14 Mar. 2014 | Comments (0) Share Follow @Conferenceboard
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“What gets measured, gets managed.”
Organizing and executing a cohesive, ongoing human capital analytics initiative in an organization is no easy task. It is not for the faint of heart. If it is done effectively, HR will drive strategic and operating decisions that will continuously improve business performance. If it is done poorly, HR jeopardizes its influence with operations, other functional heads, and the COO and CEO. So, the stakes are quite high.
Given human capital analytics significant potential, how should such an initiative be assessed to determine its likelihood of success? It starts with examining the readiness of the organization to embrace the concept. The essential factors that determine such readiness include culture, alignment, data systems, and resources.
The “culture” issue that plays a prominent role in how a company will embrace human capital analytics is the extent to which there is a top-down, organizational commitment to business analytics. Is your organization a so-called metrics driven company? Is the analytics culture widespread throughout the organization? Are business decisions fact-based (data-driven) as opposed to opinion or gut-feeling based? Is there broad support for business analytics from the functional and operational areas of the business?
Is there a consensus and understanding across the entire organization on the business strategy and the measures necessary to monitor alignment? Has HR worked with each line of business to establish specific, mutually understood expectations for targeted outcomes? What does the organization need to modify from a human capital strategy perspective to effectively execute the business strategy?
The foundation of human capital metrics and analytics relies on data quality, reliability, integrity, and security. Here are some of the data and system questions that require satisfactory answers in order for HR to proceed with a comprehensive human capital analytics initiative:
• Is the core HRIS data accurate, complete, and up-to-date?
• Can necessary, accurate, and up-to-date data be provided by relevant HR service providers?
• Will HR have access to the financial data to calculate values and cross check HRIS data?
• Will HR have access to sales and marketing data to diagnose S&M factors driving performance?
• Will HR have access to operations/supply chain data to assess the factors driving performance?
• Will the IT function allocate the resources necessary to extract, compile, and integrate the data necessary to calculate the values and analyze the factors driving performance?
From the resources perspective, there are also questions demanding satisfactory responses. These are straightforward:
• Is the company prepared to allocate both financial and employee resources to execute a human capital analytics strategy?
• Has a budget been developed and approved that identifies the magnitude and timing of the investments required?
• Will staff be hired for or assigned to the initiative, or will the work be outsourced?
Here is an exercise to determine the readiness of your organization to embrace human capital analytics. For each of the above factors (culture, alignment, data systems, and resources) rate your company’s readiness on a scale of 1 to 10. Just use your best judgment. If you can’t rate each category with a 6 or higher, determine what it will take to bring it up at least to that level.
Finally, a successful human capital analytics initiative requires a team with a mix of analytical, consultative, and communication skills. In my next blog, we will profile the type of people and skill sets necessary to successfully implement a human capital analytics initiative.