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HRA Max Effective
HRA Max Effective
HRA Max Effective
Effectiveness of HR Analytics
to Drive Business Outcomes
By Scott Mondore, Siiane Douti^itt and Marisa Carson, Strategic Management Decisions
The topic of HR analytics has been given a lot of press lately—and rightfully so. It affords HR
leaders an opportunity to show the direct impact of their processes and initiatives on business
outcomes. Unfortunately, as with many concepts that were once new to HR (e.g. engagement,
quality circles, etc.), the definitions and process details associated with doing analytics the right
way have not been well-articulated.
W
e will help remedy this by taking Chief financial officers (CFOs) do the same
you through a step-by-step pro- thing when they produce financial forecasts
What HR Analytics
cess of conducting HR analytics or conduct a cost/benefit analysis. The goal is Is Not
for maximum impact and effectiveness, to understand the past and present to predict
while making sure that we give you the the future, basing these assessments on facts It is also important to try to put a halt to some
details, via case studies, to get it done right. and data. Therefore, the idea, for example, of the misconceptions about analytics before
We will clearly articulate a step-by-step pro- that employees' attitudes can be scientifically HR leaders go down those paths. HR analyt-
cess for making these connections so that and rationally related to tangible business ics is not the following:
HR can clearly articulate a business-case outcomes is not ridiculous. In fact, based on
and show the business impact of its invest- our experience with organizations of all sizes,
ments—like other departments/functions it is quite feasible—and in this age of intense Efficiency Metrics/Scorecards
within organizations. competition, failing to discover the cause- For some, HR analytics have come down to
effect drivers hidden in your employee-related tracking more efficiency metrics around HR
Specifically, we will focus on process analytics data could be quite dangerous to your busi- activities. There is nothing wrong with mea-
that focus on conducting cause-effect analyt- ness's long-term viability. suring time-to-hire as an HR efficiency metric,
ics on individual HR processes, and but it likely does not excite your CEO—
integrated analytics that focus on pulling unless you have shown the direct connection
multiple HR processes together to tackle
strategic issues such as succession planning.
The Benefits of between time-to-hire and the quality of peo-
ple that are hired. Yet many just track it
Analytics anyway and call it analytics. Tracking effi-
We define HR analytics as demonstrating the ciency metrics on a big HR scorecard is
direct impact of people data on important Let's consider the benefits of HR departments important, but call it what it is—a scorecard.
business outcomes, but landing on a proper making an investment in stronger analytics. More metrics and a scorecard do not show
definition of HR analytics is less important business value and do not mean much outside
than using the process to affect the overall 1. They can redirect the money they spend of HR. More data collection does not equal
role of HR in an organization. The reality is today on the wrong employee initiatives analytics, it just means more collection.
that organizations already spend significant to more beneficial employee initiatives.
dollars on employees. The problem isn't that Specifically, those initiatives that impact
senior executives are not willing to invest in critical business metrics and outcomes Alignment
people. The problem is that those invest- instead of the latest un-quantified HR leaders often say that they are aligned to
ments: 1) lack data to justify their worth, HR fads that promise to make employees the business. They should be. In fact, it would
2) use the wrong data, or 3) produce unquan- happier, more engaged and satisfied. be strange if what HR was doing was com-
tifiable returns. pletely disconnected from the line-of-business
2. The investments that they decide to make (LOB) that it was supporting. If the sales
The HR function can implement a practical that focus on employees will result in tan- function is hiring, then HR should be helping
approach to help executives make the right gible outcomes that benefit shareholders, the sales function hire people. That's align-
investments based on effective analysis and customers and employees themselves. ment. No analyses are needed, nor does it
practical initiatives. Yes, there is the need for show a cause-effect relationship with
advanced statistical knowledge, but for the 3. The returns on such investments, via their
increased sales to say that you are aligned.
most part, the process is fairly straightfor- impact on the top and/or bottom lines,
ward. Today, the types of analytics required can be quantified.
to discover the drivers of tangible business 4. HR departments can be held accountable Gap Analysis
outcomes are frequently used in different set- for impacting the bottom-line the same Showing gaps between survey scores between
tings. For example, banks use predictive way business or product leaders are held two different departments is a way of analyz-
models to assess consumer and commercial accountable. ing data. Demonstrating improvements from
credit risk. Market researchers utilize cus- year-to-year is also an interesting perspective.
tomer demographics to predict buying 5. HR executives will be included in the However, if we aren't showing the business
liehaviors. These approaches make an edu- conversation, because they can now quan- impact of that gap, then all we are doing is
cated, predictive assessment based on facts tify their numerous impacts on business ranking departments on scores—i.e., looking
and data. outcomes. at data. >
k
to three priorities and build action plans
around those priorities. Measure progress
1 Quality against those plans two to three more times,
and then re-calculate the dataset linkages
Item-Level Quality Drivers: ^v^,^^ and re-prioritize.
• Service and quality in my department are not ^^*^k
compromised due to insufficient staffing
• My coworkers are committed to quality ^01^'
HCAHPS 1 HR Process Analytics
Case Study: Employee
1 Safety
Item-Levei Safety Driver:
* 1 feei safe at work (building, parking lot)
r Opinion Surveys
Employee engagement/satisfaction/commit-
ment is not a business outcome, but it can be
a driver of business outcomes. HR analytics
will allow you to link the survey data that you
collect to important business results and then
focus your initiatives on those key areas that
drive results. The key questions to ask at each
is necessary. Using structural equations mod-
eling affords us the ability to determine, for Step 5: Build the step in the Business Partner RoadMap" (see
page 23) are as follows:
example, whether employee attitudes about
work-life balance are a cause-and-effect
Program and Execute 1. On what outcomes/metrics are the senior
driver of increased customer satisfaction. Create interventions that will have the desired leaders in this organization most focused?
This implied cause-effect relationship is effect. At this action-planning stage you can
important for understanding how these dif- 2. Who owns the specific data/metrics that
focus activities at the systemic, organization- senior leaders are focused? How do 1
ferent measures relate to each other as well wide, line of business or work-unit level. The
as for calculating an expected return-on- connect with those individuals to obtain
big opportunity is that the investments focus the data?
investment for the initiatives. on those employee processes/skills/attitudes/
demographics, that have been shown to have 3. Are the important business data/metrics
The statistical component of this step accom- a direct impact on the organization's desired collected at the appropriate level for me
plishes three things: business outcomes—and not just an assumed to make apples-to-apples comparisons
impact or a feeling that it is the right thing to (i.e. department level/district level)?
1. Understanding the relationship between
do. An expected return will now be used to
employee initiatives, skills, behaviors, 4. Do I have the statistical capabilities in-
guide the HR strategy, and initiatives must be
attitudes and meaningful business out- house or do I need to look at a university
customized and placed in the context of each
comes. or consulting firm to help me analyze the
unique organization.
2. Prioritizing types of interventions (i.e., data?
determine where to spend time, money). 5. Based on the linkage analysis, what is the
3. Calculating expected ROI to determine
Step 6: Measure and highest priority/ROI project that I should
levels of investments and returns . Ad j ust/Re-prioritize execute first?
6. How do I assess the change that has
This work is designed to allow you to deter- In the last step, re-measure to assess progress occurred and make adjustments to maxi-
mine your HR priorities and how much to and calculate actual return-on-investment. mize effectiveness?
invest in them. Thefinalresult generated from Business leaders understand the importance
the data analysis step is a list of priorities that of goal setting and measurement. They also We had the opportunity to help Baptist
have data and analysis behind them to ensure understand the importance of creating a Health Care analyze their employee survey
an impact on the business. It will also show culture of measurement and accountability. data to make it business-focused. Due to the
which initiatives are not having their desired Like other organizational decisions, leaders healthcare reform law, a patient survey
impact(s) and could be candidates for cost- should make slight adjustments to initiatives known as HCAHPS (Hospital Consumer
cutting. along the way based on regular measure- Assessment of Health Providers and Systems
survey) has become a critical business out-
come with important financial implications
for the organization. The organization typi-
Employee engagement/satisfaction/commitment is cally viewed their employee survey as a way
to gauge their level of engagement, which is
not a business oucome, but it can be a driver... common in many organizations. However,
they needed new tools to improve HCAHPS
• Leadership
^H strategy and key H stakeholder ratings ^M exercise ^ | Development
leader would want to get the word out to his ^H business metrics H of performance
^M • Calibrate ratings
^H Program can
or her people and brag about the outcomes ^M and potential ^M inciude:
^M - Link people ^M distributions
the outcomes that people have achieved as a ^H assessments ^M • Analytics may I . Create customized • " Executive
^ 1 (competencies. ^M eliminate Ready ^M Assessments
result of his or her actions. ^B performance. ^B Now's from the ^B eve opmeti ^ ^ (personaiity.
attitude surveys) pool and may 360, experience)
to business uncover overlooked
investments based - Action Learning
metrics Ready Now's
Monitor • Focus on people • Reveals strengths
on performance
and potential
Teams focused
business issues
The bottom-left quadrant of the HeatMap is assessments that and gaps across
• Map plans - Group Learning
drive business the talent pool
called Monitor, because the survey categories against current
outcomes career pathing - Individual
• Assess Talent
that land here represent areas of weakness for Pool Health
Coaching
irti
" • '
Scott Mondore, Ph.D., is currently a
M*