Human Capital Analytics the Smart Way

March 16, 2020

Human Capital Analytics the Smart Way

Human resources is not a numbers industry. It deals with people: relationships, operations, and company growth that comes through interaction. But over the years, HR has improved its use of data, taking advantage of new technologies to dive deeper into the numbers that define a truly healthy team.

What is your current turnover? By how much can you expect to improve it this year? How satisfied are employees? How effective are your HR policies? How are team members performing?

These are all questions that can be explored and answered with the help of data and analytics. Human capital analytics (HCA) is the use of predictive analytics in an HR department to obtain a pulse on, and improve, employee performance for better planning, attracting, retaining, supporting, and engaging top talent. Deloitte thinks of the HR leader leveraging HCA as a new type of economist managing and allocating for a business the scarce resource of talent.

The Application of HCA for HR Leaders

  • Collect relevant data on human capital
  • Analyze and interpret data to reveal trends and root causes
  • Build a data-based business case for new HR initiatives
  • Make more strategic HR decisions and problem-solve
  • Demonstrate value

But this big responsibility thrust upon HR leaders—gathering, analyzing, interpreting, and putting to good use large amounts of data—is a responsibility that we can’t afford to mismanage. Human Capital Analytics the smart way means delivering clear, high-quality, relevant, and timely analysis to key leaders. It means paying attention to the product features that successfully push analytics messages forward and the factors that generate demand among pivotal leaders to further understand and use those analytics for the betterment of the organization.

This is what John Boudreau, Senior Research Scientist and Professor Emeritus at University of Southern California Marshall School of Business, argues for in the use of his LAMP framework. It’s the result of Boudreau and his colleague questioning the slow progress of analytics in human resources despite the impressive explosion of tools and data available to us. He also saw consistent evidence, as we’ve all seen, that better talent management means better business performance. So why are we unable to make the most of data and tools to drive performance for our companies? It could be because we’re going about HCA the wrong way.

The LAMP framework is a method that helps HR professionals use, apply, and share human capital metrics with their organization in the best way possible.

The LAMP Framework

  • Logic: Make the right connections between talent and strategic success and find the predictors of individual and organizational behavior.
  • Analytics: Use the right tools and methods to transform data into practical insights that reveal causation, not just association.
  • Measures: Get the right data (accurate and system-generated) for analytics input to ensure your numbers, and resulting decisions, have a good foundation.
  • Process: Take the right communication approach in timing, channels, and tactics to share data with decision-makers and make an impact.

And process, in this LAMP approach, shouldn’t be overlooked. Boudreau underscored the importance of considering decision-makers’ needs when receiving the fruits of HCA labors from HR and other organizational leaders. That means thinking about when and where analytics are presented (sharing in the right time and the context for digesting insights), how the value of analytics are conveyed (demonstrating analytics credibility, real-world applications, and worth), and why these analytics are something they need in their decision-making process to begin with (showing the benefits of using the data in their actions).

Anna Tavis, Clinical Associate Professor and Academic Director of Human Capital Management at NYU School of Professional Studies, also frequently speaks about the importance of analytics and digital technology in HR. In her recent article on people analytics, she says “data and digital are telling the untold story of people, teams, and organizations and helping turn insights into action.”

And a new wave of professionals are ready and excited to explore this nuanced story more deeply through analytics tools. Tavis says that CTOs, too, are now key HR allies in changing how organizations behave, and that “technologically savvy and behaviorally curious quants and tech entrepreneurs” are also stepping in to challenge the “traditional tenets of HR from outside the profession”—something that will change the way we use technologies and the data they help us collect and interpret.

All HR leaders should tap into the power of human capital analytics but do so in a way that avoids pulling numbers together just for the sake of it. Think about how your HCA efforts fit into the LAMP method. Are you making the right connections, using the right tools, gathering the right data, and taking the right approach to communicating the value of your hard work with those numbers?

If you’re looking to improve human capital, you can always get help from your peers and the talented thought leaders in your space. Join the conversation by becoming a member of EN. Get in touch today to learn more.

Sources:

  1. Human Capital Analytics: Thinking Like an Economist, Deloitte
  2. HR Must Make People Analytics More User-Friendly, Harvard Business Review
  3. What is HR Analytics?, AIHR

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