This post was originally published in the HR People + Strategy Blog: SHRM Executive Network in 2016. The content has aged well...
In Jim Collins' renowned book, Good to Great, he vividly brings to life the concept of the flywheel effect: the consistent pushing in a particular direction until enough turns are made, and enough momentum built such that the flywheel propels forward with great speed and fluidity. Collins notes that, "each turn of the flywheel builds upon work done earlier, compounding your investment of effort."
The flywheel effect, in my view, captures precisely the impact to be made from the smart and strategic application of people analytics in human resources. Against a backdrop of several turns of the evolutionary wheel in HR—from a transactional focus to multi-layered roles of the business partner—people analytics is that one-hundredth turn of the flywheel preceding unseen momentum. If negotiated properly, it will propel the field to an entirely different position of value, to the benefit of all sectors.
This work is not the latest bandwagon to be leaped upon. It is where math and technology join forces with the behavioral indicators that can reveal, and predict the degree of effective talent management within a business. Companies who use data to generate and arrive at credible business insights will make critical talent related decisions. If the overused mantra that "people are our greatest asset" is to mean anything at all, it is because the people analytics function is operating as the balance sheet—constantly identifying opportunities for stronger returns.
The broader population is loath to embrace the typical HR lexicon. Terms such as "organizational development," "total rewards," and "talent reviews" don't often resonate with those outside of the field of HR. Of course, this work is vital to any organization and can be a competitive advantage under the right leadership. However, HR can't lead with these terms. We must lead with the data in order to gain instant credibility. The softer language implies—rightly or wrongly—that a solid grasp of the facts may not exist, and that one is leading from the heart and not the head. Even the most accomplished business and HR leader, who may have won their client over at hello, is soon silently dismissed if there are no hard facts to support a program or initiative being launched.
I recently communicated online with Mike West, an innovator and thought leader in the field of people analytics across multiple industries and companies including Google. He is among the growing number of colleagues assessing the magnitude of people analytics in terms of business sustainability. In one of his LinkedIn posts, Mike shared that, "over a long time horizon, the ultimate value of any company stems from the discretionary effort of people at work. No people, no business. The effort of people determine the quality of a business."
How Do We Move the Needle?
My own desire is to move the needle—daily. I need my work to count towards something. I need to know that my team's priorities are contributing to business and revenue outcomes. Otherwise, what's the point? HR isn't a feel good profession. Rather, it is the cornerstone of productivity and competitive advantages (or social impact) achieved through people.
How long will our top talent stay and what are the best predictors of those decisions? What is the profile of top talent who is successfully recruited and on boarded to our company? How many of our teams across the Northeast are working for managers with successful track records? Where are our vulnerabilities, due to a shallow talent bench, which could cause us to miss our forecasts or programmatic goals?
These are all critical questions that we must have answers for, and the right answers are not luxuries. The right answers lie in the application of People Analytics in service to business strategies.
There is no question that we must clean up our acts—or, more precisely, our data—in HR as we create the strongest possible foundation for people analytics. Further, multiple systems which don't 'talk' to each other, and an inability to produce reports with the lowest of error rates are thwarting the progress of countless HR teams. And, it should be obvious that our information technology colleagues are vital partners in propelling this flywheel. Rather than being engaged on the backend of decisions made by HR to purchase new systems which promise increased data integration, for example, IT must have a front seat at our table helping us to make the best decisions.
In the Harvard Business Review article, "People Before Strategy: A New Role for the CHRO," the authors (Charan, Barton, and Carey, 2015) posited the idea of CHROs serving as part of the G3—a core group including the CEO and CFO. I would take this a step further. CHROs must be part of a G4—the CEO, CFO, and the CIO. Our ability to use data clarifies the stories behind the numbers, and it drives business outcomes. However, our best efforts to design and apply people analytics will inevitably fall flat if we don't triangulate across the executive office, and the finance and technology teams.
Innovations and New Players
In terms of technology solutions, the innovations and new players are beginning to abound. Many technology leaders are offering "out of the box" retention prediction tools, extensive modelling capabilities for workforce planning and spending comparisons against competitors. Even predictive analytics to help inform the timing and dollar amounts of employee raises is no longer on the wish list—it's here!
The HR path from good to great is paved with non-negotiables. One such non-negotiable is the ability of HR professionals to take things off-the-plate. In fact, I believe this is a competency in and of itself. A relentless focus on priorities, while removing lower value-added work, is a vital skill to be mastered. Every strategy session and goal planning discussion must include this focus.
Another non-negotiable is the ability of the CHRO and her team to step into the business to build the business acumen needed to couple analytics with the right business drivers. However, the increasingly popular solution of hiring non-HR leaders with business backgrounds to work in HR is incomplete, in my view. A major win in this new year will be HR's ability to institute creative career development plans allowing HR team members to spend periods of time within the business. Rotational assignments, shadowing, and regularly calendared attendance at offsite business retreats are all strategies which should be carefully orchestrated to create these learning opportunities.
People analytics is the flywheel waiting for that one-hundredth turn that propels HR to breakthrough levels. Are you ready to turn?