A growing body of evidence points to the centrality of human capital management in driving superior business results.  And although most CEOs “get it” and regularly repeat the mantra that “people are our most important asset,” many HR departments find themselves unable to play a significant part in translating these words into reality. 

Some rely so heavily on benchmarking that they’re almost guaranteed to stay average. Others get too caught up in the flavor-of-the-month.  Many are so busy putting out fires and managing lots of “urgent” activities that they have no time for addressing what’s truly important.  And that annual employee engagement survey? Too often the only thing that comes out of it is a big data dump with no real impact.

As a result, HR frequently finds itself pigeonholed as non-strategic and even out-of-touch.

Does any of this sound like your organization? Why? What can you do to set your organization – and your HR department – on a new path? Most likely, the missing ingredient is using analytics.

In an era where business intelligence is an increasingly vital competitive advantage, ignoring HR analytics represents a lost opportunity and possibly a very real business risk.

Business intelligence is created by putting together disparate pieces of information for the purpose of creating actionable insights.  These insights help:

•    Take the unnecessary guesswork out of the “people side of the business”

•    Create a prioritized fact-base for your organization’s HR and learning and development strategies

•    Move your HR function beyond fire-fighting mode

 The figure below notes some of the types of disparate information that – when put together and statistically analyzed – create actionable business intelligence.   

The foundational building block for business intelligence on the people side of the business is a smarter employee survey (more on this next week).  By statistically linking a thoughtfully-constructed employee engagement survey (one that goes beyond traditional “engagement” or “satisfaction” surveys) to other key pieces of data – such as customer satisfaction measures, sales numbers, cost containment effectiveness, 360 degree feedback – it is possible to develop a human capital investment strategy based on analysis and facts.  Doing so eliminates the need to resort to expressions such as:  my guess is, we think that, our hope is, we feel that, etc.

This business intelligence can be used to solve burning business issues such as:

1.    Improving the effectiveness of the sales force

2.    Controlling costs

3.    Identifying the specific leadership competencies that drive better business results

4.    Reducing turnover in key positions

5.    Competing for employees whose skills are in high demand

 When you stop and think about it, it’s quite astonishing that the people side of the business – which is typically both an organization’s greatest asset and its largest cost – is all too often run by guesswork and intuition.  Leading-edge firms such as Google, IBM, and American Express are, however, changing that.  They are starting to use HR analytics (business intelligence) as a source of competitive advantage. This is an issue on which you don’t want to be a laggard!

_Laurie Bassi is CEO of McBassi and Company. Contact her at [email protected] or follow her on Twitter @goodcompanybook

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