How To Create Business Impact With People Analytics

Dr. Christian Schmeichel and Dr. Christian Liebig

There are three ways that can help you “gut” the guesswork out of HR decision-making at your organization:

  1. Accurate data: An analytics infrastructure that provides access to accurate data is the basis for every analytics project.
  1. Data-driven culture: Cultivating a data-driven mindset and making it part of the daily work routine, from recruitment to onboarding to career development and retention, requires time and dedication, but investing here can lead to real benefits.
  1. People analytics skills: With people analytics, HR executives can show the business impact of their organization’s HR strategy and the role HR plays to shape the workplace of the future.

Following are some the ways companies are using people analytics to create business impact.

Enhancing diversity and inclusion

One of many organizations’ benchmarks for diversity and inclusion is to increase the number of women in senior management positions. SAP made a commitment in 2011 to increase the number of female leaders from a little over 18% to 25% by the end of 2017. We celebrated the 25% milestone in July, earlier than expected. This was possible only because we rigorously monitored the progress toward our goals as part of our daily work routine. For example, whenever we spotted a downward trend in the percentage of women in leadership positions, we determined the cause swiftly. This has allowed us to stay on course for our new milestones: we are on track to increase the number of women in leadership positions at SAP by one percent every year, with goals of 28% in 2020 and 30% in 2022.

Setting goals for talent acquisition and talent management

People analytics not only helps companies achieve goals but also to set goals. A great example of using analytics for recruitment comes from a bank in Asia, as reported in a recent study by McKinsey. The bank assumed (based on its gut feeling) that top talent came from top academic programs and had built its recruitment strategy around this assumption. However, an analysis revealed that the most effective and high-potential employees came from a wider variety of institutions. The bank revised its recruitment strategy based on the data insights as well as the way it matches people to roles and measures their performance. As a result, the bank increased branch productivity 26% (as measured by the number of full-time employees needed to support revenue) and boosted net income by 14%.

Improving retention

Last but not least, people analytics can address tough HR challenges. In a recent TechTarget interview, Emilio J. Castilla, NTU professor of management at the MIT Sloan School of Management, emphasized that turnover can be extremely costly. At SAP, we are keen on retaining our top talent and achieved a stellar retention rate of 93.7% last year. Retaining top talent requires knowing the reasons why people stay and what could drive them away. In a pilot project with employees in Asia-Pacific-Japan and the Americas, we used predictive analytics to analyze retention. Thanks to the pilot study, we identified factors that indicate whether employees are more likely to stay with the company or to leave it soon. These insights can help tackle unwanted attrition more effectively as part of the overarching HR strategy.

People analytics can bring you beyond your assumptions and even your imagination. The insights open new ways to recruit, train, and engage employees. It’s invigorating to see the possibilities today and for the future. Imagine learning and career recommendations, chatbots, job matching, or eliminating bias in recruiting decisions. Using analytics in HR is not without organizational and cultural challenges, but done right, people analytics has a tremendous impact on creating a better workplace with great experiences for managers and employees. And that’s what matters the most.

For more insights on using data to improve the workplace, see How to Avoid the Most Dangerous Barrier to Good Decision Making.

Dr. Christian Schmeichel

About Dr. Christian Schmeichel

Dr. Christian Schmeichel is Senior Vice President of HR at SAP for the board areas Technology & Innovation, Intelligent Enterprise Group, Finance, and HR. He is a passionate advocate for running HR like a business and co-shaping the future of work. Follow Christian on Twitter @Schmeichel_C.

Dr. Christian Liebig

About Dr. Christian Liebig

Dr. Christian Liebig is Head of People Insights with SAP SE. In his role, he focuses on creating superior talent experiences by bringing together our innovative HR strategy and data science on combined “X” (experiences) and “O” (operational) people data. Prior to this, Christian led in his role as the senior manager of HR strategy, planning, and analytics. Christian studied Industrial and Organizational Psychology at the Universities Mannheim / Germany, Saarbruecken / Germany, and Amsterdam / Netherlands. He holds a doctorate in Economics from the University of Mannheim.