A new report finds that less than half of surveyed organizations are adept at analyzing workforce data that can positively affect their bottom line. So what is HR's role in getting their organizations to embrace and utilize these metrics?
Is your organization a DPO or a DDO?
Being labeled data-proficient or data-deficient depends on how "intelligently" your organization handles talent-related data.
A recent report finds that only 43 percent of the about 600 organizations surveyed believe they are adept at analyzing workforce data -- qualifying them as "data-proficient" organizations. A higher number -- nearly half of those surveyed -- say their leaders are "dissatisfied" with the data provided to them, which likely means that theirs is a "data-deficient organization."
The Business Impact of Talent Intelligence -- released by Dublin, Calif.-based Taleo in conjunction with the Brooklyn, N.Y.-based Human Capital Institute -- also finds an "apparent positive correlation" between using talent-intelligence technology and several key financial-performance metrics.
"If you look at the stock-market difference [between identified DPOs and DDOs] during the course of our study, the DPO stock price went up 4.6 percent, while the DDO price went down 3 percent," says David Wilkins, Taleo's vice president of research.
"[T]alent intelligence is a driver of business success and an essential link between HR, business leadership and the human capital that drives our knowledge economy," he says.
The term "talent intelligence" encompasses "the capture, aggregation, analysis and timely reporting of talent data to inform decision-making for improved organizational strategic planning and operations," according to Taleo and HCI.
Wilkins says, "The digitized workplace of the 21st century produces incredible amounts of talent-related data. Those who take advantage of this can rapidly differentiate themselves and gain strategic advantages over organizations that disregard it."
But, he says, many organizations are missing out on those advantages "because [HR] can't provide the right data" to their business leaders.
"It's sort of reversed," he says. "We have access to the data that matters the least, and we lack access to data that matters the most."
He notes that, while 58 percent of those surveyed say that a strategic figure such as "competency skill gaps" is important to know, only 23 percent have reliable access to such a figure.
"That's a huge gap," he says. "And on the flip side, for something tactical -- such as open and vacant positions -- only 51 percent say it's important, but 72 percent have access to it.
"People seem to be continuing to overinvest in tactical HR data and underinvesting in strategic data," he says. "And the overarching story is that -- in every category of talent management, from identification to succession management -- that pattern held, where the most strategic and valued metrics were the ones people knew the least about."
Brian Levine, a partner in the human capital strategy business at New York-based Mercer, says he's not surprised by the Taleo report's findings.
"Too many organizations are not leveraging the rich workforce data tracked in their systems," he says, "but evidence-based decision-making is increasingly the norm for HR."
In order to make the most of talent intelligence, Levine says, HR needs to focus on "getting it right" and "telling the story."
"One thing that we've seen again and again is that simple relationships can mask important details," he says. "For example, that high performers are better paid seems to be a strong alignment, until further investigation shows that performance and pay are related only because each is driven by organizational tenure.
"At that point, consideration of the value of tenure would be in order," he says.
"A statistical modeling approach can ensure that a causal relationship between human capital factors is established before conclusions are reached and action is taken. HR analytics functions need to tap the right talent to validate high-risk decisions," he says.
Levine also advises focusing on a small set of metrics that hang together to tell a story that ensures organizations engage decision makers. Insight into how different aspects of human capital management work together to drive an outcome can validate the overall adoption of talent intelligence.
But, he cautions, "[t]oo many metrics can easily overwhelm."
In addition to being judicious in selecting the right metrics to tell a story, it's equally important to use the right tools, says John Schwarz, founder and CEO of Visier, a Vancouver, B.C.-based workforce analytics provider, which recently conducted a survey that found 90 percent of 150 U.S.-based employers say they use spreadsheets for some or most of their workforce analysis.
"Spreadsheets are subject to poor quality data, loss of version control and inconsistent interpretation," he says, adding that 30 percent of the respondents say they would benefit from easier-to-use analytics tools and 23 percent say they would benefit from an improved ability to interpret and present workforce data.
"HR leaders should take ownership of the most important and expensive asset of the corporation: its people," he says, "in the same context that the finance department manages the organization's capital assets."
And, in a world driven by talent, says Taleo's Wilkins, "increasingly, talent is the business. Just as we know about the machines we use and the facilities we are in, we have to get serious about the talent in our organizations."
"The data's out there," he says. "So, it's really just a question of will and vision to put the process together."