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Using People Analytics – A Proven and Effective 21st Century HR Solution

February 28, 2013
Google CEO Larry Page

Google CEO Larry Page

The basic premise of a “people analytics” approach is that accurate people management decisions are the most important and impactful decisions that a firm can make. You simply can’t produce superior business results unless your managers are making accurate people management decisions.

Many will argue that product R&D, marketing, or resource allocation decisions are instead the most impactful decisions. However, each one of those business decisions is made by an employee. If you hire and retain mostly mediocre people and you provide them with little data, you can only assume that they will make mediocre decisions in each of these important business areas, as well as in people management decisions.

No one in finance, supply chain, marketing, etc. would ever propose a solution in their area without a plethora of charts, graphs, and data to support it, but HR is known to all too frequently rely instead on trust and relationships. People costs often approach 60 percent of corporate variable costs, so it makes sense to manage such a large cost item analytically.

A major problem in HR is its traditional reliance on relationships. Relationships are the antithesis of analytical decision-making. The decision-making “currency” for most business decisions has long been data, but until now, HR has relied on a different currency: that of building relationships. Consider your last hiring decision. Were you using talent data analytics or were you subjectively evaluating how well you “relate” to the candidate (subconsciously this was probably happening)? We aren’t talking about replacing judgment with data. We are suggesting the use and respect of highly valid data is needed to raise your hiring success rate.

Our senior executive clients justifiably learned to demand data-based decisions everywhere –  including from HR.

One of the more famous examples, Google (not our client), is replacing the 20th century subjective decision-making approach in HR. Although it calls its approach “people analytics,” it can alternatively be called “data-based decision-making,” “algorithm based decision-making,” or “fact or evidence-based decision-making.”

Based on Google’s strategies as written about in an article by Dr. John Sullivan, we will use a few of the “top 10 strategic reasons” to explore and explain how any company of any size can implement powerful tools at a fraction of the investment made by Google. But first, a quick snapshot of the top 10 reasons for people analytics from Google:

  1. Leadership characteristics and the role of managers – Google’s HR team researched reams of internal data and determined that great managers are essential for top performance and retention. It further identified the eight characteristics of great leaders. The data proved that rather than superior technical knowledge, periodic one-on-one coaching which included expressing interest in the employee and frequent personalized feedback ranked as the No. 1 key to being a successful leader. Google surveys employees twice a year to determine if a manager is fulfilling that need.
  2. Identify and embed the most effective approaches for managing people – Google conducts applied experiments within Google to determine the most effective approaches for managing people and maintaining a productive environment (including the type of reward that makes employees the happiest). The lab even improved employee health by reducing the calorie intake of its employees at their eating facilities by relying on scientific data and experiments (by simply reducing the size of the plates).
  3. Employ a retention algorithm — Google developed a mathematical algorithm to proactively and successfully predict which employees are most likely to become a retention problem. This approach allows management to act before it’s too late and it further allows retention solutions to be personalized.
  4. Employ predictive modeling – Google developed predictive models and use “what if” analysis to continually improve their forecasts of upcoming people management problems and opportunities. It also uses analytics to produce more effective workforce planning, which is essential in a rapidly growing and changing firm.
  5. Improve diversity – Analytics are used at Google to solve diversity problems. As a result, the people analytics team conducted analysis to find the root causes of weak diversity recruiting, retention, and promotions (especially among women engineers). The results that it produced in hiring, retention, and promotion were dramatic and measurable.
  6. Employ an effective hiring algorithm – Google internally developed an algorithm for predicting which candidates had the highest probability of succeeding after they are hired. Its research also determined that little value was added beyond four interviews, dramatically shortening time to hire. Google is also unique in its strategic approach to hiring because its hiring decisions are made by a group (collective intelligence) in order to prevent individual hiring managers from hiring people for their own short-term needs.
  7. Calculate the value of top performers – Google executives have calculated the performance differential between an exceptional technologist and an average one (as much as 300 times higher). Proving the value of top performers convinces executives to provide the resources necessary to hire, retain, and develop extraordinary talent. Google’s best-kept secret is that people operations professionals make the best “business case” of any firm in any industry, which is the primary reason why they receive such extraordinary executive support.
  8. Design a culture of workplace collaboration – Google has an extraordinary focus on increasing collaboration between employees from different functions. It has found that increased innovation comes from a combination of three factors: discovery (i.e. learning), collaboration, and fun.
  9. Promote a culture that increases discovery and learning – Rather than focusing on traditional classroom learning, the emphasis is on hands-on learning (the vast majority of people learn through on the job learning). Google has increased discovery and learning through project rotations and learning from failures. Clearly self-directed continuous learning and the ability to adapt are key employee competencies at Google.
  10. Use data not to dictate; use data to convince — The final key to Google’s people analytics team’s success occurs not during the analysis phase, but instead when it present its final proposals to executives and managers. Rather than demanding or forcing managers to accept its approach, it instead acts as internal consultants and influences people to change based on the powerful data and the action recommendations that they present. Because its  audiences are highly analytical (as most executives are), it uses data to change preset opinions and to influence.

So how can “any company” of “any size” do all or most of these strategies at a fraction of the cost?

First, let me say I am selling at this point. I’m specifically trying to sell you on:

  • The expectations you should have as an executive
  • The fact that the disruptive technology exists and is there for the taking in a very cost-effective manner
  • The ability for The Nielson Group to deliver what I discuss below

Our secret sauce has the TriMetrix® suite of assessments at the base of our success. But it isn’t just the TriMetrix assessment that creates disruptive technology. You must also have strategic processes and a company-wide culture of continuous improvement in place.

Strategy #1 Adopt disruptive technology that cuts across HR silos

There are hundreds if not thousands of pre-hire assessments on the market. Most aren’t worth the money. Most can’t support or pass validity/reliability and adverse impact tests. Then there are all the assessments for team development, professional development and coaching. The two areas of focus, pre-hire assessment and internal development, remain in silos. To the contrary, The Nielson Group provides a “total talent management” solution. Our suite of assessments are not only valid, reliable and free of adverse impact but are highly effective in:

  • Supporting early success by understanding how best to manage and motivate the new employee
  • Supporting objective performance management discussion
  • Integrating succession planning discussions with identification of development needs
  • Proactively identifying company-wide professional development needs
  • Delivering laser-focused ongoing individual coaching and team development of collaboration skills

Our clients consistently state “I won’t hire anyone without the assessments.” The other popular comment we hear often is “The TriMetrix coaching report is mandatory for quickly getting up to speed on how best to manage and motivate my employees.” Employees are often heard saying “Incredibly accurate and insightful, very useful for my personal development, did you talk to my spouse?”

Strategy #2 Use disruptive technology to identify the true talent requirements for any job from CEO to front line customer service tech

There are two relationships that we focus on to ensure “individual fit”. They are person-to-job and person-to-culture. We use a patented process to identify the job’s talent requirements and organizational rewards and culture. This process is also very effective for articulating the “8” or “5” or “10” desired/expected competencies of a manager/leader within the firm.

Strategy #3 Give the disruptive technology to teams

Building a collaborative culture takes more than hiring the right person in the right job. Each person must be equipped to identify with and adapt effectively to different people in the organization. What if every person in your organization had a good understanding of “different” behavioral styles and personal motivation (referred to by many as “personality”)? That understanding results in an appreciation for all team members. With greater appreciation and communication skills comes greater collaboration. Our team workshops have an immediate and sustained impact.

Strategy #4 Give the disruptive technology to leaders

Many HR functions control and limit access to tools out of false fears. Fear of losing power. Fear of employee lawsuits. Fear of applicant lawsuits. Fear of not being personally competent in the use of sophisticated tools. We train HR and can even provide certification level knowledge where the client wants that level of internal knowledge. But we also provide full support to both HR and their internal clients to ensure success. We also have the validity, reliability and adverse impact studies to support clear sailing with our tools. We’ve had the TriMetrix HD assessment internally tested, accepted and adopted by some of the leading corporations such as Medtronic, a multinational medical device company. And we aren’t talking about an HR audit –  rather, a full review by the corporate legal department that included the employment of an independent 3rd party expert. We also provide a high-impact, high-value workshop for hiring managers that is rated “best” and “strongly recommend” by attendees. This isn’t the out-dated “How to Hire Legally” seminar. The workshop covers how to hire legally under the law, how to identify high potential candidates using TriMetrix assessment results, how to focus interview questions specific to the candidate, how to benchmark the job, how to leverage assessment results for new hire on-boarding, ongoing coaching, performance management, professional development and internal selection and succession planning.

Strategy #5 Teach managers to use a coaching conversation model that promotes employee engagement,  satisfaction and continuous learning

We offer a two-day program that provides managers with a conversation model or tool and tangible practice in the use of the model. Participants rank this workshop as “immediately effective and sustainable” at improving their leadership and management skills. Employee engagement is the target and this program hits the target.

Strategy #6 Provide coaching to leaders and high potentials

Coaching is the only development tool that provides a laser-focused solution that is relevant and tangible to the individual person. Whether for a leader who is struggling or your high-potential talent being groomed for broader responsibilities in the near future, our coaching is focused on established goals and sustainable results.

We offer our time to learn about your situation and needs. We can then further explain what we do and what we offer relative to your immediate needs. If you like what you hear, engage us to solve your most painful organizational headache. It doesn’t have to be a big project. We’ll show you we can back up everything we claim.

Our clients are believers. Give us a call today so your executives and employees can be thanking you tomorrow and your company can be enjoying record performance sooner. It won’t take long for you to become a believer as well.

Carl Nielson is founder and principal of The Nielson Group, formed in 1998 to help organizations create breakthrough performance.

The Nielson Group’s key expertise includes strategies for hiring top performers through job-talent matching, executive coaching, developing senior management teams and nonprofit boards, cross-functional employee engagement, team effectiveness and goals-and-role alignment. Carl has been recognized for his work in predictive selection, executive coaching, team development and high-potential identification.

Prior to starting his own company, Nielson served for 18+ years in HR and operational management roles. Today, Carl’s consulting practice addresses all areas of employee development, leadership development, hiring-for-fit and team effectiveness. In his spare time, Carl serves students in high school and college with career coaching with the Career Coaching for Students program which he authored. The program is now used throughout the United States and parts of Canada.

He holds a BS degree in Organization and Industrial Psychology and is a Certified Professional Behavioral Analyst, Certified Professional Motivators Analyst and Certified Professional TriMetrix® Analyst. He is also a certified facilitator of The Coaching Clinic for managers and supervisors. You can reach Carl at cnielson@nielsongroup.com or call 972.346.2892.

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