MCBASSI & COMPANY

HR Analytics: Get Started By Thinking Big

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HR Analytics holds the promise of helping organizations operate in the “sweet spot’ – the intersection of sustainably profitable and enlightened management of people.  Aspiring to achieve this outcome is a powerful impetus for designing, executing and sustaining your organization’s HR Analytics strategy.

It’s always important to start with the end goal in mind.  And ideally, it should be a BHAG – a big hairy audacious goal. Otherwise, your HR Analytics efforts run the risk of devolving into another HR-check-the-box reporting initiative long on activity and short on value.

To achieve your BHAG, you’ve got to start by asking the right questions. What would any potential investor want to know about the people side of your business? How could your strategic HR measurement and analysis inform an investor’s perspective?

Of course, your Board of Directors should want to know everything investors want to know, and then some.  Similarly, your CEO, CFO and the executive team should want to know everything the Board wants to know, and more.  And senior HR leaders should want to know everything the executive team wants to know, plus still more.  You get the idea.

Now here’s the thing.  Investors, boards and executive teams currently only ask for (demand) a very limited set of HR metrics.  That’s because they don’t know more is possible.  Your job is to help educate them so they know they can, and should, expect actionable insights that provide them with the facts and analyses they need to make better business decisions.  And these facts and analyses need to go far beyond executive comp and executive-level succession planning.  That is the essence of HR analytics.  (See our ATD post from last month for more detail on this.)

Here’s our advice: incorporate into the narrative perspective on the critical risks that your work mitigates.  Risk is, in fact, the other side of value creation.  One very important lesson we’ve learned in our work with clients of all sizes and industries is that “risk sells” – all decision-makers are concerned about it and want to understand better how to minimize it.

So here’s a human capital risk framework to get your creative juices flowing:

  • Capability Risk: Do your people have the knowledge, skills, resources, and business processes that will enable them to perform effectively?
  • Alignment Risk: Do your people really understand your business strategy and goals and do their day-to-day jobs in alignment with those goals?
  • Turnover/Demographic Risk: Are you retaining key people?  Do you have a pipeline sufficient to replace departing employees?
  • Labor Market Risk: Are you able to find and acquire the right people?
  • Health/Well-being Risk: Are your people healthy and able to contribute to the organization at their maximum capacity?
  • Leadership Risk:  Do you have the leadership depth or quality needed to ensure that key initiatives will be successful?

By shifting or expanding your thinking, language, metrics, and analysis from value creation to risk mitigation, you will lay the foundation for a sustainable HR Analytics strategy worthy of sustained, high-level executive and organizational support.

The most appropriate risk-based BHAG for your organization will depend on your organization’s specific people-related challenges. The only limit is your imagination – and having the available data!

Remember HR Analytics is not about generating piles of reports.  It’s about generating insights in areas of risk affecting the very life-blood of your organization.

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