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Dave Foxall Human Capital Analytics Software Deployment Approach – Part 1

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 By Dave Foxall

Adopting the Right Approach for HR Analytics Software Success

By now it's well-established that human capital analytics (HCA) technology is the next phase in the measurement of an organization's human resources. Indeed, human capital analytics applications mark a build-out from HR reports and metrics that are lagging; to the use of truly future-oriented predictive data that can drive an organization's strategic people decisions by answering (among others) questions such as:

  • Is our human capital being managed effectively (i.e. where are our problem areas)?
  • Where should investments in our talent go (e.g. compensation, learning, recruitment, etc.)?
  • Are there acceptable talent costs we can benchmark against other organizations our size?
  • Are there key employees or groups we cannot afford to lose?
  • What human capital trends are happening right now?
  • What trends can be forecasted—and what are their business implications to our company?
  • What interventions have (or will have) the greatest impact on workforce performance?
  • Are there levers to be pulled that will get us to peak human capital effectiveness and efficiency?

Human Capital Analytics software, either as a standalone best-of-breed solution or as part of a broader HRMS, can transform an organization's strategic decision-making; providing C-suite executives and line of business decision makers with critical HR business intelligence (BI). A recent McBassi & Co. article, Raging Debates in HR Analytics summarized Human Capital Analytics applications' utility succinctly; stating "HR analytics holds the promise of both elevating the status of the HR profession and serving as a source of competitive advantage for organizations that put it to good use." The core question is, what does that "good use" look like?

Most analysts, pundits, and customers would agree that the answer to our last question is that human capital analytics software alone is not enough; rather, effective use boils down to two major success factors. First, organizations must consider how best to leverage that Human Capital Analytics technology; taking note that maximizing software usage means managing the changes in process and approach that are inevitably required by the shift that an analytics focus can bring. The other driving success factor for HR analytics applications has to do with talent management; having the right people with the right analytical skills driving and operating the program. This article (part one) takes a look at the process side of analytics, the basic stages of analysis, and potential data sources. Part two will cover the different types of analytical talent and their potential deployment opportunities and patterns.

Human Capital Analytics Technology: Tailoring the Approach

The basic human capital analytics process is a consistent one (i.e. establish facts, establish reasons, and develop predictions and/or courses of action); however, the depth and complexity of that approach will (and should) vary depending on an organization's objectives, timeframe and budget. The 2010 Accenture report, Human Capital Analytics, identifies various levels of approach according to sought-after results; citing that "Scorecards and comparative analyses enable companies to get fact-based insights. Diagnostics and action plans help organizations to diagnose and to act—to move forward with as much analytic rigor as possible. Forecasting and optimization tools help companies refine their action plans by looking into the future." Organizations that are early on the Human Capital Analytics software journey will likely identify a single scenario to work through as a stand-alone project; involving limited personnel and treating the measurement situation as a pilot or test bed. Likewise, organizations with more mature analytics strategies (which are more closely aligned with overall business strategies) will likely be leveraging a complex array of situations that require considerable effort to be put forth for monitoring, reporting and adjustment.

Human Capital Analytics Technology: Defining the Process

To embed the analytics philosophy (and consequent HR analytics software use), an organization should be able to iterate a clear and consistent methodology which can be easily adopted and understood by the workforce. Based on past research, Accenture suggests that this methodology should follow a basic, 3-phase approach which can be adapted for use regardless of company size or sector.

Phase 1: Identify the human capital question to be answered – the business problem or question must be properly defined. Accenture emphasizes: "It may seem obvious that an analytics program depends on having a discrete problem to analyze, but organizations are often surprisingly vague at this stage, defining a problem that is either too limited or too diffuse." Precise, actionable results depend on a precisely-articulated issue.

Phase 2: Data requirements and planning – multiple data sources broaden both the scope and accuracy of the analytics, allowing patterns to be identified and connections to be made among multiple data sets.

Phase 3: Collection and analysis – this is the execution of the plan identified above. This is the phase in which Human Capital Analytics software can demonstrate its value, but only if the earlier phases have been completed with the end in mind.

Human Capital Analytics Technology: Managing the Data

An effective HR analytics and metrics approach that utilizes the HR analytics software rather than being driven by it, will source data from both structured and unstructured routes. Structured data is information likely already contained within an organization's human resource management system (e.g. demographics, compensation, skills & training, performance, etc.); whereas less structured and qualitative data can be found (and thusly factored into the final analysis scenario) through avenues such as employee and customer feedback, interview data, analyst reports, and social networks. Various business intelligence systems can monitor and update these data streams and run the gamut from standalone customer relationship management (CRM) software to wide-reaching fully-integrated Enterprise Resource Planning (ERP) application suites. The key is to capture all necessary data that will be used in developing current and future-state scenarios.

Leveraging Human Capital Analytics Software – Part 1 Final Thoughts

For an organization aiming to maximize the return-on-investment (ROI) for its human capital analytics software investment, a consistent methodology that is applied to the required level (and draws upon necessary data sources) provides foundation and context. The second Human Capital Analytics Deployment article examines how effective talent management can impact an analytics initiative. End

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"HR analytics holds the promise of both elevating the status of the HR profession and serving as a source of competitive advantage for organizations that put it to good use." The core question is, what does that "good use" look like?


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