Sep 27, 2010

How Companies are using Talent Analytics

Interesting article in the HBR on how organizations are using analytics to use employee data to better performance. Here are some examples:

What’s driving this shift to analytics? Certainly, companies today want more from their talent. That’s why some are reinventing a whole range of people practices: Netflix has tossed aside traditional HR absence policies, and Best Buy’s corporate office eschews standard work schedules. Analytics takes the guesswork out of fresh management approaches. At the same time, voluminous “digital trails” of data from knowledge management systems and social networks are now available for analysis. The public relations firm Ketchum, for example, analyzed personal networks in its London office to learn how easily information flowed across teams. Cognizant, a U.S.-based professional services firm with many employees in India, analyzed social media contributions, particularly blogs. It found that bloggers were more engaged and satisfied than others and performed about 10% better, on average.

Here’s how other organizations use analytics to improve their management of human capital:

•    Almost every company we’ve studied says it values employee engagement, but some—including Starbucks, Limited Brands, and Best Buy—can precisely identify the value of a 0.1% increase in engagement among employees at a particular store. At Best Buy, for example, that value is more than $100,000 in the store’s annual operating income.

•    Many companies favor job candidates with stellar academic records from prestigious schools—but AT&T and Google have established through quantitative analysis that a demonstrated ability to take initiative is a far better predictor of high performance on the job.

•    Employee attrition can be less of a problem when managers see it coming. Sprint has identified the factors that best foretell which employees will leave after a relatively short time. (Hint: Don’t expect a long tenure from someone who hasn’t signed up for the retirement program.)

•    Professional sports teams, with their outsize expenditures on talent, have been leading users of analytics. To protect its investments, the soccer team AC Milan created its own biomedical research unit. Drawing on some 60,000 data points for each player, the unit helps the team gauge players’ health and fitness and make contract decisions.