How to convince your c-suite counterparts to implement people analytics.

Talent acquisition expert Elmen Lamprecht says most CEOs don't seem to understand the need for people analytics. 

This past week, I had conversations with eight CEO’s of large South African corporates (5 of them listed on the JSE) and only two of them grasped the critical need for People Analytics.  Yes, 2 out of 9 CEO’s believe People Analytics is worth investing in.  From experience, I can say that this small sample is roughly representative of the South African landscape.  Whenever I’m asked to deliver a Keynote address on people analytics, I make it a point to understand the current capabilities within the delegates’ companies.  More often than not, most delegates have not even started implementing people analytics in any form, while a large number do not even have the basic HR systems in place to enable data analysis.  

So, if most South African CEO’s clearly do not believe in people analytics, why the big fuss over it globally?  The father of business management, Peter Drucker, is often quoted as saying “you can't manage what you can't measure.”  For this reason, businesses are obsessed with measuring every part of the business – well, almost every part.  Companies have spent millions on building their capabilities to measure and manage their finances, business operations and sales. But it is unfortunate that HR departments often must beg for funds just to send their team on Excel training.  CEO’s have access to reports that give them a real-time overview of their cash-flow, production activities and sales.  Additionally, these reports often have predictive capabilities, providing forecasting information for the next 3, 6 or 12 months.  

Yet, CEO’s have no real-time information about how happy their employees are, or which employees are likely to leave next, or what the skills gap are between current skills and skills needed to implement the current business strategy.  How ironic, since most companies profess that people are their most important asset.  I think it is time that we all call out these CEO’s for their hypocrisy.

Human behaviour – like any other activity – can be measured, assessed and improved. Many years ago HR departments admittedly did not have the tools to measure, assess and predict their employees’ behaviour.  But the exponential advancements in software, hardware, big data, Artificial Intelligence and the Internet of Things have made it quite possible for companies to predict future people behaviour.  For example, IBM’s artificial intelligence can now predict with 95 percent accuracy which employees are about to quit their jobs.  There have been similar breakthroughs in recruitment, succession planning and learning and development, which have taken away the mystery of managing people and placed HR right in the middle of science.

The benefits of people analytics are numerous.  Research by IBM and MIT showed that companies that invested in advanced people analytics (up to predictive and prescriptive analysis) had 8 percent higher sales growth, 58 percent higher sales revenue per employee and 24 percent higher net operating income than their peers. A study by Gartner showed that People Analytics boost gross profit margins by 4 percent and drive talent outcomes by up to 23 percent. The HRO Today Institute found that companies that use employee performance data to improve recruitment outperform competitors 58 percent of the time and by up to 200 percent.

Looking at all these facts, South African CEO’s have a choice between two options:  Option 1,  Invest in people analytics now and watch your bottom-line grow or,   Option 2;  keep ignoring the power of people analytics and explain to your shareholders in five years’ time why your peers are outperforming you on every business metric.  The choice is yours.