The Top 10 Reasons Why Need To Shift To A Data-driven HR Model

You can find part one of this blog, here.
There are many reasons why you need to immediately begin making the shift towards data-driven decision-making; the top 10 most important reasons are listed below.

1. Predictive analytics prepare you for the future


The most important component of database decision-making is the ability to predict trends and upcoming problems/opportunities in talent management. Trends and data will provide you with an opportunity to stop guessing about the future and instead routinely make informed, more accurate decisions about what is likely to happen in the future. Data will alert you about shifts in historical talent patterns at your firm, which patterns will remain steady and which ones will dramatically change in the future. This information can let decision-makers know when and where their current HR approaches need to change.

2. Numbers and data are the most effective way to influence managers and executives


One of the most difficult problems in talent management is how to get managers to follow HR advice and protocols. Fortunately, executives and managers are almost always fanatical about numbers, so data can be used to influence them and to change their behavior. As Google has found, “The best thing about using data to influence managers is… it’s hard for them to contest it” and “For most people, just knowing that information causes them to change their conduct.” Since a great deal of people management work is done by managers, it’s essential that they are directly provided with whatever numbers and data that have been proven to make them more compliant and effective. Since CFO’s love metrics also, incorporating them into your plans and new program proposals will increase the likelihood that you will get more executive support and funding. Working with the CFO to convert all of your talent management results into their “dollar impact on revenue” will make it easy to compare your business impacts to those of other more visible business functions. If you report the ROI of individual talent programs, you will also be able to compare their effectiveness to the programs from other business functions.

3. Data allows you to find out if existing approaches are working


Metrics can help HR leaders see which of their existing programs and tools are working and which ones are not (so that you can stop using them or fix them). Analytics also allow you to assess the effectiveness of new programs. You should require all new talent programs to utilize data-driven decision-making, and to include analytics and performance metrics. If you do, both program leaders and executives will be able to quickly see the effectiveness of existing and new HR programs.

4. Data can identify the hidden causes of problems


You can’t really improve weak performing programs unless you know the critical success factors that make them effective. If HR goes beyond typical “what happened metrics” and gathers what I call “Why or root cause metrics”, it can use data identify the hidden or “root causes” of HR problems. I have found that not knowing the root causes of problems and specifically “why” new programs work can dramatically reduce your credibility with executives when they go into “solution mode”.

5. Data helps you accurately funnel resources into those high business impact areas


Once your data reveals the highest business impact programs and which ones in that group are not working, you can more accurately allocate your HR budget and staff to the areas where they can have the highest impact and ROI. Obviously you can then put the most effort and resources into the factors that have the most impact on improving the performance of key programs.

6. Continuous improvement and lower error rates are possible


Data is the best driver of continuous improvement. This fact is illustrated by the classic HP slogan “You can’t improve what you don’t measure… and generally… whatever you measure… improves”. The stark reality is that revealing under-performance data has the effect of forcing leaders to realize that there is still room for improvement. Because data also highlight process errors, the use and distribution of data reports will dramatically decrease the number of major errors (i.e. bad hires, preventable turnover, delayed terminations, etc.) and weak decisions within the talent management function.

7. Data can speed up and increase the consistency of talent decisions


One of the major problems in talent management is inconsistency in different parts of a large organization. However, if you periodically gather and report data on best practices and “what works”, you’re much more likely to get more consistent and accurate people management decision-making across your organization. And because most data reports are in electronic form, it’ll be much faster and easier for decision-makers everywhere to have access to accurate and up-to-date information.

8. Employees can also benefit from metrics


Top performing employees demand that you keep score with numbers (champions always keep score and they love accountability). Under a data based approach, employees will have to suffer through fewer “surprises” because their performance level, successes and errors will be measured and reported to them continuously.

9. An opportunity to be strategic


The definition of being strategic includes being forward-looking and impacting business goals. So implementing predictive analytics and database decision-making can demonstrate to executives that you are acting strategically by forecasting, assessing risk and preparing for the future. Because strategic analytics are predictive and reveal business impacts, they make it more likely that elements of the HR plan will be integrated into the overall strategic business plan.

10. Database decision-making can directly increase profit


The Holy Grail of business success is increasing corporate profits. Fortunately, a recent study by the Harvard Business Review group found that advanced user firms that most effectively managed their workforce using analytics improved their firm’s profit by as much as 65%. Working with the CFO’s office, it is possible to quantify the dollar impact that HR

Final Thoughts

Perhaps you entered HR because you preferred “interactions with people” over numbers and data, but like it or not, that era is ending fast. You may also be surprised to learn that relying on the well-used excuse “But we’re different in Australia” won’t work either, because this is a global shift. If you don’t believe that this shift to a data-driven approach is inevitable, I encourage you to visit the business functions of supply chain, CRM, market research, advertising and finance in order to see what percentage of their strategic decisions are made utilizing hard data. It won’t take you long to learn that HR is a laggard. So “welcome to the future” where statistical correlations, charts, graphs, trendlines, big and little data and predictive alerts will forever replace “I think” and “I believe” answers in people management decision-making.

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