“The most important decisions that businesspeople make are not what decisions, but who decisions.” - Jim Collins, “Good to Great”
In the entire Charlie Sheen saga that has been playing out over the past several weeks we really are seeing what can go wrong with mismanagement of top talent who make the company a lot of money.
Today, we dive into the world of analytics and human capital in an interview with my colleagues Shane Douthitt and Scott Mondore from Strategic Management Decisions (SMD). Always in search of wise investments, I believe the power of analytics is key to solving today and tomorrow's business challenges ...I find it very interesting that as I post this interview, IBM announces their purchase of SPSS - predictive analytics software. In my interview, SMD shares their deep expertise in developing human capital strategies based on analytics linking employee data to business outcomes as recently published in their book "Investing in What Matters: Linking Employees to Business Outcomes"
*What is the main theme of the book and your work?
We provide a structured approach for human resource (HR) professionals to instruct corporations how to use solid analytics to connect employee data to business outcomes. "Investing in what matters" uses a case study approach to help organizations use the data they have to transform their workforce into their biggest asset.
*What experiences compelled you to write this book?
We have worked as internal HR executives, external HR consultants as well as corporate strategy executives and line-of-business leaders. We have seen HR from all angles and have had great success over the past 15 years in these roles applying our methodology to show the value of what we were doing in HR. We wanted to write this book to help HR leaders become true business partners and show the value of the work we have dedicated our careers to...
*How is your work with HR data unique compared to everything else that has come before it? What are the differentiators?
To date, the work that is out there is based on assumptions and weak analytical techniques. The work on HR Scorecards focuses on efficiency metrics and employee engagement—none of which are business outcomes. Efficiency metrics are strictly for functions that are viewed as cost-centers who can only show value by cutting their budgets. This does not have to be a soft science...far from it. Our approach is a simple, practical way to take the vast amounts of HR data that already exist in organizations (training, surveys, competencies, demographics) and link them to actual business outcome data that shows cause-and-effect relationships. This allows HR leaders to show a monetary impact on the business and to also be held accountable for the business reaching its goals. This is what is truly meant by getting a “seat at the table”.
*Can you give us an example of a company that followed your advice and has realized gains in their investment?
A large grocery chain was losing $93 million dollars a year in losses called ‘shrink’ (e.g. employee theft, food losses, spoilage). The company had worked on their supply chain and distribution issues with some impact. However, the head of the shrink initiative realized that changes in behavior was the one area that would yield the greatest benefits. We implemented our methodology which pulled in all of the HR data and we discovered specific competencies, attitudes and hiring process issues that were directly driving shrink. The organization implemented initiatives to work on these specific areas and are now already ahead of the total annual plan for the year (and it’s only July).
*What are some "a-ha's" from your experience that drive the advice you provide to organizations:
We have ten principles in the book that help frame the next steps:
*Considering everything that businesses are handling at the moment, why is linking employees to business outcomes even more critical right now?
Our work outlines a process that organizations can follow to connect investments in employees to the bottom line. In the current slow economy, as organizations have been looking to cut expenses--our approach allows them to make people investment decisions based on cause-and-effect and ROI analyses. However, this should be done no matter the shape of the economy as HR, to this point, has struggled to show a return on investment.
In other words, there is never a better time than the present to invest wisely for the future.
For more from Scott and Shane, please see www.strategicmanagementdecisions.com
