Francis Wade Unlocking the power of people analytics
As a CEO, the odds are extremely low that you have an HR background. As such, you probably struggle when board members ask detailed questions about human capital or corporate culture.
You want to enhance your effectiveness in this area, but waiting for your human resources department to evolve might not be a viable option. So, what should you do in the meantime to improve your leadership skills?
Upon becoming a CEO, it can be surprising to realise how much of your role revolves about human resources skills, often overshadowing your finance or operations experience. In this new capacity, talent management becomes paramount since nearly all your goals are achieved through the efforts of others.
However, without a background in HR, you might lack the instincts and insights that HR professionals accumulate over a career. Given the relatively short tenures of CEOs, there’s no time to wait for these skills to develop gradually. You need a faster way to acquire them.
Fortunately, a viable shortcut exists in the form of people analytics. This concept is distinct from HR department analytics as it encompasses company-wide tools addressing human capital concerns across all departments. These tools are essential for every manager, including CEOs.
As such, they belong everywhere, including the board level. For example, in one client organisation, board members introduced a new metric, average board age. The idea? To lower it dramatically.
People analytics even extend to customers and prospects in the form of information captured by marketing and sales departments. This data help identify customer preferences and trends.
Moreover, the EU’s 2023 Corporate Sustainability Reporting Directive mandates the use of people analytics for disclosing supply chains. This measure aims to prevent the exploitation of child or slave labour by suppliers in their factories.
And of course, there are metrics which track staff performance. Unfortunately, many Caribbean companies have weak or non-existent performance management systems. Leaders, therefore, lack the most basic people data.
What should a CEO do to infuse people analytics into daily operations?
Reconsider the role of the CEO: Most top leaders are willing to own bottom-line financial results, especially in the short-term. Yet, these results are all driven by human capital. It follows, therefore, that the prevailing corporate culture must be a concern.
It might seem like a good idea to leave this topic to HR, but it’s a mistake. The ultimate responsibility lies at the very top.
However, I rarely see leaders call for a specific transformation in corporate culture as part of their strategic plan. They appear not to view this as their job, or maybe outside their capabilities.
Consequently, they sometimes end up unwittingly creating toxic environments.
Demand effective dashboards: Establishing responsibility is just the beginning, but it’s far from sufficient.
Consider the processes involved in gathering accounting data, the methods used to manage it, and the supporting technologies involved. Fortunately, standardised reporting and financial ratios make the job infinitely easier. Today’s executives expect information to be presented in widely accepted formats.
Think of these reports as a kind of dashboard, a tool that allows leaders to analyse recent data through a particular lens.
Unfortunately, no such standards or dashboards exist for people analytics.
The closest comparison may be the Balanced Scorecard, which is designed to monitor the progress of strategic plans. While it does include a ‘People Perspective’ – also called ‘Learning and Growth’ – it offers only basic help.
Start by using the scorecard, but also craft your own dashboards to track business-as-usual, human capital activity. Treat these dashboards as a crystal ball to make predictions, and also as a microscope to peer into the past.
Invest in and expect a ROI: Sadly, many HR units lack the kind of sophistication we’re discussing. Therefore, they can’t make a case at the highest level for game-changing investments that could change everything.
In other words, people analytics is caught in a check-and-egg dilemma. Demonstrating a return on investment or ROI to buy the necessary tools is essential. However, if the data required to make this case is absent due to the lack of these tools, where does one begin?
As a CEO, you need to appreciate this predicament and the ways it’s holding back the organisation. But you must get unstuck at the same time.
Start by investing in the training or analytics tools HR staff needs to provide leadership. Pick low-hanging fruit which can set off a transformation in company-wide people analytics.
By taking these three crucial steps, you’ll move closer to the ideal scenario in which you have a company armed with these capabilities across all areas. Unlike many other Caribbean companies, you will be well-equipped to compete in a global marketplace with people analytics.
Francis Wade is a management consultant and author of Perfect Time-Based Productivity. To search past columns on productivity, strategy and business processes, or give feedback, email: columns@fwconsulting.com