Baseball scouts used to scour the back roads of America in search of the next Mickey Mantle or Warren Spahn. Today, team front offices rely on reams of statistics and psychological profiles that help predict not only how a player will perform on the field but also if he fits well into the team culture.
With the economy recovering and hiring levels roaring back, employers nowadays also are bringing more science to the art of recruiting, developing and retaining employees, all in hopes of building the best teams.
Google, Best Buy, Starbucks and others have been using data for years in this way. Now, it’s an approach that is spreading as a growing number of employers embrace analytics over gut instincts.
“Organizations are collecting enormous amounts of raw data on job candidates, from pre-employment assessments to background checks to social media profiles,” said Scott Erker, senior vice president of Selection Solutions Group in Bridgeville, Pa. “At the same time, they are gathering extensive data on the characteristics of their most successful employees. Talent analytics has the power to bring these two areas of data together, enabling companies to identify – with far greater accuracy – the most promising job candidates.”
Talent analytics is simply the application of sophisticated data-mining and business analytics to human resources. This data can help employers better understand what drives performance, and why, for instance, one sales person outperforms her peers, or why some individuals thrive while others burn out.
In short, talent analytics can help employers more accurately predict whether a candidate will deliver.
“We are seeing a dramatic increase in the use of analytics, not just during hiring but throughout the lifecycle of employees,” said Steve Waterhouse, president of Predictive Results, a PI Worldwide member firm in Fleming Island, Fla.
Talent analytics is becoming increasingly sophisticated at a time when businesses need it most, Waterhouse said.
“We are seeing a rebuilding in many organizations today,” Waterhouse said. “Before the collapse in 2008, the concern was that we would run out of employees. Experienced workers were retiring, and the joke was we would hire anyone who had a pulse. Today, companies are starting to build back and want to avoid the same mistakes, such as putting the wrong people in the wrong jobs.”
Many companies also have found they can be successful with fewer employees – but they must be the right ones, in the right jobs.
“People are taking about reasons why businesses are afraid to hire, such as the Affordable Care Act,” Waterhouse said. “They are being more careful. What I am hearing from every client is that they are being selective and want to hire someone who works well within their organization. They can no longer afford to hire five people and hope that two or three will work out. The cost of doing it right the first time is so much less than the cost of making a mistake and rehiring.”
“Organizations typically source their hires based on highly subjective factors such as anecdotal evidence and the personal preferences of hiring managers,” he said. “Tens of thousands of data points now can be examined to determine the most accurate predictors of success – and which may have very little bearing. An increasing number of organizations are recognizing the importance of talent analytics in hiring, though they may be at various stages of the journey.”
Laying the groundwork
That journey starts not with potential new hires but with employees already in the company. Who are the high performers, and what traits do they have in common?
“We spend a lot of time upfront helping our clients determine what the ideal candidate should look like,” Waterhouse said. “If you don’t know the results you want, it is difficult to know what to look for.”
Selection Solutions Group also does extensive preparation before its clients begin interviewing.
“Too often, talent acquisition departments are not clear about what questions they want answered from the data,” Erker said. “But if they are able to take advantage of the full potential of talent analytics — to improve quality of hire, source of hire and business outcomes – they need to approach the data in an entirely new way.
“The first step is defining the questions that need to be answered. The next level of questions connects pre-hire data with post-hire outcome.”
This approach can correlate seemingly unrelated data.
“There are several reasons why the talent analytics process has such a significant impact on hiring,” he said. “It considers all the data, rather than limited samples, so that a full picture emerges. It searches for patterns in this data, discovering critical connections that might not otherwise be seen.”
How does talent analytics translate to success in the real world?
One good case study is Canyon Resorts, the largest ski resort in Utah and a client of Predictive Results. Canyon has more than 2,000 employees, including 1,200 who are seasonal. The challenge, as it is throughout the hospitality industry, is to reduce turnover while hiring and training employees who can meet customer expectations.
After it began using talent analytics, the return rate of seasonal employees increased from 42 percent to 64 percent in one year; the retention rate of permanent employees climbed to 70 percent; and Canyon was voted the best place to work in Utah. Perhaps most importantly, customer loyalty also increased, and employee service levels rose to 9.6 on a 10-point scale.
As beneficial as talent analytics can be to a business, it also can help employees by placing them in a position where they can thrive or preventing them from joining the wrong corporate culture. “We find that what is right for the company also tends to be right for the employee,” Waterhouse said.
Larger companies often comprise numerous smaller cultures, and some applicants are a better fit for a different position. “For example, a lot of clients look at some very bright creative people who are not necessarily good at interfacing with clients,” Waterhouse said. “They may work well within a creative team.”
Even with advanced metrics at their fingertips, however, baseball teams never draft a player who hasn’t been scouted in person. In the same way, HR managers are advised to rely on talent analytics as a valuable tool but not the only one.
“Our service gives clients important information but not exhaustive information,” Waterhouse said. “It is a balance. You have to decide if someone doesn’t fit your behavior pattern and culture. Someone can have great technical skills and experience but be counterproductive in the workplace. Most companies are not willing to take that risk within the organization.”
Although talent analytics is not foolproof, it can contribute significantly to a hiring process in which there are far more homeruns than strikeouts.
“In a sense, HR is merely catching up with other functions – including sales, marketing and operations – that are already well along in using analytics to achieve their goals,” Erker said. “By applying talent analytics to the hiring process, HR is helping to fulfill its critical role as a strategic partner in the business.”
By: Alan Goforth
Originally published at www.benefitspro.com