All about Human Capital by Morten Kamp Andersen
How to tell the difference between good and great HR Analytics – part II
In my last post I argued that great workforce/HR analytics share four common traits; they are
- made on reliable data
- combined with qualitative data (and perhaps some intuition)
- used an evidence based approach.
But there is one thing missing and probably the most important thing; It must be based upon a strategic approach. I know that”‘strategic” is such an overused word in HR now and frankly most of what is said about strategic is anything but. However there is no getting away from the fact, that you can do good analytics with the above four traits without actually adding much value. Without doing analytics on the right things AND in the right way it really amounts to very little.
Or to put it in another way: Workforce analytics without a strategic approach will only with the help of luck turn out to be truly value added.
What does strategic approach mean in practice? The best way to illustrate this is to look at the difference between a bottom-up or top-down approach.
Analytics can be bottom-up (operational) or top-down (strategic). The bottom-up approach is the approach many take. They combine their data into Big Data and look through interesting ways of diagnosing, measuring, illustrating, visualizing, trending and reporting the data. They find interesting links between employee turnover and profits (no kidding!), talent profiles and performance or particular training programs and customer satisfaction. That’s when they are good. Sometimes they just show which divisions are experiencing lower employee turnover!
The top-down approach on the other hand start with your HR strategy (which of course is aligned with the business strategy). You then look at which areas you want to focus your HR efforts. Then you find the desired knowledge you require to make the right decision. The you design the data required to provide you with this knowledge.
Good analytics made from a bottom-up approach can give good results; they can surprise you, show links you hadn’t seen before and even challenge your strategy. BUT that approach must not stand alone. The primary use of analytics should be top-down. That’s the strategic approach and that is likely to support you most.
Remember: Workforce Analytics is ‘just’ a tool to make better HR decisions. It is a great tool for that, but if you are an HR executive looking to make strategic HR decisions, your analytics has to be strategic too. Don’t look at the data you’ve got and make the best of them but instead look at what data you need to create the most value-added predictive analytics.