Human Capital Analytics

Human Capital is basically arched on the notion of returns on investment made in people, such as a College degree. We invest in our career by doing a University degree. We pay for it and we forego the possible income we could be making while studying because we know that once we graduate our ROI will be tangible. A person with a college degree will earn much more than someone who did not go to University. We all invest on Human Resource Capital and want to get a return on this investment.

Analytics is simply the art of dismembering or breaking down into measurable and quantifiable facts and figures a given problem/ hypothesis. It is the opposite of a synthesis. It is the use of data science, math, logical reasoning, probability and statistics to make a prediction of the future. To predict behaviour to determine trends and to find the solution(s) to a given problem, uncovering more layers and asking the right questions. We explore scenarios using facts and data, we challenge ourselves and we challenge the common sense and traditional beliefs.

Basically, Human Capital Analytics is the use of data and facts to make accurate Human Capital investments and informed decisions. Is it fundamental to know our own workforce and talent pool. A company must understand its promotion trends and competencies. The best way to predict behaviour is through data collection. We can perform surveys, performance appraisals, analyse academic backgrounds, establish an internal forum for discussion and then collect ideas, words, trends and turn them into rock solid science.

Measuring Human Capital is vital to drive more productivity, employee engagement and to promote strategic growth. We can develop a tangible competitive advantage if we invest in Human Capital analytics.

In my opinion, the biggest challenge does not lie in the data collection, but in the actions that should derive from the understanding of a behaviour. The question is: How do we build a plan based on data? How does data translate into strategy? Or is Human Capital Analytics derived from business strategy?

Let’s first focus on optimization, specifically in the area of salary competitiveness. Low salaries are not competitive, high salaries are costly mainly because people are willing to work for lower salaries. So what is the optimal salary? How do we measure it? We use data, surveys, we study people’s behaviour because salary competitiveness should be just right. Not too high, not too low.

Most competitive companies use Human Capital Analytics in sales and customer service too. They analyse how training can increase profit. How can it speed up the sales process? How can a customer service helpdesk be more efficient/ effective?

We can measure retention, absence, sick leave and employee engagement. We can collect data on compensation, training costs and recruiting costs. We can compare numbers, compare years, understand trends, and calculate the ROI on human capital. Finally, we can we move from Anecdotes to Predictions, with a 95% chance of accuracy.

Thank you, Rebeca Gelencser

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