Can People Analytics Revolutionize Your Organization?
Using People Data to Inform Your Leadership Development Investments
The age of analytics is here. And for most industries, using data to inform business decisions is nothing new.
“For decades, companies have leveraged data to make decisions and to achieve desired business outcomes,” says Stephen Jeong, senior faculty in our Leadership Analytics practice.
But using people data in talent development and management is a more recent explosion. “HR has lagged behind other functional areas in leveraging people analytics to optimize how individuals and teams can achieve business goals,” Jeong says.
For example, people data could be used to measure the impact of leadership development programs. Organizations spend billions of dollars each year in development efforts, but generally do a poor job of tying their investments to their bottom line. This has led some executives to question whether it makes sense to invest in leadership development efforts at all.
“What’s ironic,” Jeong says, “is that most companies have an abundance of business data they could leverage to make better decisions on investments in leadership investment. Often, they’re just not sure how to connect the dots.”
So how can you feel confident that when your organization invests in human capital through leadership development programs, you’ll get measurable results that improve your bottom line?
The answer is a 3-pronged strategy that involves collecting people data, analyzing it, and then taking action.
What Are Examples of People Data?
Employee engagement has dominated the talent management headlines for a good part of the last 2 decades. And many organizations actively collect leadership assessment data that can be directly linked to employee engagement.
But our experts say that it’s time to move beyond just measuring employee engagement.
The most successful organizations look at that people data alongside their desired business outcomes. For example, they might measure how a needed leadership competency like setting clear goals and direction aligns with a team’s understanding of the corporate mission.
3 Types of People Analytics Worth Measuring & Leveraging to Inform Development Decisions
At CCL, we think about people analytics data in 3 clusters:
1. People data about leaders within the organization.
This includes leaders’ beliefs, behaviors, and practices that affect their people, and, in turn, the business. People data from 360 feedback or other leadership assessments on individual leaders is essential to understanding and evaluating the overall impact of investments in talent.
2. People data about employee experience and engagement.
How do employees feel about their organization’s overall culture and senior leadership? Do employees feel that they have the tools and resources to do their jobs effectively? Do they feel safe taking calculated risks? What are their attitudes about their organization’s internal communications? These are questions related to how employees experience their organizations.
3. General data about desired business outcomes.
What does your organization consider to be among its most important metrics? While specific metrics vary by industry, some outcomes, such as increasing revenues, operating income, and market share, while reducing turnover and other costs, are common. These key metrics should be examined alongside your people data about leader actions and employee experiences.
How to Use People Analytics Data to Prioritize Development Investments
When investing in leadership development, organizations often have a goal of improving specific leadership skills that are correlated with their employees’ engagement and productivity. As is often said, though, correlation is not causation, and doesn’t address the root cause of a behavior, so correlations can lead to erroneous insights because they don’t account for the complexity in data. For example, one leadership skill may impact multiple business outcomes in different ways.
Besides, employee engagement is not the endgame — improvement in a specific business metric is.
Using your people analytics strategically allows you to leverage the power of multiple data sets, sort through the complexities, and arrive at the prioritized behaviors that will lead to specific business outcomes.
Use People Data to Understand Root Causes
Suppose that your organization wants to increase sales by 15% this year. What does your people analytics data, specifically your leadership assessment data and employee engagement data, suggest that you should focus on to increase sales?
Jeong gives an example: “One approach is to correlate leadership behaviors with employee engagement data. Employee engagement surveys often ask workers whether their supervisor inspires them.” Questions like this are often reported as being positively correlated with employee engagement and productivity.
But if so, what is the recommended solution to improving employee engagement? Instruct all your sales supervisors to “be more inspirational”?
Probably not, because that approach overlooks the root cause underlying the correlation. It’s more likely the supervisors’ level of emotional intelligence or their communication skills that are actually a better predictor of worker engagement — and ultimately, productivity and sales.
Without an examination of root causes, companies risk investing in development programs that focus on the wrong thing.
By using people analytics to pinpoint the behavioral drivers and developing specific development interventions to address them, organizations can de-risk decision-making and invest in their people with confidence.
Use People Analytics Data for Leadership Development
At CCL, our analytics-driven solutions help guide organizations through this process. We partner with clients through the following 5 steps to help them use their people analytics to adopt development and retention strategies that deliver the biggest payoff.
1. Set priorities.
What does your organization want to achieve? Engage your executive team and other key stakeholders in identifying which business outcomes and metrics are critical to your business strategy. For example:
- Should you focus on increasing customer satisfaction?
- Do you need to emphasize improving worker productivity?
- Should you concentrate efforts on driving more innovation?
2. Gather data.
No 2 organizations are alike, and one-size solutions are seldom a perfect fit. Specifically, 2 types of people data are critical to connecting the dots between business performance and people performance:
- Business metrics linked to the priorities you established.
- People data on the unique aspects of your environment that set you apart, including your organizational culture, employee experience and engagement, and leadership behaviors and practices.
Once organizational priorities are established and data collection is complete, predictive modeling helps identify the precise people factors that help or impede your most important business goals. Sophisticated people analytics point to important linkages and to any gaps in your current leadership practices and behaviors, culture, employee experience, and engagement. Using predictive analytics for leadership development allows you to paint a picture of the specific leader behaviors that are likely to have a quantifiable impact on your organization’s business outcomes.
4. Take action.
Now that you’ve connected the dots between your people data and key business metrics, you have the insights you need to make smarter investments. You can now take evidence-based steps to strengthen leadership, nurture a culture of engagement, and bring key business strategies to life.
However, this can be the riskiest step in the 5-step process.
How many times have organizations administered an employee engagement survey, and then failed to act on the data? Far too often, the effort put into creating and administering the survey, obtaining the results, and managing and securing the data stops with the final wrap-up communication and message from the CEO.
Then, nothing happens. That creates real risk for organizations because workers feel let down and morale suffers — they were asked for their feedback, and they gave it, but it seems that no one really cares to use it.
So, whether you choose to execute using internal resources or external partners, you must act on your people data, once you have it.
Do not just gather people analytics — use them to invest strategically in your employee development. This needs to include specific, measurable actions for improving individual leaders, team dynamics, and organizational culture.
5. Assess impact.
Use follow-up surveys and assessments to document the strategic impact of your action plans and the returns you achieve on your people investments. Evaluating the impact of leadership development is a final but critical measurement step because it helps you to fine-tune your approach and validate whether you’re on the right track. It can also help you build support for further investment.
Targeted, Data-Based Investments in Leadership Development Lead to Improved ROI
Particularly in volatile or uncertain environments, leadership development is key to future-proofing your organization.
In our experience, when there’s shared agreement of what an organization is trying to achieve and people analytics data are leveraged strategically in designing leadership development to meet the objectives, the odds increase dramatically that organizations see transformational impact on their most important business strategies.
As the value of human capital goes up and the availability of data continues to skyrocket, it becomes a no-brainer to utilize all of your available people data. The organizations who pay close attention to their people analytics and use them with care will be at a unique advantage in the years to come.
Ready to Take the Next Step?
Learn more about how your organization can help you unlock the power of your people analytics for talent management and employee development. Our Leadership Analytics experts can partner with your HR team to unlock the power of your people data in designing leadership development interventions that make a lasting impact on individuals, teams, and your entire organization.