Eduardo Valencia is a New York-based People Analytics expert with 23 years of expertise in the application of HR analytics, business intelligence, data mining, and statistics in multiple industries. Eddy is Founder and director of the on-campus executive master People Analytics Pro (140 hrs-Madrid). He is a prolific blog writer and the author of 2 books: People Analytics. Structured and Unstructured Data for HR Analytics (in English) and Data Coaching (in Spanish).
What are the key aspects of employee performance that are critical to the success of HR Analytics?
All the organizations that I’ve worked with take into consideration two fundamental metrics: performance and turn-over.
All the organizations that I’ve worked with, even if they preach something else, always work with the principle ”You have to create value.”
However, there are two different paths to create value, which is directly connected with performance:
- Less intelligent and the most toxic companies operate in the short term: making money short-term, whatever the cost.
- More intelligent companies think in terms of sustainable value, that is, the long term. To do so, they have found that the best strategy to create sustainable value is indeed to have skilled, motivated employees.
How can HR Analytics enhance employee performance?
HR analytics should be contributing to this goal of value-creation.
HR analytics should reinforce a framework that combines two type of indicators. The result indicators (called “laggard indicators”) are the ones that measure performance. Here we line up the business profits. Leading indicators are used to measure the factors that generate results. Happiness, motivation, and commitment go here.
In a way, this environment of leading indicators (also called “causal indicators”) and result indicators (“result indicators”) follows the same logic as the basic procedures of analytics in which we handle predictor variables (also called ”independent variables”), and result variables (also called ”dependent variables”).
What do CEOs/CHROs look for in employee performance analytics?
Disappointing as it may sound, companies are indeed trying to make money. CEOs more often that CHROs are conscious of this need. Value creation in the company is measured by the same result indicators that are handled and understood in finance: profitability, liquidity, growth, and risk. Our work at HR Analytics should be aligned with these company goals.
What is missing in terms of employee performance data that could make HR Analytics even more meaningful?
Employee performance is not an easy task. Nevertheless, every day, employees in a company show multiple signs that can be used to measure their performance, degree of job satisfaction, and commitment to the organization. Technology has enormously simplified the measurement and collection of objective parameters on work activities (attendance records or ”clocking in,” periodic employee performance reviews, number of e-mails sent, time spent in meetings, conference room reservations, shared calendars, etc.).
Personally, I have found that one of the most promising ways to measure Employee performance might be the Employee Net Promoter Score.
Employee engagement is strongly correlated with customer experience. The more engaged employees are, the more likely it is that customers will be satisfied with the service provided. Customer experience, as measured by the NPS (Net Promoter Score), is closely related to a service’s profitability. The more likely the customer is to recommend a service provider, the more profitable the company will be.
Can HR Analytics play a prescriptive role in helping employee finetune performance real-time?
Most performance evaluations are actually annual or bi-annual. Nevertheless, frequent performance scoring gives employees clear feedback about whether their performance is increasing or decreasing.
With this short feedback cycle, managers can reward hard work or rapidly take corrective measures if need be.
Ten years ago, General Electric stopped using its legendary vitality curve, the one that made them fire 10% of the worst of their staff of close to 300,000 employees.
GE is now introducing a new system that anticipates more frequent updates of its performance evaluations through an app.
With this decision, GE joins other important companies like Microsoft, Accenture, and Adobe, which have adopted a new focus that’s based on more frequent reviews and feedback on employee performance.