But HR adoption must accelerate in order to deliver potential value.
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By Frank Costanzo, SVP, Caliper
“Talent is now the most scarce and valuable commodity on earth, so companies that really understand how to attract, retain, and manage people will win,” noted Josh Bersin, principal and founder of Bersin by Deloitte, Deloitte Consulting LLP, Nov. 4, 2014, in “The People Analytics Market Heats Up With New Cloud Offerings.”
It is undeniable that the demand for talent has been picking up for the last four to five years. As of December 2015, the unemployment rate was 5 percent, which is half the 10 percent unemployment rate we experienced in 2009. At the same time, the balance of power has been shifting steadily from the employer to the employee. But that’s not all. Employees are becoming much more mobile and willing to work on a project or consulting basis, which has compounded the challenges associated with hiring, engaging, and retaining employees.
The talent landscape within corporations also has been changing rapidly. Baby Boomers are retiring at a rate of 10,000 per day, and Millennials are stepping in to scoop up these positions—however, on their own terms. This frequently means having expectations for rapid promotions and a desire to stay in a role for a much shorter time. Flexible work arrangements are becoming more popular and required.
How has this trend affected managers and leaders? Basically, this has resulted in less control, more variables, more unknowns, more risk, and, in general, a constantly shifting environment in which to operate. Future business projections being made by business leaders are becoming more challenging and less certain. As a result, managers and business leaders are forced to rely on the bench strength and stability generated by diverse teams.
Through the thoughtful assembly and diversification of teams, managers and business leaders are able to bring some consistency and balance, which can increase the odds for success. To accomplish this, a team leader must be able to confidently identify the strengths of each person on his or her team and capitalize on these strengths while understanding how to focus and challenge each person. Team leaders also must do the same for potential new hires and new additions to their teams from other departments or divisions.
HR’s Role
How are HR departments responding to and addressing this challenging environment? Part of the answer can be found through the use of workforce and people analytics. By analyzing the skills, abilities, certification, and personality traits of your current talent and then combining that information with demographic, economic, and industry statistics, you can make data-driven decisions related to hiring, employee development, retention, and team selection to ensure that your business is successful now and in the future.
“HR and People Analytics have the potential to transform the way organizations hire, develop, and manage people,” notes Jason Geller, principal, Deloitte Consulting LLP in “Managing Talent Costs with Talent Analytics Technology,” Deloitte CFO Journal.
“Leading organizations are already using talent analytics to understand what motivates employees and what makes them stay or leave. These insights help drive increased returns from talent investments, with huge consequences for the business as a whole,” he adds.
Although People Analytics has the potential to deliver significant value to an organization, the adoption by HR professionals has been slower than expected, perhaps as a result of some factors including:
The perception that HR teams may not yet be staffed with individuals who are fluent in the collection, aggregation, comparison, and analysis of various datasets. Additional training may be required around the skills needed to translate People Analytics into decision-making insight. At the same time, some People Analytics solutions are designed specifically for non-technical leaders in order to empower them with critical human capital insights and real-time analysis.
Although the range of People Analytics solutions has increased rapidly, many may not be aware that these solutions vary widely, and, therefore, complexity and ease of implementation vary widely, as well.
There may be a perception that People Analytics will require a lengthy implementation process with significant IT resources. Meanwhile, some applications can be implemented in a few days, not months, without the need for IT resources.
Concerns regarding limited access to appropriate data required to power People Analytics solutions also may be causing some hesitation regarding their implementation. Clean, current data are required to generate the best results, and a combination of internal and external data can lead to some unexpected conclusions and recommendations. At the same time, highly targeted data, selected to answer specific ongoing questions, such as data required for team analysis and prediction of success, can be efficiently collected by many advanced People Analytics providers.
Analyzing Challenges
For those utilizing People Analytics platforms, there is a tremendous response. People Analytics is not limited to just comparing candidates for selection, but organizations also can use these types of tools to help analyze and answer some more complex challenges such as:
Rapidly assessing and analyzing hundreds of candidates for an entry-level positions and predicting the potential fit for future positions.
Career path and bench strength analysis for existing teams.
Comparison of a recently promoted senior leader to their new teams or predicting the fit of a potential manager with various teams.
Identification of high-potential candidates for specialized emerging leader programs.
Analysis and development of precise onboarding programs based on results of People Analytics analysis.
Assembling innovation teams with a proper mix of not only strategically focused individuals but also those who can facilitate, implement, and execute.
Mining existing talent pools (full-time, part-time, and contractors) for people who can fit a wide range of positions. People Analytics plays a critical role by allowing managers to compare individuals to a wide range of future positions and predict the potential for success.
People Analytics is here to stay. We are convinced that we are at the very beginning of what will be a long and productive People Analytics journey. Many of the current challenges and barriers will be overcome rapidly, and HR’s adoption of People Analytics will accelerate as the big questions are answered and we experience the tremendous advantages that can be produced.
Frank Costanzo is SVP at Caliper, a pioneer in talent assessment and consulting for more than 50 years. It has conducted more than 3.5 million assessments for 30,000-plus companies. Its product line features Caliper Analytics, a predictive data-driven tool for talent planning that enables companies to quickly map the strengths and weaknesses of managers and view the results in an easy-to-interpret manner.