In Human Resource, generally speaking there is a paucity of data-driven analysis
Mo Data stashed this in Big Data in Human Capital
We live in a world of Big Data, and whilst it is a subject that has been hyped more than Lady Gaga’s insipidly bad eighties retro Europop, many people believe it will change the world. Some even claim big data will be bigger than the Internet. That is as an outlandish a claim (minus the blasphemy) as the one made by the late, great John Lennon in the mid-sixties when comparing the relative size of The Beatles to Jesus Christ. But does it stack up? And what is the impact on HR and Talent Acquisition professionals?
To put the amount of data we generate in the world into context it is worth revisiting the staggering revelation Google CEO Eric Schmidt made in 2011:
“Every two days we create as much information as we did from the dawn of civilisation up until 2003”
Think about that for a minute. As stats go that’s up there with Donald Bradman’s Test batting average of 99.94 – surely the most remarkable sports stat as it is over 50% better than the second best average in history. Anyway, I digress…
Sir Martin Sorrell said last year that “the future of advertising and marketing services belongs as much to Maths Men (and women) as it does to Mad Men (and women)”. A similar trend is taking place in HR, where CIO magazine reported the function being “invaded by Data Scientists”. But is HR ready for the revolution in Talent Analytics that big data has ignited?
In a business world dominated by numbers, balance sheets and return on productivity. HR is increasingly isolated in its inability to talk the language of the business. McKinsey’s 2012 report on the Human Capital function – False Summit, concluded HR has an inherent inability to relate the ROI or business impact of the function. This was echoed by Josh Bersin in Forbes where he presented findings from research that suggested only 14% of organisations studied had done any significant “statistical analysis” of employee data at all.
The extent of this chasm between the ‘haves’ and the ‘have-nots’ is reflected in Cielo’s Talent Activation Index (download a copy here), which found that Leaders are 12 times more likely than Laggards to rate their use of data and analytics to inform workforce strategies as “very effective” (72% vs. 6%).
Generally speaking there is a paucity of data-driven analysis and where it does exist, it is not tied to financial measures or communicated well. The consequence is that this can prevent HR from gaining buy-in for innovation, no matter how much it is needed.
So, is there anything that HR can do to rectify this situation? Is this an opportunity to not only gain that long sought after seat at the table, but actually provide insightful talent analytics that have a quantifiable impact on business performance?
Fortunately, the answer to both questions is a resounding yes. HR actually sits on a gold mine of data, but sadly is often not using it well. This is the critical point. The answer does not lie in purchasing expensive technology solutions – a fool with a tool, is still a fool - but in simply doing a better job of applying existing data insights to critical business questions. Moreover, it needs to present the insights in a language the business understands. Chief Executives want HR data to be like financial data: standardised, specific and clearly linked to outcomes.
Take the following example. The HR Director of a large financial services organisation had identified it was taking an average of 55 days to hire Insurance Sales Agents. Having benchmarked his competitors and confirmed that this was too long, he called in a team of external consultants. Several workshops later the HRD signed a contract to install a new Talent Acquisition system. Twelve months on, the HRD and the partner from the consultancy firm were in the CEO’s office excitedly telling him that the $1.5m investment had reduced time to hire from 55 to 37 days. The CEO was distinctly unimpressed. “You mean it takes 37 (insert expletive) days to hire an insurance agent? Get out” he shouted as they scuttled out of the office.
Initially flummoxed after the unexpected hairdryer treatment, the HRD and consultant regrouped and decided to look at how they could present the data differently. A fortnight later, things duly went a lot better. “We hire 3,000 Agents per year and their average revenue per day is $700” ventured the HRD. “By reducing the average time to hire by 18 days, we estimate that we generated additional revenues of $37.8m in the last 12 months”.
The CEO, for once smiling and full of bonhomie, came over and slapped them both on the back and acclaimed “now that’s the kind of data I want from my HR function”. Lesson learned.
Whilst in part anecdotal, this story is an all too common example of one of HR’s main weaknesses. Conversely, it also provides a clear indication of the huge opportunity available if HR is prepared to do things differently. First, by adopting a scientific approach to collecting and analysing data biased towards answering critical business decisions related to talent. Then by presenting it in a language that the business understands, HR will help drive the business agenda , gain influence and have a positive and quantifiable impact on the bottom line.
However, as Bersin highlights and as I heard for myself when I chaired the recent HR & Workforce Analytics Summit in London (read my six key takeaways here), a growing number of HR functions have made the great leap forward and have analytics and data at the centre of their HR strategy. One notable example is provided by Patrick Coolen at ABN AMRO – read how his analytics journey has unfurled on the excellent HR Intelligence Blog.
HR can’t afford to continue being the laggard within the organisation when it comes to talent analytics and big data. It has a huge opportunity and now is the time to seize it.
David is a Director at Cielo (formerly known as Pinstripe & Ochre House) and has worked with a number of organisations to design talent acquisition programmes that drive growth and competitive advantage. You can contact David by email, LinkedInor Twitter.
Stashed in: Dilbert
It's really difficult to change anything in human resources. Not a culture of technology or data.
I often say that 'human resources is a waste of time' - mainly to provoke a reaction, most often I find the HR department either an administration department that applies policy and navigates benefits for employees or a hiring machine.
Least often I find them proactively or even intelligently trying to solve the problems of organizational alignment or productivity. However metrics can help, here is something that might illustrate the principle:
Travel and Entertainment is always a sore point for organizations - a cost of doing business, but always an expense that the CFO targets for reduction or at least control. And to do so, assuming T&E is handled by HR, then there are policies put in place - e.g. nobody can travel business class unless it is a flight over 5 hours and they are Sr. Director level and above, or maximum nightly rate for hotels is $300 per night. And these policies are sent out as rules, applied by the travel booking company and policed by the folks approving expenses.
But policy is often something you do when there is no data. In this case we don't know what people are doing, but we know we want to prevent extreme behaviors, so policy is created. However the fact is that policy in T&E only prevents the extremes. If most of the time people are staying in hotels at $299 per night, we're only saving the excess costs in the long tail, yet there are probably huge costs hiding in the middle. Also there is the case where, "I actually stayed in the Westin at $325 per night because it was right next to the conference venue. The Sheraton that you approved me for at $275 per night was 10 miles away, so I needed to take a taxi to the conference, then to dinner, so the real cost of the Sheraton was $350 per night, but your policy didn't see that"
Applying data to the blind spot here were instead of creating policies and rate caps, we could look at everyone's expenses associated with the trip, then creating an average cost per night for each destination and then benchmark everybody against that data. At the end of each trip, you show each person what they spent, what the average is and what their rank in the company is for that destination. People are naturally competitive, and the expense approvers can really weed out the unnecessarily high spenders.
That's just one example where I think that HR can start to think differently about how to bring data into their work.
Technically, you are correct.
The main challenge comes from changing the culture of HR to be organizational problem solvers rather than to limit the liabilities of the company.
Indeed, and there is very little hope from what I am seeing day to day. I do have a friend, Tobey who understands strategy and KPIs and how organizations function and perform. Here's Tobey: http://blog.prezi.com/latest/2013/12/30/people-at-prezi-a-conversation-with-tobey-fitch-head-of-tale.html - who has just taken a job running human capital. Waiting to see what he does in this respect.
"Because we’re growing fast and working to be a learning organization as we grow. I’m proud to be entrusted with finding and growing Prezi's greatest asset—people (and I’m honored lead a terrific team). It’s more than just hiring—once you start working with Prezi, we need to ensure that our teams are aligned with a smart strategy that everyone understands. Meanwhile, we've got to support and empower people to stretch and grow as Prezi evolves, and set up simple systems and processes that enable people and managers to do good work."