More and more, the leaders of business functions are turning for competitive insights to the massive data they can now capture. But to date, human resources departments have lagged behind the efforts of marketing, IT, CRM and other functions. The purpose of this article is to show how executives can start using data to measure and improve HR's contributions to business performance.
The article identifies six analytical tools that HR can use to connect HR efforts to business performance. Survey results underscore the value of an analytical approach while revealing that many HR departments are heavily focused on internal measures rather than business outcomes. Each analytical tool is exemplified through case studies. A model is presented to suggest how executives can get started by focusing on five key areas.
Leading companies are using six analytical tools to improve the connection between HR investments and business returns: employee databases; segmentation of talent; targeted investments; customization of the employee value proposition; long‐term workforce planning; and talent supply chains.
As the case studies reveal, the tools identified here can help HR leaders actively shape their organization's future – managing talent and directing programs toward the long‐term needs of the business. Survey data shows that most companies increasingly seek to use analytics for long‐term advantage, and the model presented here can help HR executives take the first critical steps.
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