Using Anayltics in HR | TheRBLGroup ©2010 1

Using Analytics in HR

KEITH LAWRENCE & JOE GROCHOWSKI THE RBL INSTITUTE | MINI FORUM WHITE PAPER | SEPTEMBER 2010

Participating RBL Institute Members:

Linda Brown, Accenture | Mark Green, Applied Materials | Rick Vanasse, Bon Secours

Mohammad Al-Sharhan, EQUATE | Debi Hirshlag, Flextronics | Allison Spoonmore, Eli Lilly

“The powerful measures of the finance, marketing and operations ‘decision sciences’ evolved in predictable ways. The lessons

from these other disciplines show how HR measurement must evolve to achieve significant influence. The key is that HR mea-

sures must enhance decisions about the organization’s human capital. Those decisions occur not only within the HR function,

but significantly beyond the HR function.”

–John Boudreau, Ph.D. (USC)

Our Premise: Innovative HR functions and compa-

nies are increasingly using analytics to drive better

decision-making regarding people and the organiza-

tion. Not only does analytics enable HR to better evaluate the

effectiveness of its work, but it also equips HR business part-

ners with sound, data-based insights that can drive improved

decisions and better business performance. This capability

enables a firm to apply the same rigor it uses with invest-

ments in products, services, or equipment to its people.

KEY QUESTIONS COVERED

• How are you using analytics in HR?

• What challenges or roadblocks have you experienced

around the use of analytics in HR and how are you address-

ing them?

• What new organization capabilities are required in HR to

effectively use analytics?

• Where do you see future opportunities for the use of analyt-

ics by HR and the business?

• What would be your single word of wisdom to others re-

garding the journey of HR analytics?

KEY INSIGHTS FROM THE DISCUSSION

1. Significant success is being seen across many companies

in applying HR analytics not only to improve the HR func-

tion’s products and services but also to drive better people

decisions and bottom line results.

2. Building HR analytical capability is a multiple year journey

that encompasses many aspects of the organization (such

as information systems, data cleanup, roles and responsi-

bilities, skills, etc.) and requires strong leadership support

for ongoing investment of time and talent to achieve its full

impact.

3. Forward looking analytics can equip HR leaders with pro-

found new knowledge that will significantly increase their

influence and impact on the employee experience as well

as their company’s long-term success.

WHAT ARE ANALYTICS?

HR analytics is the ‘decision science’ of applying analytical,

quantitative, and diagnostic skills and tools to organization

data in an effort to create new knowledge, proactively influ-

ence the future and dramatically improve business results.

It enables companies to predict the value of investments in

RBL Institute

Using Anayltics in HR | TheRBLGroup ©2010 2

people and subsequently get more from its pool of talent. Ana-

lytics links Human Capital issues directly to business success.

It includes leveraging data to improve a company’s ability to

attract, develop, engage and retain great talent.

As Tom Davenport, Professor at Babson College, notes, “Ana-

lytics, statistics, and fact-based decisions are not new to busi-

ness. They were important and provided value, but were often

marginal to the business. With firms that compete on analytics,

the capability moves to center stage in organizational perfor-

mance.” Below is a graphic which illustrates the evolution of

analytics and how increasing business value will come from

analytics when organizations can truly optimize the wealth of

data they posses.

As this illustration shows, organization data analysis is

moving beyond extracting data, running standard backward

looking reports and comparing benchmarks to influencing

decisions based on correlations, causation and simulating

‘what’s possible.’

BENEFITS REALIZED

Much of what Human Resources does today is driven by

experience, hunches, or other factors such as:

• External Requirements - ‘The law tells us we must’.

• Fashion - ‘ The gurus all say.’

• Fad - ‘ Benchmark companies all do.’

The number of exciting examples of companies moving be-

yond this by applying sound, strategic thinking (‘This is what

will drive our success’) is growing exponentially. We’ve high-

lighted some comments from participants on the call around

analytics in HR and also included some external examples

from other well-known organizations.

Accenture (which is heavily driven by data) is seeing $1 mil-

lion in savings this year through its efforts, and is expecting

$5 million to be realized over the next two years. Significant

strides have been made in workforce optimization. They are

moving beyond the fundamentals of HR analytics and looking

at analytics in a vacuum. They are concentrating on seeing a

more holistic, ‘bigger story’ that will grow their business and

that of their clients.

WHAT ARE ANALYTICS? (SOURCE: TOM DAVENPORT – BABSON COLLEGE)

 

Modified from

a chart by Keith Collins of SA

S

Using Anayltics in HR | TheRBLGroup ©2010 3

Applied Materials is applying a systemic approach to looking

at organization data in more digestible ways to increase

employee engagement and reduce regrettable turnover. They

are creating a Strategic Work Force Plan (SWFP). It will bring

together the business plan, external market trends, skill

requirements/needs, etc. to help them better manage the

significant business cycles their industry experiences.

Bon Secours has nine years of experience in penetrating what

drives employee engagement and the employee value propo-

sition. They are identifying direct bottom line correlations to

their patients and physicians. They are looking to expand the

scope of their work to encompass the local communities by

tapping into the recent work Gallup has done on Well Being

(which interestingly has a direct connection to Dave Ulrich’s

recent work on meaning in The Why of Work).

Cognizant analyzed who contributed to their social media and

discovered that bloggers were more engaged and satisfied,

resulting in, on average, 10% better performance than their

peers.

Disney identified through extensive analysis of customer satis-

faction that ‘street sweepers’ were one of their most important

employee groups. These individuals are called upon by visi-

tors to help them in their ‘time of need’ (providing directions,

dealing with personal issues, etc.). By providing the right

training (how to be cheerful and answer questions), the right

incentives (the freedom to stop sweeping) Disney found they

could create more ‘delightful encounters’ with their guests.

EQUATE is a petrochemical company with a solid apprecia-

tion for numbers. It has applied Six Sigma to several HR work

processes such as speeding up recruiting and resolving em-

ployee issues. Data has been mined to be sure that there are

no discriminatory practices (adverse impact) on any specific

group of employees. It is developing a model to predict how

the workforce will change over the next five years based on

business growth, demographics, etc. This is helping them

decide what talent they need to hire now to be sure sufficient

numbers of skilled resources are available in the future.

While Flextronics is in ‘the teenage years’ on HR analytics

they have made significant strides in studying HR service ef-

fectiveness and leveraging organization data to better under-

stand employee engagement. They have identified what kinds

of background (skills, capabilities, etc.) will predict success

within their sales organization. It has also applied concepts

from lean manufacturing to streamlining its office processes.

New efforts are underway on workforce planning, developing

better leaders and in identifying where HR can help drive both

top and bottom line growth in the future.

Jet Blue has created a ‘crewmember net promoter score’ that

monitors employee engagement and predicts financial perfor-

mance. They measure an employee’s willingness to recom-

mend the company as a great place to work.

Google’s Project Oxygen (named because good management

keeps the company alive) is looking to identify the attributes

of successful managers. It also can identify what employees

are struggling and can proactively intervene to help improve

their performance.

Eli Lilly has invested in building HR analytical capability to

better inform leaders about where its resources are and how

to more effectively focus them. It is enabling integrated man-

agement of resources globally and improving the effectiveness

of its talent management systems.

Sprint has identified the key factors that best predict which

employees will leave early on their career.

Sysco has improved the retention rate of its delivery as-

sociates from 65% to 85% by frequently tracking employee

satisfaction scores and making immediate interventions if

they begin to dip.

Many firms (P&G, Google, AT&T, etc.) have long used analyses

of external labor markets to identify the most fertile grounds

to recruit new talent (‘who is most likely to join, stay and suc-

ceed?’).

CHALLENGES ALONG THE JOURNEY

Organizations who have pioneered the use of HR analytics

have discovered that there are a number of challenges that

one will face as they build this new analytics capability.

1. Disparate, ad hoc systems: not having consistent, en-

terprise-wide processes to easily collect and use data. This

includes poor coordination between financial, operational

and HR reporting activities.

Using Anayltics in HR | TheRBLGroup ©2010 4

2. Bad or late data: having poor quality data, limited histori-

cal information to support analysis, or information that is

‘backward looking’ or only available well ‘after the fact’.

3. Lack of a few, clear metrics: trying to measure every-

thing (much of which is not business relevant), unclear and

agreed to standard definitions. Much of today’s information

is static and ‘reports the news’ versus providing HR the

ability to ‘see around the corner’ and provide more accurate

forecasting of the future.

4. Data analysis skills: having the proper expertise to ask

the right questions, gather the right information, run the

appropriate modeling and complete sound analysis. Human

related issues are hard to measure by nature and caution

must be used in rushing to conclusions (like satisfaction

with one’s pay).

5. Taking action: either due to lack of skills, time or other

factors some organizations have struggled with implement-

ing changes in response to the data that is collected.

6. Leadership understanding and support: the mea-

surement of people related matters is seen as soft and not

directly related to growing the business.

7. Privacy and security: concerns related to protecting

critical employee and organization information.

Several companies have found benefit in overcoming these

challenges and accelerating their progress by learning from

and reapplying approaches from other functions who routinely

use data in their work (such as Finance or Consumer Research)

HR ANALYTICS PATH

To use a phrase coined by Tom Davenport, “competing on

analytics” is a journey or series of stages. Every company has

to start somewhere and understand how to move from one

stage to the next (as the illustration below shows which is

based on data from 32 Fortune 500 companies).

STAGES OF ANALYTICAL COMPETITION (SOURCE: TOM DAVENPORT – BABSON COLLEGE)

 

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In our discussion with members we found similar stages. We

highlight three key phases that most companies experience

on the journey of HR analytics.

PHASE ONE - GETTING THE DATA:

THE BASICS

1. Defining the right data needs. This begins with chang-

ing how we look at data. For example we need to elevate

our look at organization data into ‘slices that matter’. The

critical few business relevant metrics must be identified

and agreed to by both HR and senior line leadership. Their

support for what has been selected is essential to success.

This step includes gaining agreement to standard defini-

tions for each metric across the company.

2. Building the data system. Many companies are

investing heavily in SAP, Workdays, etc. to create a single,

enterprise-wide information system to collect organization

data. This is a pre requisite to being able to easily access

real-time data to be able to do reporting and analysis.

3. Creating the supporting infrastructure. Sufficient

resources need to be put into place to maintain the infor-

mation system and the quality of the data over time. As part

of their HR transformation, most companies are creating

small Centers of Excellence where skilled resources can

access and analyze the data. Google has a people analyt-

ics department with a staff of 30 researchers, analysts and

consultants. At P&G a Customer Data Board of representa-

tives from every business unit and HR operations was put

into place to proactively manage and improve the HRIS

over time.

Clarifying everyone’s role in organization data management

(including employee self service) is important to ensure that

people are spending their time in the right way. For example

while HR business partners should have a fundamental under-

standing of data they should leverage the HR Analytics COE

to work directly with the line to minimize distractions to their

primary focus on strategic HR related work.

PHASE TWO - REPORTING THE DATA

1. Extracting and Reporting Data. Most technology solu-

tions include dashboards and data mining tools that allow

meaningful key factor data to be gathered and reported to

the various stakeholders. The HR resources charged with

this task must have broad business understanding and be

able to communicate effectively with line leaders. They

must seek to understand the real business issue so the

right questions are asked and the correct data is collected

and analyzed.

2. Benchmarking Data. Comparisons of performance ver-

sus other organizations (either other operations inside the

firm or different companies) can accelerate sharing of best

practices and stimulate faster change.

PHASE THREE - LEVERAGING THE DATA

With the critical investments having been made in getting a

robust enterprise-wide information system and data reporting

capability in place the true benefits of HR analytics can now

be realized.

1. Identifying Opportunities. This entails identifying

clear hypotheses about possible high leverage opportuni-

ties, such as ‘Our attrition among new employees is being

caused by poor coaching by their immediate supervisor.’

2. Applying Analysis. There are numerous statistical tools

that can be employed to identify correlations and drive new

insights into what really drives improved results. Selecting

the right one is critical to be sure the proper conclusions

are drawn from the data.

3. Developing New Approaches. From the deeper under-

standing of root causes of performance more predictive

models can be created.

4. Influencing Decision Making. Armed with this pro-

found new knowledge HR can partner with line leaders

to make more informed, better decisions about where to

invest in the organization.

ADDITIONAL RESOURCES

In addition to the experience of The RBL Group and its mem-

ber companies there are several other examples of companies

and expert resources on HR analytics. Other firms who are

lead thinkers in this space include Best Buy, Google, Sears,

Disney, Starbucks, Sysco and SAS to name a few. Individuals

who are pioneering thinks include John Boudreau, Dr. Jac

Fitz-enz, and Tom Davenport.

Using Anayltics in HR | TheRBLGroup ©2010 6

CONCLUDING THOUGHTS

In summary each participant on the call was asked to provide

a ‘golden nugget’ concerning the journey of leveraging HR

analytics to drive the business:

1. Really understand what the customer truly needs to drive

the work we do.

2. Focus on the critical few high leverage areas.

3. Ensure simple and consistent metrics.

4. Remember analytics is only of value if it is driving towards

a business outcome or decision.

5. Have the right people talking to the business.

6. Be sure the right data and analytics are used.