Wednesday, April 30, 2014

Creating a knowledge-based organization and People Analytics

Analtytics and BI are 'the thing' these days (along with rye cocktails and pickling).

We can talk all day long about how companies have collected so much data they don't actually know what to do with it. (And, consequently, what to do with it)

But I want to talk a bit about another advantage analytics provides us. That is moving an organizaton forward with internal statistics and benchmarking efforts. So, this comes about in two different ways. First, creating a knowledge-based organization. This means that the organization itself is constantly looking for data, looking for proof of their assumptions, and testing and improving upon these. Proof of this trend is in the prevalence of Chief Knowledge Officers and Chief Data Officers. Young MBA students are coming out of their programs with the idea that the evidence is out there- and they know how to find it. Those students are starting to move into executive positions and influencing their bosses and peers. While the knowledge-based organization is still seldom among companies, changes are slowly being made, and many new start-ups are beginning their culture with this in mind. Redfin is one such firm (p-values are brought up in c-level meetings).
With better awareness of the implications of decision making and practices, executives at all levels can begin to make better decisions, and be more innovative in their daily practice.

The other area where BI has started to do some really cool things is in a space called People Analytics, or HR analytics. Instead of relying on just one person's review of another's performance, and other equally biased measures, HR departments at innovative firms have started to use industry and internal analytics to drive their hiring and development programs. This essentially links strategy of the firm to hiring in a way that is lost on many companies: a company defines which metrics are most important to its bottom line and future strategy, and then figures out how to determine whether current or potential new employees' skills align with the strategy. Then, a firm uses these metrics to determine performance.

Google is well-known for this. Specifically, they call their 'HR department' their People Operations:

"Made up of equal parts HR professionals, former consultants and analysts, we’re the champions of Google’s colorful culture. In People Operations (you probably know us better as "Human Resources"), we "find them, grow them, and keep them" - bringing the world’s most innovative people to Google and building programs that help them thrive. Whether recruiting the next great Googler, refining our core programs, developing talent or simply looking for ways to inject more fun into the lives of our Googlers, we bring a data-driven approach that is reinventing the human resources field."

Google aside, there are other firms starting to implement these analytics, and still other firms that are start-ups that focus on people analytics consulting.

So what do you think: Is People Analytics the next big field? Can organizations actually define a strategic advantage by better aligning their HR practices with their strategy? Or is this only something that works for certain types of firms, specifically more knowledge-intensive ones?

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