You have a lot of data, but do you know what to do with it?
The most successful organizations are analytics rich. That means they know how to analyze their data to find ways to maximize organizational success.
Some organizations are data poor and therefore cannot become analytics rich. However, the more common scenario is a company that is data rich but analytics poor – they are collecting a huge amount of HR data but they don’t know how to use it.
Getting the data is the first step; analytics is the key to moving you from data, to knowledge, and eventually to strategy. The goal is to utilize your data to answer strategic questions that will benefit your organization.
In your own organization, what questions are you able to answer by analyzing the data you already have available? And what other important questions do you have that you can’t answer? What data would you need to be able to answer them?
The Power of Analytics for Recruiting
Let’s take recruiting as an example of how organizations can become strategic through data.
Did you know that there are six key attributes for predicting performance and retention when recruiting? Those attributes are:
- Referral source
- Previous relevant experience
- Currently employed full time
- Employed more than 6 years with one organization
- Currently working (or in last position worked) over 40 hours per week
- Currently earning within the average range for the position
How Do We Know This?
We know this because we have worked with thousands of companies who have tracked this data in their hiring processes, and then validated it against performance and retention.
Being systematic in gathering and tracking this type of data allows businesses to become more predictive and ultimately, more profitable. To be successful in this, it’s important to remember these two things:
- Be not only Data Rich but also Analytically Rich. Having great data points at your fingertips is just the start – you must leverage it to improve your prediction of performance and retention within your specific company. Many companies don’t know how or where to start when analyzing this information; if that’s the case, you may want to look into working with an organization that can help.
- It’s essential to complete all of the steps in the hiring process, even if you need to hire in a crisis or if you’re trying to decrease time to hire. Our data on compliance is clear – following the system doubles Only by being systematic can you become predictive.
Predicting Performance and Retention (aka Effective Retention)
Effective retention is hiring people who will both perform and stay. It is essential to focus on retaining employees who are performing well; achieving this is the ultimate goal of most systematic selection processes based on analytics.
It’s easy to optimize hiring for performance if you don’t worry about retention; and, it’s easy to optimize hiring for retention if you don’t worry about performance. The tricky part is improving both at once – which is where your talent analytics and processes are critical.
Companies that are strategic in their use of data not only find it easier to identify top performers, but actually save time in the hiring process and are more predictive in selecting the top performer who will stay. They dramatically increase both the top and bottom line of the company simply by:
- Following the process, and
- Leveraging the power of data to more predictive in making better hiring decisions.
We’ve helped many clients set up predictive processes to improve their hiring. Here, I’d like to discuss one particular example:
The client performed an experiment with their hiring managers. First, the hiring managers followed the hiring process exactly with their candidates. Then, the same managers did not follow the hiring process with another set of candidates.
When the hiring managers followed the process, they saw:
- 50% increase in retention
- 80% of top performers properly classified
These results clearly show how predictive the hiring process is when followed precisely.
To put this into context, imagine you enjoy gambling and going to the casino. What if I told you, that you based on scientific data that you would have at least an 80% chance of winning every time you played, but only if you followed a specific process – I bet you would follow it, right?
This is exactly the message we are trying to convey in the above example, that companies can increase their odds of accurately selecting a top performers in their company by following the selection process based predictive data points found in their top performers who stayed!
From Data to Strategy
To make sense of descriptive statistics, you need statistical knowledge and analytics. Combining the art of hiring people with the science allows companies to really understand their culture of top performing people and replicate that success.
This is what separates good companies from great companies, especially in terms of profitability and competitiveness in the marketplace.
Building this type of predictive process isn’t a one-time revolution – it’s an evolution where the model continually becomes more predictive over time. Companies often ask the wrong question such as: “is our hiring process predictive?” The right question to ask is, “how predictive is our hiring process now and how can we continually improve?”
The more data points your business can collect and the better you become at analyzing that data, the more you can improve upon your prediction model to select top performers who will stay and dramatically improve effective retention.
When you are able to use your data to accurately make predictions, you have moved your organization from simple data-gathering to real strategic thinking.
You might be surprised how data rich you already are!