It is common for companies to develop a hiring plan and then measure the results afterwards. An organizational hiring plan typically represents a struggle to develop a workforce capable of meeting business needs today while developing a potential workforce for the future. When diversity goals are added to the mix, the hiring plan can quickly become one in which quotas are established and where results measurement involves mostly recording demographics of past hires and perhaps setting new quotas. Diversity is not treated as a strategic priority but more like an add-on program. The result is management does not assess diversity efforts in terms of human capital analytics that provide strategic information about planning, risk management, workforce intelligence, leadership progression or workforce development.
On old fashioned organizational charts, functions that were added on or managed separately were always shown with dotted lines and connecting somewhere in the middle of a solid line representing accountability from one level to another. On the new charts, diversity management is a distinct function firmly and equally embedded in the organizational structure. The departments or divisions usually have names like “Office of Diversity and Inclusion”. However, diversity management’s new role as a strategic function requires more than an elaborate title. It requires human capital analytics that document, assess, project and guide organizational efforts To build a diverse workforce. The driving force behind the use of analytics is to link Human Resource actions directly to specific business outcomes.
A strategic function is one in which carefully designed goals, objectives and strategies are focused on long term interests and results that will lead to an organizational advantage. Therefore, making diversity a strategic function means strategizing in advance to achieve long term results that benefit the organization, as opposed to simple recruitment and hiring. It is at the point of diversity strategizing that human capital analytics and diversity first intersect, because there must be methods for linking diversity planning with long term workforce needs. For example, during strategizing, management will consider the need for innovation in a diverse market and then determine the kind of workforce makeup that can contribute to this need. This is followed by an action plan to recruit minorities who can help the organization succeed in its goals. Once recruited, analytics determine how the employees can best be developed and utilized.
The human capital metrics and analytics will be used to review how well the organization is utilizing its diverse workforce to achieve goals and what needs to be changed to improve employee performance. It normally includes benchmarking of progress. This is far different from simply documenting the number of African Americans or women hired, for example, which is what most businesses do at this point. Instead, the business will collect data and information about current employees, workforce needs, employee development, organizational culture, workplace experiences and progression.
By collecting information, management gains knowledge and not just data. Tools for collecting the information include employee surveys, as well as employee resource groups for continuous information delivery and assessment, collection of accountability measures and simulations. Metrics will include information concerning talent development and the diversity leadership pipeline for succession planning.
Human capital analytics must be designed so that planning and decisions concerning people are tied to business outcomes and assessment of people are linked to metrics. Strategizing outcomes is only the first step. The data and information collected in employee surveys is connected to the desired outcomes using statistical analysis. What does the linkage analysis indicate? Where can the highest return on investment in diversity be obtained? What customized training programs are needed to develop employee potential and competencies?
Decision-making simulations are used by some companies to reduce risk and build a strong culture. The simulations can accelerate competency development and shorten learning curves while building capabilities around business strategies and initiatives. Employees can use simulations to build leadership skills and improve decision making. Simulations are also constructed in a way that insures all participants are given equal opportunity to learn and are rated in the same manner. The analytics generated by simulations can be used to identify those who belong in the leadership pipeline and those who need further development.
The metrics coupled with information is then used for the long term advantage of both employees and the organization. Management can use these analytics to look for employment patterns that serve as barriers to progression, failures to engage a diverse workforce, linkage between diversity participation and the organization’s strategies for competitive success, success of marketing strategies for recruitment, benchmarks of progress in diversity plan, and the impact of gaps between current and future diversity workforce needs. Human resources should also statistically assess performance reviews by ethnicity, race and gender. A business will want to analyze its success in developing cross functional participation of women and minorities on teams, in groups and on committees to insure a diversity of approaches are used when strategizing.
The human capital analytics must also be connected to the business stakeholders. What do consumers expect of the business in terms of diversity? Are there language preferences or cultural attributes that should be considered to improve products or services?
Good People Decisions
Human capital analytics is an evidence-based approach designed to help managers make good people decisions to improve organizational performance. That’s a far cry from simply collecting data. Human capital analytics helps an organization become a learning one, so diversity management becomes value adding. It is an alignment tool that tells the organization when employee initiatives need to be changed or when employees are or are not contributing to desired outcomes.
There are success stories already. Lowe’s implemented human capital analytics to connect employees to financial outcomes. The results provided valuable information for the company concerning the positive relationship between employee engagement, customer satisfaction and sales. Bank of America has also instituted human capital analytics to ensure the company develops a diverse workforce to full competency for improved financial performance.
Human capital analytical applications include identifying critical talent, tracking skills and performance, predicting employee behaviors, forecasting business requirements and scaling recruiting supply channels. The intersection of analytics and diversity will identify talent management needs, customize employee value propositions, assist workforce planning and optimize the talent supply chain.
Unfortunately, many companies are not using human capital analytics because of the need to perform statistical analysis or failure to identify workforce development with financial outcomes. There is a trend, though, towards the use of analytics due to the need to ensure limited business resources are used as effectively as possible. Analytics can be yet another tool to insure an organization retains and develops a diverse workforce benefitting employees and the organization.