HR professionals make countless decisions every day, and each one can have far-reaching consequences for both individuals and organizations alike. And like all of us, they tend to rely on their experience and gut instinct to make decisions. As people, we gain wisdom through experience, so why not use it, right?
The problem is that every organization is unique in ways that are often not appreciated. Each business has its own culture, strengths and weaknesses, geographic context and impacts, internal and community dynamics, and more that influence what works – and what doesn’t – from an HR perspective. Equally important, organizations continuously evolve, so strategies and actions that worked yesterday may not work in the future.
The big “so what” is this: When HR professionals make their decisions based solely on their training and experience – even when tempered by the recommendations of others – it can lead to unintended outcomes. Experiences and assumptions must be tested within the current context in each unique business using people analytics.
I like to think of this testing process as “myth busting,” which was popularized by the beloved show that goes by a similar name. In the HR world, this means using models of actual employee and organization data to test assumptions and gut instincts. The results are often surprising – and lead to different decisions and better outcomes for employees and the business.
If this sounds like a lot of work, it’s not. The SAP SuccessFactors Workforce Analytics solution is so incredibly intuitive that just about anyone in HR can use it – no analytics training or expertise required. Plus, it comes with more than 2,000 prebuilt HR metrics. To help focus on the metrics that matter most, the “100 Critical People Analytics Questions: How Well Do You Really Know Your Workforce?” brief includes a series of questions designed to help you and your organization understand HR metrics and help you make decisions that will support your executive strategy, drive revenues, manage costs, and mitigate human capital and business risks.
To understand the power of people analytics and why myth busting is more important than ever, consider the findings uncovered by an SAP customer using SAP SuccessFactors Workforce Analytics. We showed them how to test widely embraced assumptions and preconceived notions within the HR department against actual business data. Here are just a few examples.
Assumption: The Best Source of New Hires Is Your Current Employees Through Employee Referrals
When we looked at the data for this company, this was not necessarily the case. The best referrals came from top performers only; people referred from average performers did not typically become top performers and turned over at twice the typical rate.
Assumption: Commute Time Is a Key Driver of Turnover
This assumption did prove to be true. The data showed that for this business, turnover correlates to both commute time, travel cost, and geographic location, but not directly to distance. Using SAP SuccessFactors Workforce Analytics, the business was able to filter for various variables and identify real drivers of turnover as it relates to commuting.
Assumption: Employee Equity Awards of Any Size Increase Retention
At this company, this proved to be true. Giving employees equity in the business through stock, for example, was highly correlated to employee retention.
Assumption: Industry Experience Is a Key Factor in Successful Salespeople
At this company, this long-held assumption did not prove to be true. In some positions studied, salespeople with little or no industry sales experience outperformed seasoned salespeople. This freed HR and hiring managers to focus on a new set of candidates for sales positions and increase the likelihood of having high performers.
Assumption: Previous Work Experience Can Be an Indication of a Candidate’s Future Performance and Expected Tenure
This is a logical and common assumption that did not prove to be true at this business. SAP SuccessFactors Workforce Analytics revealed that, for this company, previous work experience is not an indicator of future performance or even tenure.
Assumption: The Longer a Person Is with the Company, the Better Their Performance Will Be
Again, this is a logical and common assumption, as employees tend to know their job better over time. But SAP SuccessFactors Workforce Analytics revealed that for this business, this is not true. The analytics showed that Millennials reach peak performance at one year in a position; after that, boredom sets in and they are ready to change jobs and learn something new. For older workers such as Baby Boomers, they reach peak performance at three years in a role. HR was able to use these data-driven insights to help create an evolving job program for Millennials and Baby Boomers that timed job changes around their respective peak performance timeframes.
It’s important to note that these analytics results are unique to this business. Another firm in the same industry or other geographic location may uncover very different findings, which would in turn result in very different decisions by HR professionals. Every business needs to understand their own people-related data using people analytics.
Did any of these findings surprise you and challenge your assumptions and experience? What kinds of assumptions and preconceived notions – many based on logic and past experience – might you be bringing to your decision-making process? I encourage you to become an HR myth buster by adopting SAP SuccessFactors Workforce Analytics. To learn more, visit us online at www.sap.com/people-analytics.
Tammie Eldridge is in Solution Marketing at SAP SuccessFactors.