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HR as Competitive Advantage
Date: 2012-12-6 14:34:23 Hits: 9887
CEO’s and business leaders are fond of saying that their “people are what makes the company better, smarter, faster, stronger….” Yet, not many CEO’s would say the same things about their HR departments. Would those same CEO’s say that their “HR department is what makes the company better, faster, stronger…”? Yeah, not so much.
One of the reasons for this discrepancy is the lack of clear connection between people value and HR value. Executives intuitively know that if they hire the right people and empower them to work on the right things, good stuff will happen. And that’s about as far as the analysis gets in most companies. On the whole, HR organizations have done a poor job connecting talent data and talent investments to business issues and business impact.
Companies often can’t even answer basic talent questions, like “do we have the skills and experience we need to start a new XYZ division?” “do we know how many critical roles have no successors in place?” “do we know how many of our most talented people lack a career path?” “do we know our best sources to find talent in region XYZ?” In 2010, Taleo and HCI tried to quantify what companies knew about their people. What we found was a bit scary: less than 25% of organizations could answer critical questions about their people. Most had a passing awareness of siloed people data but few organizations could quantify much of anything, let alone anything strategic. And yet HR leaders were at the time, and still today, wondering why they don’t have a seat at the exec table. The real question should be why they still have jobs – if senior marketing leaders or sales leaders could only identify 25% of their lead sources or their pipeline close rate, they’d be fired on the spot. If IT leaders could only document 25% of their spend, CTO’s wouldn’t have a seat at the table either.
This year, we decided to take a slightly different angle with a new set of research; we tried to see what makes data proficient HR groups different from data deficient groups. We wanted to see what strategic HR leaders were focused on and whether there was any connection back to bottom-line business results. So we did another talent data survey, this time also focusing on business impact. We also looked at financial performance among those companies who were publicly traded. The results were both expected and surprising.
Data deficient organization (DDO’s) and data proficient organizations (DPO’s) valued many of the same key HR data points with very similar rankings for both the top and bottom nine metrics. Yet, DPO’s were universally more interested in strategic metrics like engagement, productivity and top performer retention. In fact, 65 percent of DPO’s rated engagement as a critical metric versus just under half of DDO’s, and on top performer retention, it was similar gap – 70 percent vs 46 percent. One clear finding is that talent strategy is the chicken to the talent data egg. People don’t measure what they don’t value; if less than half of DDO’s find value in engagement, it’s not surprising that their ability to measure it lags DPO’s by 27%.
With some solid metrics in place and a solid classification of DDO and DPO, we then looked at financial performance. The premise was that companies who knew their talent better would outperform those who knew less about their people. We looked at Return on Assets, Market to Book ratios and stock market performance over 12 months. We believe that in a world where more than 80% of stock market valuation can be tied to “intangibles” – know how, secret sauces, secret recipes, intellectual property etc.. – the value of people management shows up in stock price, ROA, and market to book comparisons. Not surprisingly, we found a correlation. DPO’s outperformed DDO’s on all three of these measures and on some, by a significant margin.
What is the exact connection? That’s a bit harder to determine. Did the talent awareness of data proficient organizations enable them to outperform less talent aware companies? Or were these companies already outperforming peers, enabling them to invest discretionary funds into more talent awareness? To some extent, this distinction may be less relevant for HR professionals. Leading companies are either using talent data to create competitive advantage or they are using it to maintain and extend competitive advantage. In either case, those companies who are not yet leveraging sophisticated TI practices should take notice.
Taken in total, what this research suggests is that some companies are beginning to use awareness of strategic talent data to drive competitive advantage. It further suggests that companies need to accelerate their efforts to invest in analytics, integrated talent strategies, and clear talent communication to business leaders. At Taleo, we started this journey with our clients a few years ago with our Talent intelligence strategy. Talent intelligence is about gathering relevant talent data and turning that data into insights for business leaders so that they can make better decisions faster. These research finding suggests that this was the right strategy then and remains the right strategy today.
It’s clear that HR professionals need to bring the same data and data analysis rigor to the world of talent that their colleagues in Marketing, Sales, and IT bring to leads, pipeline, and equipment metrics. Those that do will elevate their status and earn a seat at the “adults” table. More importantly, they will deliver shareholder value and improve the overall competitiveness of their organizations. Some companies are already well down this path; others are lagging pretty significantly. It’s time for those laggards to step up; with the right systems and, more critically, the right mindset and strategy, the data is there to be had. The key challenge now is rethinking the HR role and the HR value chain. If we do it right, maybe someday more CEOs can say “our key differentiation is our people, and we have the data to prove it.”
来源：http://www.hci.org/lib/hr-competitive-advantage
One of the reasons for this discrepancy is the lack of clear connection between people value and HR value. Executives intuitively know that if they hire the right people and empower them to work on the right things, good stuff will happen. And that’s about as far as the analysis gets in most companies. On the whole, HR organizations have done a poor job connecting talent data and talent investments to business issues and business impact.
Companies often can’t even answer basic talent questions, like “do we have the skills and experience we need to start a new XYZ division?” “do we know how many critical roles have no successors in place?” “do we know how many of our most talented people lack a career path?” “do we know our best sources to find talent in region XYZ?” In 2010, Taleo and HCI tried to quantify what companies knew about their people. What we found was a bit scary: less than 25% of organizations could answer critical questions about their people. Most had a passing awareness of siloed people data but few organizations could quantify much of anything, let alone anything strategic. And yet HR leaders were at the time, and still today, wondering why they don’t have a seat at the exec table. The real question should be why they still have jobs – if senior marketing leaders or sales leaders could only identify 25% of their lead sources or their pipeline close rate, they’d be fired on the spot. If IT leaders could only document 25% of their spend, CTO’s wouldn’t have a seat at the table either.
This year, we decided to take a slightly different angle with a new set of research; we tried to see what makes data proficient HR groups different from data deficient groups. We wanted to see what strategic HR leaders were focused on and whether there was any connection back to bottom-line business results. So we did another talent data survey, this time also focusing on business impact. We also looked at financial performance among those companies who were publicly traded. The results were both expected and surprising.
Data deficient organization (DDO’s) and data proficient organizations (DPO’s) valued many of the same key HR data points with very similar rankings for both the top and bottom nine metrics. Yet, DPO’s were universally more interested in strategic metrics like engagement, productivity and top performer retention. In fact, 65 percent of DPO’s rated engagement as a critical metric versus just under half of DDO’s, and on top performer retention, it was similar gap – 70 percent vs 46 percent. One clear finding is that talent strategy is the chicken to the talent data egg. People don’t measure what they don’t value; if less than half of DDO’s find value in engagement, it’s not surprising that their ability to measure it lags DPO’s by 27%.
With some solid metrics in place and a solid classification of DDO and DPO, we then looked at financial performance. The premise was that companies who knew their talent better would outperform those who knew less about their people. We looked at Return on Assets, Market to Book ratios and stock market performance over 12 months. We believe that in a world where more than 80% of stock market valuation can be tied to “intangibles” – know how, secret sauces, secret recipes, intellectual property etc.. – the value of people management shows up in stock price, ROA, and market to book comparisons. Not surprisingly, we found a correlation. DPO’s outperformed DDO’s on all three of these measures and on some, by a significant margin.
What is the exact connection? That’s a bit harder to determine. Did the talent awareness of data proficient organizations enable them to outperform less talent aware companies? Or were these companies already outperforming peers, enabling them to invest discretionary funds into more talent awareness? To some extent, this distinction may be less relevant for HR professionals. Leading companies are either using talent data to create competitive advantage or they are using it to maintain and extend competitive advantage. In either case, those companies who are not yet leveraging sophisticated TI practices should take notice.
Taken in total, what this research suggests is that some companies are beginning to use awareness of strategic talent data to drive competitive advantage. It further suggests that companies need to accelerate their efforts to invest in analytics, integrated talent strategies, and clear talent communication to business leaders. At Taleo, we started this journey with our clients a few years ago with our Talent intelligence strategy. Talent intelligence is about gathering relevant talent data and turning that data into insights for business leaders so that they can make better decisions faster. These research finding suggests that this was the right strategy then and remains the right strategy today.
It’s clear that HR professionals need to bring the same data and data analysis rigor to the world of talent that their colleagues in Marketing, Sales, and IT bring to leads, pipeline, and equipment metrics. Those that do will elevate their status and earn a seat at the “adults” table. More importantly, they will deliver shareholder value and improve the overall competitiveness of their organizations. Some companies are already well down this path; others are lagging pretty significantly. It’s time for those laggards to step up; with the right systems and, more critically, the right mindset and strategy, the data is there to be had. The key challenge now is rethinking the HR role and the HR value chain. If we do it right, maybe someday more CEOs can say “our key differentiation is our people, and we have the data to prove it.”
来源：http://www.hci.org/lib/hr-competitive-advantage
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