Examples of Company

1)Xerox: Increasing employee retention

Sometimes the insights from big data can be simple, but effective. Xerox used
extensive data analysis to find out how to retain its customer service
employees. The result? Employees who stuck with their jobs longest tended
to be the ones who lived nearby and had reliable transportation.
Findings like these helped Xerox decrease its attrition rate by 20% in a pilot
program, which was later extended.

2)Royal Dutch Shell: Identifying good idea-

generators
The petroleum giant’s “GameChanger” strategy unit analyzed a database of
ideas generated by about 1,400 employees over several years, and then
asked the original idea generators to play a couple of video games.
However, these weren’t your average video games. They were designed by
neuroscientists, psychologists, and data scientists as a way of testing human
potential. Working with a Silicon Valley start-up called Knack, Shell was able
to compare the results from the video games against the real-world results of
the ideas the employees had proposed.
The result: Shell’s GameChanger unit has identified the people who tend to
have the best ideas, and is now able to focus more on those people’s
suggestions. Knack also identified six characteristics of people whose ideas
would succeed at Shell: mind wandering, social intelligence, goal-orientation
fluency, implicit learning, task-switching ability, and conscientiousness.
3)Juniper Networks: Tracking career paths
Using LinkedIn for recruiting purposes is nothing new. But Silicon Valley firm
Juniper Networks is taking it a step further, using the wealth of data compiled
by LinkedIn to analyze not only where the best employees come from, but
where they go after leaving Juniper. The idea is to get an overall view of
career paths in the industry, helping the company devise new strategies for
attracting and retaining the best talent.
Do you think you know how to get the best from your people? Or do you know? How do
investments in your employees actually affect workforce performance? Who are your top
performers? How can you empower and motivate other employees to excel?

Leading-edge companies are increasingly adopting sophisticated methods of analyzing employee

data to enhance their competitive advantage. Google, Best Buy, Sysco, and others are beginning
to understand exactly how to ensure the highest productivity, engagement, and retention of top
talent, and then replicating their successes. If you want better performance from your top
employees—who are perhaps your greatest asset and your largest expense—you’ll do well to
favor analytics over your gut instincts.

Harrah’s Entertainment is well-known for employing analytics to select customers with the
greatest profit potential and to refine pricing and promotions for targeted segments. (See
“Competing on Analytics,”HBR January 2006.) Harrah’s has also extended this approach to
people decisions, using insights derived from data to put the right employees in the right jobs and
creating models that calculate the optimal number of staff members to deal with customers at the
front desk and other service points. Today the company uses analytics to hold itself accountable
for the things that matter most to its staff, knowing that happier and healthier employees create
better-satisfied guests.

For example, Harrah’s used metrics to evaluate the effects of its health and wellness programs on
employee engagement and the bottom line. Preventive-care visits to its on-site clinics have
increased, lowering urgent-care costs by millions of dollars over the past 12 months. And
because Harrah’s understands the relationship between employee engagement and top-line
revenue, it can evaluate the program according to revenue contribution as well.

At Best Buy the value of a 0.1% increase in employee engagement at a particular store is
$100,000.

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.

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.

Cognizant’s analytics revealed that employees who blogged were more engaged and
satisfied.

In our work with companies like these, we have seen best practices emerge for using analytics to
manage people.

Six Uses of Talent Analytics

Analyzing talent is not significantly different from analyzing customer relationships or supply
chain management. It starts with the delivery of historical facts (“What happened?”) and ends
with real-time deployment of talent based on rapidly changing needs. The six kinds of analytics
for managing your workforce, from simplest to most sophisticated, are human-capital facts,
analytical HR, human-capital investment analysis, workforce forecasts, the talent value model,
and the talent supply chain.

Applying Talent Analytics

Six kinds of analytics can help companies answer critical talent questions—listed here from
simplest to most sophisticated.

Human-Capital Facts
What are the key indicators of my organization’s overall health?

JetBlue analysts developed a metric—the “crewmember net promoter score”—that monitors

employee engagement and predicts financial performance.
Analytical HR
Which units, departments, or individuals need attention?

Managers at Lockheed Martin use an automated system to collect timely performance-review

data and identify areas needing improvement.

Human-Capital Investment Analysis

Which actions have the greatest impact on my business?

By keeping track of the satisfaction levels of delivery associates, Sysco improved their retention
rate from 65% to 85%, saving nearly $50 million in hiring and training costs.

Workforce Forecasts
How do I know when to staff up or cut back?

Dow Chemical has a custom modeling tool that predicts future head count for each business unit
and can adjust its predictions for industry trends, political or legal developments, and various
“what if” scenarios.

Talent Value Model

Why do employees choose to stay with—or leave—my company?

Google suspected that many of its low-performing employees were either misplaced in the
organization or poorly managed. Employee performance data bore that out.

Talent Supply Chain

How should my workforce needs adapt to changes in the business environment?

Retail companies can use analytics to predict incoming call-center volume and release hourly
employees early if it’s expected to drop.

Find this and other HBR graphics in our Visual Library

Read more

Human-capital facts are a single version of the truth regarding individual performance and
enterprise-level data such as head count, contingent labor use, turnover, and recruiting.
Companies should carefully consider what facts will give them that version. For some, one or
two data points may indicate overall health. For example, JetBlue created an employee-
satisfaction metric around its people’s willingness to recommend the company as a place to
work. This “crewmember net promoter score” (modeled after the customer-satisfaction metric)
has been used to study the impact of compensation changes and to help determine executive
bonuses. Employees are asked annually on their hiring date if they would recommend the
company, so JetBlue can effectively monitor employee engagement monthly.

JetBlue and other successful organizations are transparent with end users about the process: Any
manager or employee may see how the data were collected, what formulas are being used, and,
most important, why the data matter to the operation. For example, Harrah’s provides
documentation in its HR scorecard to ensure that all readers understand how human-capital facts
are created and what they mean for daily management.

Analytical HR collects or segments HR data to gain insights into specific departments or

functions. For example, a manager might be able to see that staff-turnover intervention is needed
for the East Coast sales team but not the West Coast team. Analytical HR integrates individual
performance data, such as personal achievement in key result areas, with HR process metrics,
such as cost and time, and outcome metrics, such as engagement and retention.

Lockheed Martin built a performance management system to link each employee’s performance
to organizational objectives. The automated system collects timely performance-review data
throughout the year. The data can then be compared with knowledge management information,
such as who has undergone formal training in specific areas. With the system, Lockheed Martin
can identify its high potentials for special programs or monitor employees who need
improvement in certain areas.

Human-capital investment analysis helps an organization understand which actions have the
greatest impact on business performance. One leader in this area is Sysco, the $36.8 billion
Fortune 100 global food-service company. Sysco is a complex organization made up of nearly a
hundred autonomous operating units and about 51,000 full-time employees serving
approximately 400,000 customers. The company began its workforce analysis with three gross
measures for each operating unit: work climate and employee satisfaction, productivity, and
retention. It has drilled deeper to understand, measure, and manage seven other dimensions of
the work environment, including frontline supervisor effectiveness, diversity, and quality of life.

Sysco’s analysis revealed that operating units with highly satisfied employees have higher
revenues, lower costs, greater employee retention, and superior customer loyalty. The company
can efficiently identify what actions by management will have the greatest impact on the
business. For example, in six years it has improved the retention rate for delivery associates—
who provide customer service and build customer relationships—from 65% to 85%. Sysco tracks
the group’s satisfaction scores, and when they dip, it institutes immediate improvements to get
them back on track. By retaining this key talent, Sysco saved nearly $50 million in hiring and
training costs for new associates.

Workforce forecasts analyze turnover, succession planning, and business opportunity data to
identify potential shortages or excesses of key capabilities long before they happen. As Vinay
Couto, Frank Ribeiro, and Andrew Tipping wrote recently in Strategy + Business, Dow
Chemical has evolved its workforce planning over the past decade, mining historical data on its
40,000 employees to anticipate workforce needs throughout the chemical industry’s volatile
business cycles. It forecasts promotion rates, internal transfers, and overall labor availability.
Dow uses a custom modeling tool to segment the workforce into five age groups and 10 job
levels and calculates future head count by segment and level for each business unit. These
detailed predictions are aggregated to yield a workforce projection for the entire company. Dow
can engage in “what if” scenario planning, altering assumptions on internal variables such as
staff promotions or external variables such as political and legal considerations. Workforce
forecasts can be used to staff up in key growth areas or identify knowledge management risks for
retiring employees before they are clear to managers.

Dow mines employee data to forecast promotion rates and internal transfers.

The talent value model addresses questions like “Why do employees choose to stay with our
company?” A company can use analytics to calculate what employees value most and then create
a model that will boost retention rates. Such a model can help managers design personalized
performance incentives, assess whether to match a competitor’s recruitment offer, or decide
when to promote someone. Google uses employee performance data to determine the most
appropriate intervention to help both high- and low-performing employees succeed. Laszlo
Bock, Google’s vice president of people operations, told us, “We don’t use performance data to
look at the averages but to monitor the highest and lowest performers on the distribution curve.
The lowest 5% of performers we actively try to help. We know we’ve hired talented people, and
we genuinely want them to succeed.” The company’s hypothesis was that many of these
individuals might be misplaced or poorly managed, and a detailed analysis supported that idea.
Understanding individuals’ needs and values allowed Bock’s team to successfully address a
number of difficult situations.

The talent supply chain helps companies make decisions in real time about talent-related
demands—from optimizing a retail store’s next-day work schedules, on the basis of predicted
receipts and individuals’ sales performance patterns, to forecasting inbound call-center volume
and allowing hourly staff members to leave early if it’s expected to drop. This is the most
complex of the six kinds of talent analytics, because it requires particularly high-quality data,
rigorous analysis, and the integration of broad talent management and other organizational
processes. Talent supply chains are still in their infancy, but the early success of some
organizations, particularly in the retail space, suggest that they will spread.

Mastering Talent Analytics

Unsurprisingly, building a capability in this domain requires the same fundamentals that most
other business analysis does. We summarize them with the acronym Delta (access to high-quality
data, enterprise orientation, analytical leadership, strategic targets, and analysts).

Data.

Organizations can get increasingly good HR data from their enterprise systems, but they
sometimes need to augment them with new metrics, like JetBlue’s. At Harrah’s many line
managers, who are already on the floor at its properties, observe and record the frequency with
which customer-facing staff members smile, because that behavior is highly correlated with
customer satisfaction. Data needn’t be perfect to be appropriate for analysis—just sufficient to
understand trends that matter.

Enterprise.

HR can no longer confine employee data to its silo; organizations need access to those data to be
successful. JetBlue, Best Buy, and Limited Brands have observed an important statistical
relationship between employee satisfaction and company performance—usually at the station,
branch, or store level. The significance of the relationship motivated Best Buy to make its
employee engagement surveys quarterly rather than annual.

Leadership.

The success of almost any initiative depends on its leaders, and talent analytics is no exception.
In fact, at the organizations we’ve researched and worked with, leaders’ commitment to this
approach is the single most important factor in whether it succeeds. Because the data pertain to
human behavior, executives may be skeptical. Comcast’s senior vice president of compensation
and benefits, Bill Strahan, recalls, “It was crucial for manager adoption that we present the
analytics business case in the language of our company, focusing on competitive pressures and
the people component of our change.”

Leaders who believe that human-capital insights should be used to solve business problems must
constantly press for decisions and analyses based on facts and data rather than on tradition,
hearsay, or supposition. And they should foster a culture that allows for experimentation and
mistakes—which are often unacceptable in HR functions today.

Targets.

Organizations that use talent analytics have already made people the focus of analytical activity.
But should they concentrate on hiring, assignments to projects and tasks, or retention? Which
types of employees need the most analytical attention? Which of the six kinds of talent analytics
should be employed when? When Google was adding 100 employees a week, from 2005 into
2008, hiring the right people was its primary focus. When hiring slowed in 2008 and 2009, the
company turned to gaining insights into employee attrition and effective management
approaches.

Talent Analytics at Google

Google’s highly analytical culture and practices extend to its human resources function. The
company’s goal is to identify leading people-management practices and confirm them with data
and analysis. To achieve it, Google created a people analytics function with its own director and
a staff of 30 researchers, analysts, and consultants who study employee-related decisions and
issues. The People and Innovation Lab (PiLab) conducts focused investigations for internal
clients
Google has analyzed a variety of HR topics and has often moved in new directions as a result. It
has determined what backgrounds and capabilities are associated with high performance and
what factors are likely to lead to attrition—such as an employee’s feeling underused at the
company. It has set the ideal number of recruiting interviews at five, down from a previous
average of ten.

Google’s Project Oxygen—so named because good management keeps the company alive—was
established to determine the attributes of successful managers. The PiLab team analyzed annual
employee surveys, performance management scores, and other data to divide managers into four
groups according to their quality. It then interviewed high- and low-scoring managers
(interviews were double-blind—neither interviewers nor managers knew which category the
managers were in) to determine their managerial practices. Google was eventually able to
identify eight behaviors that characterized good managers and five behaviors that all managers
should avoid.

Google’s vice president of people operations, Laszlo Bock, says, “It’s not the company-provided
lunch that keeps people here. Googlers tell us that there are three reasons they stay: the mission,
the quality of the people, and the chance to build the skill set of a better leader or entrepreneur.
And all our analytics are built around these reasons.”

Read more

Analysts.

Analytical theory must be converted into practice. This requires experts not only in quantitative
analysis but also in psychometrics, human resource management systems and processes, and
employment law. Industrial-organizational psychologists are especially helpful in creating
analytical initiatives and ongoing programs. Google, P&G, Royal Bank of Scotland, Intel, and
Tesco have all established HR analytics groups to get deeper insights into their people practices.

The best analysts can persuade managers to adopt analytical decision making. In late 2009
Harrah’s began recruiting an external sales force and used organizational psychologists to create
a predictive assessment for the job. But during the interview process managers became
emotionally attached to some of the candidates with low probabilities of success. The analysts
were prepared: They used randomized testing to prove that analytics was the superior method,
and relied on their interpersonal skills to sway decisions when necessary. One management team
at a troubled Harrah’s location was astounded by the high call volume and conversion rates the
new hires achieved, which helped reverse a decline in sales.

Common Mistakes in Talent Analytics

Companies that use analytics for employee management can create tangible value for themselves
as long as they avoid these mistakes:

 Making analytics an excuse to treat human beings like interchangeable widgets

  Keeping a metric live even when it has no clear business reason for being

 Relying on just a few metrics to evaluate employee performance, so smart employees can game
the system

 Insisting on 100% accurate data before an analysis is accepted—which amounts to never making
a decision

 Assessing employees only on simple measures such as grades and test scores, which often fail to
accurately predict success

 Using analytics to hire lower-level people but not when assessing senior management

 Failing to monitor changes in organizational priorities, thus creating irrelevant—if accurate—

analyses

 Ignoring aspects of performance that can’t easily be translated into quantitative measures

 Analyzing HR efficiency metrics only, while failing to address the impact of talent management
on business performance

Read more

No organization we’ve worked with has embraced an analytics-only method of managing,

motivating, and retaining employees. But early adopters have created tangible value for
themselves by applying the right data and tools to people processes. The best organizations see
their people not only as individuals but also as a rich source of collective data that managers can
use to make better decisions about talent.

Future organizational performance is inextricably linked to the capabilities and motivations of a

company’s people. Organizations that have used data to gain human-capital insights already have
a hard-to-replicate competitive advantage. Others, too, can draw on these new techniques to
improve their business results.

Thomas H. Davenport is the President’s Distinguished Professor in Management and

Information Technology at Babson College, a research fellow at the MIT Initiative on the Digital
Economy, and a senior adviser at Deloitte Analytics. He is the author of over a dozen
management books, most recently Only Humans Need Apply: Winners and Losers in the Age of
Smart Machines  and The AI Advantage.

Jeanne G. Harris is managing director for technology research at the Accenture Institute for High
Performance. She is the co-author of Competing on Analytics and Analytics at Work, both
published by Harvard Business Review Press.    

Jeremy Shapiro (jeremy.shapiro@morganstanley.com) is an executive director in human

resources at Morgan Stanley and a coauthor of Ultimate Performance (Wiley, 2007).

This article is about ANALYTICS

Follow this topic

Related Topics:

 Employee retention
 Human resource management
 Motivating people

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Comments

3 COMMENTS

 Aidematic Aidematic 3 months ago

Aidematic is a workforce experience platform that allows you to perform talent analysis
and fix the problems stated above. With Aidematic, your HR professionals, managers and
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dimensional information about your organizational job roles. You can centrally manage
competencies that demonstrate the skills, behaviors and knowledge of your employees
and align them with your core business values, goals and vision. Aidematic also offers
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all information regarding their job role, start discussions, playback media attachments,
rate their job role experience and more.

Read more about it here http://aidematic.com/

Reply

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