Analyst Perspectives

Human capital analytics is an area increasingly under discussion in businesses today as the linkages between employee performance and company success become increasingly clear, as do the roles analytics can play in maximizing that success. This intensified interest in analytics coincides with major changes in the processes of hiring, engaging, retaining and optimizing talent in the enterprise. It also reflects the impact of technology innovations such as cloud computing, the business use of mobile devices, social media and location-based information that offer new options for interacting with human capital and deploying relevant analytics.

These trends are reflected in several benchmarks we completed in 2012 that I outlined are part of our research agenda in human capital management. Our next-generation business intelligence benchmark research showed that 53 percent of companies are currently deploying or plan to deploy tablet computers to their analytics environment, while 60 percent of companies are deploying smartphones. Further, our next-generation workforce management benchmark research showed that the second most important technology to help improve operations and performance of the workforce was analytics, and 61 percent of companies are planning to invest in improving their workforce analytics capabilities.

This expanding use of human capital analytics stems from increased attention to performance management in human resources departments, particularly because of the light it can shed on employment and talent management processes. Lacking the right analytics capabilities, many HR-led performance management initiatives fail to live up to their potential. Companies have found that they measure the wrong things, or measure things in the wrong way, resulting in unintended and often negative consequences. That’s because business decisions almost always must be made in the context of limited resources, and virtually every important decision requires tradeoffs, such as salary against experience, for example. Analytics can point out these tradeoffs and provide guidance, facilitating the best choices and ensuring that the actions of individuals in all business units align with the company’s overall objectives.

Executives and managers need guidance on how to select the measures most useful for them to take, and need information about best practices and common mistakes in choosing human capital measures, metrics and key indicators. They also need reliable advice about integrating historical and predictive analytics into systems and processes so they can make better use of existing investments and plan new ones including the how big data might play a role to better understand information about the entire workforce. Having the right measures and metrics for human capital processes is essential because they enable good managers to make better decisions faster and more consistently. This dictum is just as true for new technologies in human capital management, such as social media, which has become important in the recruiting process of most companies. Our benchmark research on social collaboration for human capital management showed quality of hire, cultural fit and candidate experience were the most important metrics companies wanted to use when assessing the value of their social media investment.

Analytics can work in conjunction with existing systems for talent management, learning, workforce management and human resources management to integrate them into the larger framework of human capital management. To understand how to approach these tasks and devise a comprehensive strategy, organizations need an in-depth understanding of the options available and the information technology requirements of each. But many prospective buyers lack an understanding of best practices and functional requirements for human capital analytics, and they often are unaware of deficiencies in their own software and data environment.

We are launching a benchmark research program on human capital analytics in this first quarter of the year. This research will identify, explore and quantify the ways in which organizations use human capital analytics. It will investigate what types of organizations are interested in making investments in analytics to improve their human capital management, why they are interested, who will make the purchase decision and in what time frame, and what selection criteria they use. It will explore the perceived value of more effective analytics processes, and it will assess the maturity of the analytics and the measures, metrics and indicators they use for human resources and administration. Ultimately, it will produce guidance in selecting the right analytics and identify best practices for using them with particular processes and related technologies.

Our human capital analytics benchmark research also will explore in detail how departments can improve their performance in this area, and thus benefit the company overall. It will examine the current means of access to and use of metrics and indicators for human capital management processes. For our clients, the benchmark research will deliver detailed insights into the thinking of company management in the area of human capital analytics. We expect this research program to inform suppliers and buyers, educate the market, deliver opportunities and gauge the receptiveness of participants to new technologies and products.

As the results become available in coming months, I will share here on my blog some of the most interesting insights the research uncovers on organizations’ priorities, issues and key factors when evaluating human capital analytics market. I will also assess providers’ offerings to see how they are maturing and how well they meet the needs of a broad range of organizations of differing sizes and in specific industries. Keep an eye on this space in the coming months to see what our research uncovers!

Regards,

Stephan Millard

VP & Research Director