Reading quite a lot of the press and commentary about analytics, you could be forgiven for thinking that these techniques were only usable for customer-facing work. Improving sales and marketing? Yes, you want analytics, using Big Data about your customers. But there are plenty of internal and operational issues where analytics can also help to improve the way things are done, and reduce costs considerably. Human resources, for example, can benefit hugely from the application of analytics techniques.
Let’s just consider recruitment, one of the most important aspects of the HR role. It is vital to get the right people into the organisation. If pressed, however, most recruiters will admit that techniques remain a bit ‘hit and miss’. Even interviews—pretty much the gold standard—are not all that predictive of job performance. Managing the relationship between hiring manager and recruiter or HR team member can be a challenge in itself. In one survey, 80% of recruiters said that they had a good understanding of the job position, but 61% of hiring managers said that their recruiters only had moderate levels of understanding. That is a serious mismatch.
Analytics, however, can help. By looking at performance in the first two years’ post-recruitment, for example, one company realised that its recruitment procedures were looking for the wrong things in candidates. Examining which factors were correlated with success in the job enabled the company to change its recruitment processes and hire much more accurately. The change was so profound that the company saw a $4m improvement in sales revenues over the next period. In other words, the people they recruited were better able to do the job. They may well also have stayed longer, saving on future recruitment costs.
Analytics can also be used to improve other HR practices. While many pieces of HR data are fairly static—the results of the annual employee survey, for example—there are plenty of data available to help predict the answers to some big HR problems. For example, almost half the workforce, and 50% of millennials, say that burnout is encouraging them to look for another job. 95% of HR leaders are worried that burnout is affecting retention of employees. It is, therefore, important to try to identify those at risk of burnout, and help them before it becomes a real problem.
It turns out that it is possible to predict the risk of burnout fairly accurately by looking at four variables derived from email activity, including sending a lot of emails outside working hours and work flow being interrupted by email activity. By its very nature, data from email activity is constantly being updated, so any changes in working patterns will show up very quickly. Because they show actual activity, these data are likely to be more accurate than opinion surveys, and offer a genuine way to identify and resolve a major problem.
Social media data is a similarly rich and rapidly-updating source of information, both for existing employees and potential hires. Companies do need to be careful about falling foul of laws on personal data protection and privacy in using this type of data, but there is potential there.
Real-world improvements in HR practices
These examples, however, are perhaps the exception, rather than the norm. The majority of companies do not have thousands of employees, let alone the millions required for genuine ‘big data’ analytics. And most companies are still collecting annual data on employees. Rather than thinking in terms of ‘big data’, perhaps most HR teams need to do a little thinking ‘outside the box’ to help them become more data-driven, and to improve the quality of their data. For example, it may be helpful to ensure that measures of employee performance actually measure performance in a meaningful way.
Next steps for HR analytics
The importance of data quality may sound obvious. But a recent event on HR Analytics held in Riyadh demonstrated clearly that this is still the biggest issue holding back the use of analytical techniques in HR. The buzz from the event was fascinating, and it is clear that there is appetite in the Middle East region for using analytics techniques in HR.
Improving the data that they hold is vital, however, if HR departments and teams are to take advantage of the new techniques available. Small steps are likely to be the way forward, but as Neil Armstrong reminded us, small steps eventually add up to giant leaps.