Finding and Retaining Talent: Data-driven Approaches to Managing People
As analytics practices become ingrained in companies, opportunities are growing for using data to make business decisions. Using data about buying patterns to precisely target customers or data about operations to optimize production has become key to organizational effectiveness.
Now analytics practices are enhancing decision-making throughout firms, including managing people in organizations.
Just as marketing and operations have become more about quantitative measurement and analysis than intuition or “gut-feeling,” human resources management is heading down the same path.
Entrepreneurial firms cite difficulties in finding talent as hampering growth. More broadly, 46% of U.S. employers (40% globally) report challenges in filling jobs. At the same time, individuals’ psychological attachment to and identification with firms has been eroding as their careers have become more mobile and flexible. Using data analytics to inform talent management could address these shortages and mismatches by enabling more effective recruitment and retention practices.
Consider two scenarios:
- Imagine you met your goal of hiring five new employees during a university recruiting trip. By this common measure, your visit was a success. But, what if you kept following those five employees and found that three were low performers who were let go and the other two left in less than six months? Can you continue to say that your recruiting efforts at that university were successful?
This scenario suggests how firms can use analytics to more effectively place their recruiting efforts. Firms recruit new employees through multiple channels, but how effective are these channels? Is college recruiting better than public job fairs? Are recruitment firms worth the costs? Do employee referrals perform better?
Companies need to track return on investment for various employee recruitment techniques to find the more effective approaches. Most firms already collect data on the number of high potential resumes collected, and hiring rate for those resumes. And, most firms stop there. Imagine if these data were tied to job performance, job satisfaction, mobility and turnover data throughout an employee’s tenure. Companies would find how much “bang” they get for their recruiting “buck” for various channels, and have a better idea how to allocate recruiting resources.
- Your firm has an annual engagement survey to gather information about employee satisfaction. Almost all respondents said that they are uncomfortable speaking up in meetings about things they think are wrong or inappropriate. Yet only 25% of employee responded. Should the firm act?
This scenario illustrates the need for understanding when and how data can be used. Many firms survey employees about their satisfaction in order to better engage the workforce. But when can the results be trusted? Knowledge of sampling concerns and statistical techniques for analyzing survey data is critical to understanding the strengths and limitations of the data collected from employees, which can be used to improve the corporate climate and reduce turnover.
There are many opportunities to use employee data to improve productivity and reduce turnover. Firms can use pre-hire data about employees’ education, experience and interviews to build better predictive models of post-hire productivity. Or, rather than just using internal job posting systems to fill jobs, firms can use information about who applies for which jobs to proactively match employees’ career aspirations to advancement paths. Firms can also analyze turnover data by employee characteristics or job characteristics to yield insights about who might be likely to quit next.
Firms already have rich data about their employees, including prior work experiences, skills, recruitment source, job performance and a host of other data. But they have yet to fully use these data to make decisions about hiring and managing talent. By using the data they have and supplementing with new data where necessary, firms can better manage their valuable human capital.