Workforce metrics and analytics have been a buzz topic within the HR profession for the past 5+ years. Those companies who have recognized the importance have invested in analytics systems and people to run those systems (fewer have invested in the people to actually perform the analytics, but that’s another blog for another day). Dashboards have been created, reports rolled out, and presentations delivered on the state of human capital. The frequency of these publications varies from annually to quarterly to monthly.
And while some have succeeded in developing a data-driven approach to workforce management (Infohrm has excellent case studies on these organizations in our Research and Information Center), the majority of companies still struggle. (Perhaps I should dive into the topic of investing in the people to perform analytics now after all…)
This might lead one to ask, “Is it worth it? Do HR analytics really matter, or are we adding to piles of information without creating any real insight or value?” Many studies have been conducted and published that deliver a resounding yes, and this week the Aberdeen Group added to that collection with the research report, “Intelligent Human Capital Management: Workforce Analytics Drives Profit and Performance.”
This report shows that, on average, organizations who use workforce analytics achieve a 4% improvement in both profit and revenue per employee, plus an 11 percent year-over-year improvement in employee performance. Not only does using analytics benefit an organization, but those who do not do so at the detriment to their bottom line by suffering a one percent drop in revenue and a five percent reduction in profitability.
“Our research found that the top performing 20 percent of organizations saw as much as an 11 percent improvement in profit per employee, and a six percent growth in revenue per employee. Those leading organizations are much better at providing line managers with usable data on the workforce – 45 percent of managers have immediate access to current HCM data on their team members at their desks,” said David White, senior research analyst, Aberdeen Group.
You should be cautioned however, that measuring value is not the same as creating it. Earlier in this blog I asked the question, “Are we adding to piles of information without creating any real insight or value?” Workforce metrics must be approached in a thoughtful manner and tie directly to strategic business goals. Often, these analytics are created from an HR-centric view and/or show what can be measured, not what should be measured.
So, do HR analytics matter? Yes. Study after study has proven this to be the case. Stay tuned for more blogs on how to make it successful at your organization.
Tags: data driven workforce analytics, ROI of HR analytics, ROI of human capital, ROI of workforce analytics, strategic hr, strategic HR measurement