BENCHMARKING: More than a numbers game!

In 1988, Benchmarking became one of the world’s mostly widely talked about and used
measurement and management tools. 1988 was when we recognized the first winners of
the Malcolm Baldrige National Quality Award: Motorola, Globe Metallurgical Inc., and
Westinghouse Electric’s Nuclear Fuel Division. In subsequent years, Xerox, Fedex, IBM,
Cadillac, Milliken, Texas Instruments and The Ritz-Carlton all received the honor. They
all had one thing in common that set them apart from their competitors: they all used the
same measurement tool-Benchmarking- to dramatically improve customer service,
quality, reliability, and accuracy of their business processes. Companies around the world
all wanted to understand and implement Benchmarking as a means to achieving
competitive advantage. This same desire to compare our companies and their
performance exists today!

In those early days of Benchmarking, there were very few companies and fewer
individuals who had the expertise to effectively implement this new tool. All Baldrige
winners have the responsibility to teach anyone who wants to learn how they achievedtheir results. Desire to learn was soon replaced by the need to learn. As more companies
deployed benchmarking, their results led to breakthrough improvements. Back then there
were no benchmarking clearinghouses, no consortiums, no benchmarking exchanges, no
websites to log onto. In order to understand the what, how, and why of these award
winning and top performing companies, they had to talk to each other. They established
dialogues that provided a meaningful exchange of information. This exchange of
information lead us to ask more and more questions about how and why companies did
what they did to achieve their results. We were able to understand the practices and most
importantly, the context the practices lived within. Companies around the world used
Benchmarking to dramatically improve their business processes and achieve new levels
of competitive advantage.

Benchmarking is more than a numbers game!

Benchmarking has become a misused and misunderstood measurement tool. Today,
companies rely upon others to collect information from anyone interesting in submitting
it. The data is scrubbed and filtered, massaged and manipulated, and run through AI
tools. The end result is a number that provides little insight, no context, and has little
value. This number is then used by a company to make a decision that can have negative
consequences on the bottom-line, on quality, customer service, or employee inspiration.
Take the example of the “benchmark” for number of employees served by 1 HR FTE:

1:85. This number was provided by a well known HR consulting firm and published in
the August 2020 issue of a popular HR journal.
The unfortunate scenario that unfolds when a CEO sees this ratio will play out in far too
many companies. The CEO first asks their CHRO, “What is our ratio?” If the ratio is
lower, the directive is to cut staff. If the ratio is higher, the CHRO is questioned about
their function’s effectiveness: “What do other organizations get from HR that we don’t?”
The questions that should be asked by the CEO are:

  • What is the Value Discipline of these organizations and to what extent does HR
  • align with it?
  • What is the strategy of the business and how do these HR FTE’s contribute?
  • What is the Effectiveness Rating of these HR FTE’s?
  • Are the HR FTE’s seen as Business Partners or Administrators?
  • What impact are the HR Business Partners having across the company?
  • What do these HR FTE’s spend there time doing?
  • What is the ROI these organizations receive from HR?
  • What is the financial performance of these companies?
  • Does the performance of these HR organizations exceed your own?

Not one of these questions can be answered by the ratio 1:85. The only way to answer
these questions is to use comparative Analytics about these companies that are
performing at the level you want your HR organization to perform at. Once these
questions are answered, it may prove that this ratio has no significance to your HR
Strategy or service delivery.

Benchmarking is more than a numbers game!

Metrics and ratios do play role in Analytics and Benchmarking. Metrics are best used in
the Benchmarking process as result measure. Metrics should be used to determine if the
results achieved by another company are more successful or effective than your own
results. If another company is achieving a result that exceeds your own, then the
opportunity to understand the what, how, and why of their practice or process forms
the basis of the Benchmarking study. The metric is not the driver of change. The
practice or process that produces the desired level of performance is the driver of
change. Comparing your metric to someone else’s metric is NOT benchmarking.

Benchmarking is:

a continuous, systematic process for evaluating the products, services and work processes of organizations that are recognized as representing best practices for the purpose of organizational improvement.

The Benchmarking Book by Michael Spendolini

The proper deployment of the Benchmarking process can make significant and dramatic
improvements in organizational performance. Emergency medical teams benchmark pit
crews at the Indianapolis Speedway. To ensure that Benchmarking does produce the
breakthrough results that top performing company’s experience, I offer the following
suggestions:

  • Use your business strategy to determine the need for change, not a comparison of metrics. Do what’s right for your business, your customers, and your employees.
  • Analyze, document, and measure your process before you engage in dialogue with a potential partner. If you don’t know the results of your own practice or process, you can’t set goals for improvement, and you can’t determine who is performing at the level you need or want to.
  • Choose your partners wisely. Don’t let someone else choose them for you. Staying within an industry or segment can limit your thinking and contribute to the “best of a bad lot” comparison.
  • Be prepared to provide something your partner will value in exchange for their participation in your Benchmarking study. Treat them like valued customers, they may be.
  • Adapt the “best practices” of other companies, don’t try to adopt them. Just because it works for them, doesn’t mean it will work for you. Most practices are not plug and play.
  • Following the teachings of the GOAT, Coach John R. Wooden: “The willingness to win is not as important as the willingness to prepare to win.” Preparation improves learning.

Benchmarking is a measurement and management tool that has the potential to enable
breakthrough thinking for an organization.

Einstein was right,

the significant problems that we face cannot be solved with the level of thinking that was used to create them.

As has been outlined here, Benchmarking is NOT simply the comparison of metrics
across a group of companies. It requires thoughtful preparation, discipline, tenacity, and
an open mind.

Benchmarking is more than a numbers game!

For more information on HR Analytics and Benchmarking, contact Brian Lowenthal, Managing
Partner, Lion Valley HR Solutions, brian@LionValleySolutions.com or 216.533.7465.

Taking Your Seat in The Room Where It Happens

Brian Lowenthal

As an advisor to HR executives, I think about the present VUCA world we must all learn to

operate within. I was curious if the past could give me insight on how I need to be today, to help ensure a better future. I went back 10 years to see what HR experts and advisors had been recommending for HR. I was not surprised at one recommendation that has continued to be suggested over this 10 year period .The recommendation was that for HR executives to be valuable contributors to their organizations success, they need to “be in the room where it happens”, and they have to bring data as their voice!

The currency for HR today is Data – driven with analytics to support Human Capital decisions.

This is so important for organizations today, that the SEC is now requiring companies to begin, as of October 1, 2020, reporting Human Capital metrics. The rationale for this decision and the current requirements can be found in an article by David Vance that appeared in Chief Learning Officer magazine, parts of which are reprinted here:

“The U.S. Securities and Exchange Commission just published its final rule on human capital reporting on Aug. 26.The rule mandates, for the first time, public reporting of human capital metrics by companies subject to SEC reporting requirements, which includes all U.S. companies issuing stocks, bonds or derivatives.

Today, companies have to report only one human capital metric: number of employees. The new rule will still require reporting the number of employees, but it also encourages companies to report the number of full-time, part-time and temporary employees as well as independent contractors and contingent workers if they are material to an understanding of the company’s business. “Material” means anything that an investor would want to know before buying or selling a stock, bond or derivative.

More important, the new rule mandates, for the first time, that a company provides, “to the extent such disclosure is material to an understanding of the registrant’s business taken as a whole, a description of a registrant’s human capital resources, including any human capital measures or objectives that the registrant focuses on in managing the business.” The SEC goes on to specifically call out the three areas of “attraction, development and retention of personnel as non-exclusive examples of subjects that may be material, depending on the registrant’s business and workforce.”

SEC Chair Jay Clayton commented in the public release, “I cannot remember engaging with a high-quality, lasting company that did not focus on attracting, developing and enhancing its people. To the extent those efforts have a material impact on their performance, I believe investors benefit from understanding the drivers of that performance.”

In other words, the SEC expects to see these three areas discussed and measures reported if they are material, and it is hard to imagine companies where they are not. Consequently, public companies will need to start disclosing and commenting on them beginning with results released in October, 2020.

And this is just the starting point. The rule calls for all material matters to be disclosed so each company will need to decide what other human capital matters might be considered material by an investor. Depending on a company’s particular situation, this might include total workforce cost or productivity, diversity (especially at the leadership level) and culture (revealed by employee engagement and leadership surveys). Discussion may also be required about the implementation of a new performance management system or a significant change in compensation and benefit philosophy.

Where can companies get guidance on specific metrics they might use to meet the new rule? We suggest starting with the 2018 recommendations by the International Organization for Standardization, which include 10 metrics for public reporting by all organizations and an additional 13 for reporting by large organizations. ISO also recommends 36 other metrics for internal reporting. These are organized by area or cluster. Here are the recommended metrics for the three SEC focus areas recommended for all organizations:

  • Attraction: Time to fill vacant position, time to fill critical vacant positions, percentage of
  • Positions filled internally, percentage of critical positions filled internally
  • Development: Development and training cost, percentage of employees who have completed
  • Training on compliance and ethics
  • Retention: Turnover rate

Publication of the final rule by the SEC ushers in a new era of transparency in human capital which will fundamentally change the way organizations operate. And these changes will go far beyond U.S. publicly traded companies. In five to 10 years, privately held companies, nonprofits and other types of organizations will be compelled (or shamed) into adopting the same level of transparency.”

In the future world of human capital transparency:

  1. What investor will buy stock in a company that .refuses to disclose material human capital information, which is already the primary driver of value in many companies?
  2. What employee will go to work for an organization that refuses to share its key human capital metrics when the only reason for refusal is because they are embarrassed to share?
  3. Why would anyone work for an organization where the culture is terrible, where they don’t invest in you, where turnover is high and where there are not enough employees to do the work?

The new world of human capital transparency is here.

Legislation should not be the primary reason to begin using data-driven analytics to support your Human Capital decisions. In my experience, organizations that use workforce analytics have the most engaged workforces, cultures of high character, high levels of customer retention, they outpace their competitors by a wide margin and they thrive in the VUCA world.

Every Human Resources organization must use analytics to ensure that they have a seat in the room where it happens AND that their voice is heard. HR practitioners will learn to ask not just how many, but — more importantly — ask why. You will uncover workforce insights; help ensure HR is strategically aligned to the business; and proactively create better business outcomes. You will cover the full critical thinking cycle from the what, to the so what, to the now what.

The now what is to focus your time and resources on these first 5 steps:

  1. Be sure you are clear on our organization’s strategy? What type of work needs to be done and how can you become more productive and competitive in accomplishing it?
  2. Determine how you put the right number of people in the right roles without simply reducing headcount to reduce costs?
  3. Determine if your employees fully engaged and inspired? What is expected from them and how can HR help them meet those expectations?
  4. Determine what must change? How can you share insights and innovations that allow your employees to be even more productive?
  5. Craft an HR Balanced Scorecard to begin to organize your data and monitor your performance. Develop a partnership with Finance and IT to ensure you have all the right inputs into the Scorecard.

For questions or guidance on how to get started, I can be reached at

Brian@LionValleySolutions.com or 216.533.7465

How New SEC Disclosure Rules Impact CHROs and CFOs

This article was jointly written by Russell Klosk, Strategy Principal Director at Accenture, and Ian Cook, VP People Analytics of Visier.

On August 26th, the U.S. Securities and Exchange Commission (SEC) adopted a broad set of amendments to the disclosure requirements under Regulation S-K. This has the net effect of forcing companies listed on US Exchanges or doing business with the federal government to state if they view Human Capital as: (a) material to their operations, and (b) if so to place value to the people in their employ. 

What this means in practical terms is that CHROs with strong people analytics teams will continue to drive success, while we can expect more rigor from CFOs in how they budget and regard talent. Organizations that do not have these capabilities will struggle and will have to quickly catch up.

What are the expanded human capital disclosure requirements?

This amendment elevates people to their rightful place as a core driver of business success, and further places the CHRO as a key strategic driver of how the business executes its business strategy.   

So what does the amendment actually say? It states that organizations must now:

“include, as a disclosure topic, human capital resources, including any human capital measures or objectives that management focuses on in managing the business, to the extent such disclosures would be material to an understanding of the registrant’s business, such as, depending on the nature of the registrant’s business and workforce, measures or objectives that address the attraction, development, and retention of personnel…”

In support of these changes, Jay Clayton, the Chairman of the SEC stated: “I am particularly supportive of the increased focus on human capital disclosures, which for various industries and companies can be an important driver of long-term value.” 

The new disclosure requirements come into force on October 1st. Reporting requirements are expected beginning in January 2021 and aligned with a companies fiscal calendar and existing reporting structure. 

What is clear is that the SEC is demanding the disclosure of far more detail than overall headcount, cost of labor, or sales per employee.

What is not yet clear is if a holistic view of the value of human capital is required or if the SEC is only seeking a view of direct labor. In practical terms, reported or not, the better companies can understand the full value of their talent strategy, inclusive of direct, contingent and indirect (outsourced and SOW) labor the more effectively they can empower operations and drive benefit from how resources are deployed. 

Forward looking organizations will not just look toward compliance, but also toward driving direct business benefit from the additional data they will now be looking at.   

Ensure you’re not relying on the wrong tools

The change in disclosure requirements should drive a whole new set of investment priorities for the CHRO, their tech stack, and their teams. 

The first reality is that relying on spreadsheets to perform, share, and persist information reported to the SEC will not suffice. The “source of truth” for information disclosed in quarterly reports to the SEC needs a good deal of rigor behind it as inaccurate or incomplete reporting can result in both direct and indirect penalties.  

This is not an exercise for spreadsheets that are stored on a network, and only one or two people know about and know how to operate. Any auditor will immediately question this practice and highlight the unnecessary risks to which it is exposing the organization. 

In addition, the CHRO will not be able to rely on their HRIS as a historical source. For one thing HRIS’ systems are notoriously bad at storing historical data in a way that makes it easy to retrieve. This is the reason why most HRIS systems can only provide charts and reports on end of period measures. They cannot show trends and changes overtime because they don’t have the architecture and tooling to create consistent calculations overtime, handling things like changes in hierarchy or job names.

Although a lot of investment has gone into moving HRIS systems into the cloud and improving the user interface, this phase of “transformation” has done little to truly enable more advanced analytics and to empower the CHRO to answer the business questions which really matter to CEOs, the Board, and investors.

Game on people analytics

People analytics is consistently a top three priority for many organizations, but despite the focus few have made the necessary investments to actually drive meaningful results. Those who have taken action and built out their people analytics capabilities are in good shape, and when tied to leading Talent Strategy and advanced Strategic Workforce Planning these organizations typically realize measurable competitive advantage in the market.

Investments in people analytics technology, teams who can make good use of it, and change management to enable data-driven talent decisions all the way down to line managers produces real and quantifiable results. This has created capabilities for the CHRO and the business which leaders have been asking for consistently for decades. (An informal survey of people analytics leaders indicated a high level of confidence that they were well prepared to respond to these new rules. Some were already engaged in Board level conversations).

Those who have delayed their investments in people analytics, deciding instead to manage with spreadsheets, or standard reporting engines tied to their core systems, or who have delayed progress until their HRIS vendor releases sufficient capability, will now find they have a crucial HR technology gap to fill.

The new SEC disclosure requirement is not a set list of clearly defined measures that need to be reported. They expressly chose to stay away from a “one-size-fits-all” set of standards, which every organization can easily follow and present. Instead, they require the reporting of human capital measures that are “material to an understanding of the registrant’s business.” This makes the process of reporting, explaining, and updating the information shared with the SEC far more complex than other regulatory reporting.

For example EEO-1 or I-9 compliance reporting has a standard format and list of measures. The SEC has taken the opposite stance leaving each organization to report what they view as “material” to their business.  Understanding whether or not a measure is “material” will require the data and skillsets that can link people practices to organizational outcomes. This is where people analytics teams with the right technology are vital.

In practical terms, there is no one-size-fits-all answer to this question across an entire companies workforce. The value of your sales team is different from your back office functions, which is different than your operations teams, etc.  Careful and deliberate thought is going to need to be paid in creating the metrics for these values.  The good news is once the work is done the reporting is straightforward, and again the real value is not in compliance but what else can be done with the views being created.    

Let’s walk through the example of absence rates. This is the percent of time that employees are absent from work due to illness, etc. For organizations with an hourly or shift-based workforce, absences have a “material” affect on their labor costs. Absences generate overtime, overtime increases the cost of production, and, if not well managed, this impacts the margins achieved by the business. However, for organizations with high volumes of knowledge workers, where production is not measured hourly, absence does not have the same material impact. It does not necessarily generate overtime, so does not impact production costs and may or may not impact overall production deadlines. 

In lieu of specific guidance from the SEC, organizations will need to either build their own capabilities or engage with consulting firms to form a clear and well articulated opinion about what they will disclose and what these numbers mean for their business. Whether you build in-house capabilities or work with a consulting partner you will need the technology that assembles data from multiple sources and allows for the exploration of linkages between people and costs, risks or revenue.

With the first reporting deadline imminent, every organization will need to have this capability on hand fast.

Wait and see is not an option

When the right direction is unclear it is most common for organizations to wait and see what others do before taking action themselves. In this situation, inaction will be opening up your organization to significant legal and financial risk.

Some of this risk does comes from the SEC as a regulator, but most will come from investors who now have expectations on the information that will be disclosed to them about the organization in which they have invested. It is no accident that Blackrock, a Fortune 500 investment company, was named as part of the SEC’s press release. The driving force behind this change is the institutional investment groups, who want to make better investment decisions based on a perspective of the business which includes the people. These groups are the ones more likely to drive and shape the type and extent of human capital disclosures that become the norm.

Talking this through with some legal friends we came up with the following scenarios:

1. An organization chooses to disclose nothing at the first or second reporting deadline.

The likely response from the institutional investors is to either discount your stock or downgrade their guidance. The assumption is that the reporting organization does not have a good handle on its human capital risks, and opportunities because it has reported nothing. Therefore, buying the stock becomes riskier than previous guidance indicated.

2. An organization has a people related event come to light and its stock loses 2-5% in value. 

The institutional investors chose to launch a lawsuit against the organization. Their case is based on the fact that the people-related events were risks that were, or should have been, known to the organization. The lack of disclosure of a “material” human capital risk means the reporting organization could be liable for the money that the investors have lost due to the drop in the value of their investments. 

The costs associated with either of these scenarios far outweigh the level of investment that would be required to stand up a strong people analytics practice, including people and technology. The level of investment required is a small fraction of what it has been costing to upgrade the core transactional HR systems, and yet the value returned is far greater.

People analytics is a NOW priority

Much has changed during 2020 and the effects of these changes will be felt for a long time to come. When this level of disruption hits organizations, it brings with it the imperative to reset overall goals and investment plans.

People analytics has moved to the front of the line for any CHRO that needs to re-align their people to new business models and staffing plans. The new SEC disclosure rules have increased the urgency with which the people and technology need to be in place to support the big reset of work and meet the required reporting deadlines.

A version of this article first appeared on LinkedIn.

10 Reasons To Shift To A Data-Driven High Business Impact HR Mode

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The latest survey from the prestigious Conference Board ranks Human Capital as the #1 challenge facing global CEOs.  At first glance, senior HR executives might take that top ranking as a positive thing. However, that would be a mistake because Human Capital was classified as a strategic challenge (not an asset) and it has, unfortunately, remained the number one CEO issue for the last four years running.  As a result of being the top challenge for such a long period of time, it is clear that CEOs and board members fully understand the value of Human Capital, but they have also learned to expect a higher rate of strategic change than most HR functions have been able to deliver.  In order to move from this “list of challenges” to the “corporate asset list,” I have found that HR and its key functions like recruiting, retention and learning must move to dramatically increase their measurable business impacts by adopting analytics and data-driven decision-making.

Unfortunately, a study by AICPA revealed that only 12% of CEO’s were confident with Human Capital metrics.  HR Can’t Become A High Business Impact Function Unless It Adds Analytic Capabilities  

One of the best ways to find out how to become more strategic is to analyze the characteristics of other well respected and better-funded high business impact functions.  If you analyze functions like finance, supply chain, CRM, IT, and marketing you will find common key drivers of success. They include: data-driven analytical decision-making, having everything digital and connected, showing in dollars how their actions directly impact strategic business goals, continuous improvement measures and being forward-looking.  

10 Reasons To Shift To A Data-Driven High Business Impact HR Model  

1. Analytics allow HR and its functions to measure and then increase its business impacts.  

For decades, HR has been satisfied with being “aligned” with corporate goals. However, in the highly competitive corporate world, CEOs now expect even overhead functions to directly impact key corporate goals including revenue, productivity, innovation, and market share.  Fortunately, when everything in HR is digital, prioritized and managed with data, HR can show where and how much it directly impacts strategic business goals. For example, by designing more effective recruiting, employee retention and reward systems, HR can directly increase the revenue of the sales group. Everyone knows that the Holy Grail of business success is increasing corporate profits. So it is encouraging that a recent study by the Harvard Business Review group found that advanced user firms that “most effectively managed their workforce using analytics” improved their firm’s profit by as much as 65%.  

2. Analytics allow HR and its functions to increase workforce productivity  

Of all the strategic business goals, HR is unambiguously responsible for just one: increasing the productivity of the workforce.  By first requiring the output of each mission-critical job to be quantified, HR can then utilize analytics to identify the factors that directly increase productivity in each key job family (i.e. motivators, development approaches, rewards and management actions). Working with the CFO’s office, HR can also quantify the dollar impact of any increase in productivity as a result of, for example, better quality hires.   

3. Analytics allow HR and its functions to contribute to an increase in corporate speed and adaptability.  

In a rapidly changing and volatile VUCA world, businesses can only succeed if they are fast and adapt quickly. HR can make a contribution to that effort by utilizing analytics to develop a hiring process that selects individuals with these two key skill sets.  Analytics can also be used to improve development and training processes in order to increase the speed and adaptability of current workers. Data can also alert managers on the appropriate ratio of employees to contingent workers so that the workforce can be flexible and rapidly adapt to the changing levels of business growth.  And finally, when HR demonstrates through its data-driven actions that we can increase organizational speed and therefore decrease a product’s time-to-market, everyone will recognize us as a corporate leader.   HR can make a contribution…by utilizing analytics to develop a hiring process that selects individuals with these two key skill sets  

4. Analytics allow HR and its functions to contribute to increasing corporate innovation  

If you look at the most valuable global firms by market cap (e.g. Apple, Google, Microsoft, Amazon, and Facebook) you’ll find that the one success factor that they share is serial innovation. As a result, increasing innovation is frequently a strategic corporate goal.  Analytics can help HR increase its contribution in this critical area by designing recruiting systems that effectively attract the best innovators. Analytics can also reveal the workplace factors like serendipitous interactions that directly increase collaboration and innovation among current employees. Data can also help HR to dramatically improve the retention of its innovators.   Analytics can help HR…[design] recruiting systems that effectively attract the best innovators  Data visualization showing the talent acquisition pipeline trends  

5. Data allows HR and its functions to more effectively influence managers  

One of the most difficult problems in traditional Talent Management is how to get managers to follow HR’s advice and protocols. Fortunately, executives and managers are almost always fanatical about numbers. So numbers and dollars (i.e. the language of business) can be used to influence them and to change their behavior.  As Google has found, “The best thing about using data to influence managers is… it’s hard for them to contest it.” For example, you could get managers to listen more if you sold them that by improving their quality of hire by 10% that the revenue generated by their team would go up as much as $250,000 a year.  Quantifying the impact this way would instantly get most hiring managers to devote more effort to recruiting. Since CFO’s also love analytics, incorporating them into your plans and new program proposals will increase the likelihood that HR will get more funding from the CFO. The best thing about using data to influence managers is… it’s hard for them to contest it  

6. Predictive analytics prepare managers and HR for the future  

The most impactful component of data-driven decision-making is the ability to predict trends and upcoming problems or opportunities in Talent Management.  Trends and data provide HR with an opportunity to stop guessing about the future. Data alerts you about shifts in historical talent patterns at your firm, which patterns will remain steady and which ones will dramatically change in the future. This forward-looking information can reduce risks by alerting decision-makers about upcoming problems, while there is still time to prevent or mitigate them.     

7. Analytics allows HR to prioritize and funnel resources into the highest business impact areas  

HR data will reveal which individual HR programs have the highest business impacts. With that information, HR leaders can more accurately allocate their HR budget and staff into the programs with the maximum impact. Data can also help HR identify the jobs, teams, and business units that, when provided with top talent, have the highest impact on corporate goals.   

8. Analytics helps HR leaders discover which of their existing programs and tools are working and which ones are not. 

Analytics also allow you to assess the effectiveness of new programs. With its own ROI ratios, HR can also compare the effectiveness of its programs against those in competing functions like finance, marketing and IT. Under the analytics model, HR will also require all new talent programs to utilize data-driven decision-making and to include performance metrics and current and predictive analytics.     

9. Analytics will identify the hidden causes of problems  

You can’t really improve a problem area unless you know the root causes of the problem. HR must go beyond its current “what happened metrics” (i.e. our turnover is 12%) and begin gathering why metrics,” (i.e. 85% left because of bad managers). Knowing the root causes will enable HR to better understand what causes each people management problem. Knowing the underlying causes can save a great deal of time and money because you can avoid “wrong direction solutions” that don’t address the real underlying causes.  

10. Data will increase hiring and recruiting efficiency  

Research by the prestigious Boston Consulting Group found that the recruiting function had the highest impact on both corporate revenues and profit. As a result, it makes sense to apply analytics in this area. First, realize that firms like Google have used data and correlations to better refine their hiring criteria. By dropping criteria that don’t predict, firms can dramatically improve the performance and the retention of new hires. Recruiting data can also identify the sources that produce the highest quality of hires (e.g. referrals from top-performing employees) and even which interview questions don’t predict new hire success (e.g. brainteaser questions).  And finally, by multiplying the percent improvement in new hire performance by the annual average revenue per employee number, the recruiting function at large corporations can assign a multimillion dollar amount to their business impact.  

Years ago, the business world shifted to what is now called big data (an approach that relies on analytics to improve every aspect of business decision-making). And the time is long overdue for HR and each of its functions to also make the shift to its own form of data-driven decision making.  To begin with, shifting to this new model will allow HR to more effectively interact and share data with all other business functions. By freely being able to share data, HR will better be able to understand their needs and to provide improved service to all other business functions.  In addition, the widespread use of analytics will allow HR to understand the underlying root causes of talent problems and the factors that make effective people management programs work. With this knowledge, HR will have an improved capability to design new talent programs and processes that will measurably increase productivity, innovation, and revenue.  Throughout the HR world, very few VP’s of HR or HR thought leaders doubted that this shift to analytics would occur.

 The only remaining question is: “What are you waiting for?