How talent analytics – and I/O psychologists – can help organizations succeed

Topic: Business Strategy, Strategic HR, Talent Management
Publication: Harvard Business Review (OCT 2010)
Article: Competing on talent analytics
Authors: T. H. Davenport, J. Harris, J. Shapiro
Reviewed By: Liz Brashier

How many times have you made a “people” decision based on gut instinct? Whether it’s deciding which department needs attention, selecting a customer population to target, or trying to determine our organization’s overall health, Davenport, Harris, and Shapiro (2010) encourage us to make these critical talent decisions based on analytics rather than “going with a gut instinct.” In an article rife with illustrations of organizations that effectively use analytics to save money, increase profits, and retain the best talent, the authors give us six types of analytics to use when addressing talent issues:

  1. Human-capital facts focus on one piece of information regarding individual performance (i.e., turnover) that can be used to indicate organizational health.
  2. Analytical HR uses HR data to gain insight into which departments or functions need attention; by using the data to focus only on the areas that actually need help, managers can save valuable time and resources.
  3. Human-capital investment analysis allows an organization insight into which actions have the largest impact on performance.
  4. Workplace forecasts use metrics to make predictions about potential shortages and/or excesses before they actually happen.
  • The talent value model uses analytics to determine what employees like most about the company, and then use those data to increase retention.
  • Lastly, the talent supply chain operates in real time to help organizations make key decision about talent-related demands; this is the most complex of the analytics, requiring high-quality data and rigorous analysis.

So, how do we master talent analytics? The authors give us five suggestions for building competence in this area:

  • Data: Must have access to high-quality data.
  • Enterprise: The organization as a whole – and not just HR – must have access to employee data
  • Leadership: An organization’s leaders must be on board with the approach.
  • Target: Consider which analytics should be used in particular situations, which areas need analytical focus, and which types of employees need the most attention to get the best use of analytics.
  • Analysts: As with any type of analysis, theory must be converted into practice: the organization must make use of skilled quantitative analysts, human resource management systems, and people skilled in employment law.

The authors also note that industrial-organizational psychologists are skilled in creating analytical initiatives and programs.

What do we take from this? Using analytics as a method of making talent-related decisions means value-add – and the best organizations view their employees as both individuals and as an informative source of data. 

Davenport, T., Harris, J., & Shapiro, J. (2010). Competing on talent analytics. Harvard Business Review, 12, 52 – 58.