By Bruce Fern and Eric Lesser
While in recent years many companies have strengthened their analytics capabilities in areas such as marketing, supply chain and finance, far fewer have become adept in applying analytics to unravel elusive workforce dynamics such as turnover, employee engagement and productivity.
In fact, less than 20 percent of organizations report being able to apply predictive analytics to address important people issues. However, an increasing number of executives are realizing the power of talent analytics and its ability to challenge conventional wisdom, influence behavior, guide decision-making and, ultimately, impact business outcomes.
A new IBM Institute for Business Value study, Unlock the People Equation: Using Workforce Analytics to Drive Business Results, captured the insights of more than 40 executives with responsibility for workforce analytics in 15 industries.
Many of the executives emphasized the importance of applying workforce analytics to solve business problems through HR actions and interventions, such as identifying the best hiring sources or optimizing employee engagement. These problems ranged from reducing costs and transforming business models to enhancing customer experiences and increasing the level of innovation.
We learned that, while there are numerous similarities between workforce analytics efforts and successful analytic projects in other areas of the business, workforce analytics provides a host of unique challenges. For example:
- HR information systems have not received the same level of investment or attention as others in the organization, forcing companies to address a litany of data management, integration and visualization challenges. Without a basic level of trust regarding data quality, organizations find it difficult to take the “next step” towards applying more predictive types of analytics to HR data.
- Those who have historically dealt with talent management issues don’t have the same level of quantitative experience compared to other functions. While companies are continuing to build these analytic skills within their HR organizations, for many, this remains a work in progress.
- Talent-related data represents individuals, who, due to their motivations and actions, can be far more complex than commodities or consumer products. While data privacy and security issues are relevant in any analytics effort, they are particularly important when dealing with decisions that directly impact individuals.
Yet despite these challenges, workforce analytics has the potential to significantly shape policy and actions in organizations. It enables leaders to discern previously unconnected patterns and trends and develop an evidence-based perspective of vital workforce challenges and opportunities.
For example, a few organizations reported that they use analytics to identify the likelihood that certain individuals or groups may leave their jobs. A small number of companies also described the use of prescriptive modeling, which not only determines the potential for an action to occur – such as an individual leaving the organization – but also identifies potential remedies to that action.
Workforce analytics provides an opportunity to see the organization’s most valuable resources in a new, more revealing light and take advantage of previously hidden opportunities to drive better business outcomes. To learn more, download a copy of the report at www.ibm.com/business/value/peopleequation .