goal easily. But few in the HR field have had the knowledge and ability (including resources) to undertake value-added analytics activity. The missing element is objective (rather than observational) data about the individual which has explanatory power over performance, retention etc; Knowing and understanding the numbers for HR are critical for the effectiveness and influence of the function. The other functions such as sales, marketing, manufacturing, etc. have to know and understand their numbers as well; why should not HR? Excellent HR leaders understand the importance of the numbers and use that knowledge to enhance the department's contributions to the organization. HR people have to become business people too. The talent analytics success depends on a company’s ability to unleash initiative, imagination, and passion of employees at all levels—and this can only happen if all those folks are connected heart and soul to their work and their company, and to discover the purpose, achieve autonomy and pursuit mastery.
The talent analytics and metrics should help build trust, not the opposite way. In the information age there is an over abundance of metrics which not only confound potential users, but also have a serious defect related to their ability to measure what they claim to measure. So the aspect of a metric is its VALIDITY, and if it’s not constructed valid then it could have toxic effects. That being said, the metrics should help bring tangible results and build the trust relationship, not the opposite way. When employees trust you have their interest in mind they will passionately exceed expectations, they become empowered. If they trust the management, they will be engaged as well. How does this impact HR analytics? Because the only reason processes, memos, meetings etc exist are to improve the engagement of employees so they innovate product and services to exceed demand of customers. When you have trust, you have a culture of innovation. Not in products, but rather in strategy, change programs, attracting and recruiting. That is the function of HR. The currency, the essence of HR is: trust and engagement. No organization can remain competitive unless employees ardently believe they can trust you. Data is important. However you have to recognize that analytics is only a tool to deliver excellence, not impede the progress. Regardless of circumstance, the most effective talent managers understand their first obligation is to think in terms of the individual and how they arrange things to make the individual experience better, which will ultimately transfer into better service and products for customers. But the Analytics will only indicate the where and how the things are not going according to plan, and the biggest challenge is how HR get the people related to the figures, to upskill and perform.
Perhaps the most important reason for analytics is to make a compelling case to improve the lives of people. That is frequently overlooked. Analytics demonstrates their worth when employees believe the purpose of such feedback is to promote the benefits of the employee instead of merely the firm. For all success goes through them. Analytics is just the tool to provide you the numbers, but humans are the masters to capture the insight from them. Every leader and manager are in the business of people growth, development and success aspiration of organizational excellence. You only grow when the staff, and that includes all of them are growing.