1 February HCI Research The Business Impact of Talent Intelligence In partnership with:
3 Table of Contents Executive Summary... 1 Key Findings... 2 Definition of Key Terms... 3 Introduction... 3 Why Talent Intelligence Now? Research Research... 8 Talent Intelligence Proficiency and Deficiency:DPOs versus DDOs... 9 Connecting Talent Intelligence to Organizational Financial Performance A Difference of Opinion Top and Bottom Nine Metrics Data Classification Segments Workforce Data... Sourcing, Onboarding Talent... Learning and Development... Succession Planning and Talent Mobility... Performance Management and Compensation... Barriers Conclusion About This Research Appendix A: About the Research Partners Appendix B: Respondent Demographics Appendix C: Works Cited... 29
5 The Business Impact of Talent Intelligence The Business Impact of Talent Intelligence Executive Summary Talent Intelligence (TI) could be a key lever in today s hyper-competitive world. As business intelligence captures, extracts and analyzes key data on an organization s traditional hard assets, talent intelligence centers on key data on its people assets to generate insights that can drive improved decision-making and performance. In conjunction with research partner and TI innovator Taleo Corporation (Taleo), the Human Capital Institute (HCI) launched a new study into the economics of TI to examine connections between financial performance and the use of talent intelligence. The results reveal a heightened importance and greater access to workforce data among organizations that do satisfy leaders needs via proficient analysis of workforce data (Data Proficient Organizations DPOs) versus those organizations whose business leaders are not satisfied with the workforce data provided to them (Data Deficient Organizations DDOs).The research findings identify the distinct differences between talent intelligence practices of both types of organizations. Copyright 2012 Human Capital Institute. All rights reserved. 1
6 HCI Research Leading-edge companies are increasingly adopting sophisticated methods of analyzing employee data to enhance their competitive advantage. Google, Best Buy, Cisco, and others are beginning to understand exactly how to ensure the highest productivity, engagement, and retention of top talent, and then replicating their successes. If you want better performance from your top employees who are perhaps your greatest asset and your largest expense you ll do well to favor analytics over your gut instincts. Competing on Talent Analytics Thomas H. Davenport, Jeanne Harris and Jeremy Shapiro Harvard Business Review October 2010 Key findings: Data Proficiency Matters: Organizations that rated themselves proficient in workforce data analysis were far more likely to rate their business leaders as satisfied with workforce data, to draw connections between retention and recruiting, to calculate HR s impact on business strategy, and even, among publicly traded companies, more likely to financially outperform those who rated themselves as deficient at workforce data analysis. Not All Metrics Are Created Equal: Of the types of talent metrics measured, those concerned with defining the organization s talent needs, evaluating how talent is selected, and evaluating talent performance were considered very important by the majority of respondents. The least important metrics were mainly rudimentary talent metric counts, percentages, and costs. Don t Take the Easy Road Out: While data proficient organizations tend to value many of the same metrics as data deficient organizations, they place markedly higher importance on those that enable measuring and tracking internal talent demand, quality of hire, engagement, and fit within the organization. The Gap between Importance and Access: Among several metrics with high importance ratings, significantly fewer respondents indicated they also had access to reliable data in key areas including: competency/skills gap analysis, cost of turnover, employee engagement, quality of hire, employee productivity, succession planning, learning and development, and others. Major firms such as Google, Best Buy, Cisco, Starbucks, Limited Brands and Lockheed Martin have integrated a TI approach into their larger corporate plan and business strategy. This report describes how successful organizations have prioritized, accessed, and used workforce data to guide their business decisions. 2 Copyright 2012 Human Capital Institute. All rights reserved.
7 The Business Impact of Talent Intelligence Definition of Key Terms Data Proficient Organizations (DPOs) Data Proficient Organizations (DPOs) are defined as those respondent organizations that agree they are proficient at analyzing workforce data AND their business leaders are satisfied with the workforce data provided to them. Data Deficient Organizations (DDOs) Data Deficient Organizations (DDOs) are defined as those respondent organizations that don t agree that their organization is proficient at analyzing workforce data or their business leaders are not satisfied with the workforce data provided to them. Talent Intelligence Talent Intelligence is the capture, aggregation, analysis, and timely reporting of talent data to inform decision making for improved organizational strategic planning and operations. Talent Intelligence Talent Intelligence is the capture, aggregation, analysis, and timely reporting of talent data to inform decision making for improved organizational strategic planning and operations. Introduction Improved data processing and analytics continue to revolutionize today s organizations. From subtle data mining to sophisticated forecasting methods to real-time market feedback, quantitative information has rapidly become an essential counterpart to the qualitative feel or intuition that organizations often have relied on in the past to guide their decision-making. At the same time, employers are faced with increasingly complicated workforce data and technology: disparate systems, organizational silos, even conflicting datasets present real, and murky, challenges to understanding the employee base. Every day, innovative new tools for the collection and analysis of business data are becoming increasingly affordable and easy to use. With this greater influx of data and rapidly emerging tools to analyze data, quantitative and analytic abilities are necessary skills for much of today s workforce. Nearly every department of any modern outfit has integrated an analytic component into their core functions. As this analytics trend continues to surge, there is no reason for HR professionals to allow themselves to be left behind. The field of Talent Intelligence (TI) the use of concrete metrics to monitor and study the people elements of a workforce is rapidly developing, and has already been embraced by many leading firms. Copyright 2012 Human Capital Institute. All rights reserved. 3
8 HCI Research Many organizations have already been using some iteration of TI, (albeit in rudimentary, limited forms) including tracking conventional HR data, such as retention rates, hiring costs, and manager to staff ratios. Organizations using more sophisticated TI approaches do much more than just track the typical administrative HR data points. Advanced TI practitioners measure complex data like quality of hire, competency/skills gaps, and employee engagement. They create accurate and clear profiles of large or dispersed workforces. They also are able to connect HR metrics to organization-wide strategy and performance and can reach across functional silos to both capture data, and provide actionable information to leaders. As one industry observer stated, Effective use of talent intelligence means managing workforce data in the context of other business information and using it to drive decisions. Talent intelligence moves beyond traditional reporting on talent management and benchmarks. It uses an analytic framework that ties data related to business performance and talent management effectiveness. It leverages a variety of technologies to provide historical, current, and predictive views of the workforce and its direct impact on business operations. It also enables talent and other business leaders to better understand and addresses the impact workforce investments have on business performance and results. 1 Talent Intelligence, then, is the capture, aggregation, analysis, and timely reporting of talent data to inform strategic decisions with organization-wide impact. Among the most critical components of TI are data aggregation and capture. While the potential sources for talent data capture may seem selfevident at first talent-processing systems within the business it s critical to step back and consider the larger talent ecosystem. Does the organization recruit from LinkedIn? Does it use third party assessment tools in the recruiting process or leadership development? Does it rely on HRIS tools to store core people data i.e. pay grade, job role, and hire date? To develop the most complete talent picture for each employee, all of these talent systems and many more need to become part of the capture and aggregation strategy. For example, it is important to link HRIS data, LinkedIn data, data from talent partners and recruiting/cv data with the organization s talent metrics data. While analysis is critical, it is misleading and ineffectual without the right inputs. Neither the data nor the analysis mean anything if not delivered in a way that empowers managers to make better decisions, faster. 1 Brenna, Mike Talent Intelligence: Cut Through the Chaos, March 7, 2009, talentmgt.com. 4 Copyright 2012 Human Capital Institute. All rights reserved.
9 The Business Impact of Talent Intelligence The benefits of utilizing TI include: Ability to provide improved insights for strategic staffing choices, talent mobility, sourcing decisions, workforce planning, development opportunities, and goal planning. Clear identification of both high- and low-performers and potentials, especially in firms where it is difficult for managers to develop a rapport with each employee due to workforce size or geographical dispersion. Consolidation of disparate workforce-related data from multiple sources which enables more robust, substantive insights. Improved ability to project short-term staffing needs. Firms are better able to manage for fluctuations in volume or productivity. Skills and competency gap analysis that predicts organizational capacity to deliver on strategic goals and specific programs. In addition, TI s improved reporting ability can increase the visibility of human capital issues and highlight their importance and impact in the C-Suite of an organization. To gain that level of impact however, this reporting must be presented in a manner understandable and relevant to a business leader s needs. The real issue [that] few pay attention to HR metrics is a simple one: most simply are not compelling. Let s face it: HR is rarely a strategic priority, and due to years of bureaucracy and failure to meet expectations, it is something that most managers and executives would rather deal with less rather than more unless it is immediately relevant to their business. For metrics to be effective in altering behavior, they need to be both visible and immediately relevant to the audience that needs influencing, not the party producing them. To accomplish that, recruiting leaders need to proactively identify and understand the factors that make a metric a critical must-see metric. The goal behind measurement initiatives should be to get executives to demand access to your metrics, to pay thorough attention to them, and to know immediately how to act differently in response to them. 2 Why Talent Intelligence Now? Talent management practices and human capital quality are issues that affect an entire organization, not just its HR department. This is especially true in today s service- and knowledge-driven economy, where the human capital of an organization is its principle engine of production. 2 Sullivan, Dr. John, How to Get Your Executives to Pay Attention to Metrics, September 6, 2010, ere.net Copyright 2012 Human Capital Institute. All rights reserved. 5
10 HCI Research As the global economy continues its slow recovery and organizations grapple with understanding the way forward in an uncertain climate, the ability to define future talent needs and vulnerabilities is a critical key to success. In today s knowledge economy, up to 70 percent of an organization s value is based upon the skills and experiences of its employees. Yet for most businesses, there is simply no visibility into how well the company s biggest asset is being managed. In fact, LinkedIn and Facebook probably offer more information about a company s talent assets than their HR technology systems have today. Without a unified approach to talent data, real intelligence on a company s most valuable asset its workforce is not immediately available to generate key insights for decisions that drive business performance. 3 Four factors are driving the need among business leaders for talent insights: Companies continue to globalize which requires more comprehensive talent insights across a global workforce. The market for leaders and key professional skills talent is more competitive and requires a system to efficiently identify and source it. The aging workforce further exacerbates the demand for talent and underscores the need for succession planning in key positions. There is a growing inability to formally identify, develop, and retain the leaders of tomorrow. The strategic implications of basing decisions on talent intelligence are well-documented among thought leaders and were echoed in the survey responses. One respondent stressed the importance of understanding talent data stating, Without full knowledge of the competency and satisfaction of the workforce we have no direction on how to excel, retain, or move further toward our mission. 3 Talent Intelligence Key to U.S. Business Success, 2010, Taleo Corporation. 4 HR Analytics: Driving Return on Human Capital Investment, November, 2009, Oracle In addition to strategic benefits, the cost savings associated with implementing an effective TI solution can be substantial. An industry paper cited multiple cost benefits for implementation including revenue stream protection and mitigated replacement costs for high performers, improved management of hiring costs through analysis of cost tradeoffs of hiring external versus internal talent, ensuring salaries and benefits are consistent with benchmark sources of market salaries to avoid overpaying for talent or underpaying which could increase turnover. 4 Adopting TI has become more practical than ever, as the quantity and quality of tools, services, consultants, and systems are growing exponentially. Perhaps even more compelling, is the increasing ease of collecting and generating 6 Copyright 2012 Human Capital Institute. All rights reserved.
11 The Business Impact of Talent Intelligence usable, relevant data. The digitized commerce and workplace of the 21st century produce incredible amounts of data. Data is now a critical input, valued output, and, in many instances, an inevitable side-effect of most market activity. Those who take advantage of this abundance of available data can differentiate themselves and gain strategic advantages over organizations that disregard it Research In 2010, Taleo Research and HCI conducted a survey on talent analytics. The survey was designed to understand the value companies place on talent information and whether HR and Line of Business executives have access to reliable talent data to understand the levers that help them drive business results. 29 metrics were measured for importance and reliable accessibility. The key findings from this survey demonstrated: There were significant gaps between the level of importance companies place on talent management data and their access to reliable information. HR and Line of Business executives were not receiving access to talent management data that ensures they have the right talent to meet everchanging business challenges. Although HR leaders need additional information for regulatory and compliance purposes, HR and Line of Business leaders were aligned in ranking the level of importance they place on talent management information to drive the business. The business of information management helping organizations to make sense of their proliferating data is growing by leaps and bounds. In recent years Oracle, IBM, Microsoft and SAP between them have spent more than $15 billion on buying software firms specializing in data management and analytics. This industry is estimated to be worth more than $100 billion and growing at almost 10% a year, roughly twice as fast as the software business as a whole. Data, Data Everywhere The Economist February 25, 2010 An analysis of the top 10 most important talent analytics were broken down into four major categories: Business Strategies. Defining business goals and aligning employees to achieve these goals. Retention. Identifying and retaining high potentials and high performers. Leadership Development. Identifying and developing leadership bench strength. Workforce Metrics. Understanding the skills gaps to execute the business plan. There was a significant opportunity to provide accurate, accessible human capital data which could generate insight and improve business results. But talent intelligence capabilities must be timely, intuitive, and not require separate processes. Copyright 2012 Human Capital Institute. All rights reserved. 7
12 HCI Research The 2010 study also found HR practitioners focused on efficiency instead of effectiveness in measuring talent management. HR organizations have usually measured the efficiency of their talent management strategies, such as the time to hire, HR headcount ratios, and percentage of performance reviews submitted on time. But they lack access to information to measure their effectiveness. 5 The survey results revealed that companies were not measuring the metrics that matter. Instead, they measured less important data and did not provide strategic insight to their executives Research Taleo Research and HCI partnered once again to update this research and to delve deeper into TI data metric importance and use. An expanded set of 37 metrics were measured. An 86-item survey exploring the importance and use of various talent management metrics was created and distributed to HCI s executive members and through its network. More than 600 responses were received from organizations around the world and the results gleaned helped produce the foundational knowledge for this paper. The results reveal the heightened importance and greater access to workforce data among organizations that do satisfy leaders needs via proficient analysis of workforce data (Data Proficient Organizations DPOs) versus those organizations whose business leaders are not satisfied with the workforce data provided to them (Data Deficient Organizations DDOs).The research findings identify distinct differences between the talent intelligence practices of both types of organizations. Several metrics were more specifically defined and the categories were revised to reflect the talent metrics associated with needs identification, selection, and the deployment of talent within the organization. Workforce data Workforce profiling metrics such as costs related to hiring, talent deployment, and turnover as well as workforce gaps, engagement levels, diversity, and vacancy counts. Sourcing, onboarding talent Hiring efficacy including source of hire, time, cost, quality, and success rates. Learning and development Tracking employee development and training according to needs of the employee and the organization. 5 Talent Intelligence Key to U.S. Business Success, 2010, Taleo Corporation. Succession planning and talent mobility Measuring the organization s bench strength and identifying roles that may be at succession risk. 8 Copyright 2012 Human Capital Institute. All rights reserved.
13 The Business Impact of Talent Intelligence Performance management and compensation Tracking metrics related to performance, compensation, retention and top performer exposure. In addition to identifying importance versus access and reliability gaps for the TI data metrics, results were analyzed to identify organizations that are proficient data practitioners and the benefits these organizations realize as a result of utilizing TI data. Key questions to answer in the 2011 study included: What are the financial benefits of using TI? What are some common TI practices, and who is using it now? What metrics are used and what metrics need to be developed? What are the barriers to adopting TI systems and how have users overcome them? Talent Intelligence Proficiency and Deficiency: DPOs versus DDOs To gain deeper insight into the respondents and their organizations use of workforce data, they were asked baseline questions about whether their organization was proficient at analyzing workforce data and their business leaders level of satisfaction with the workforce data provided to them. Less than half (43%) of the respondents agreed their organization was proficient at analyzing workforce data and only 56% indicated their business leaders were satisfied with the workforce data provided to them. These findings underscore the fact that workforce data analytics is an important development opportunity for many companies. The combination of these data points clearly identified organizations that excel at meeting the data needs of their company. Among those organizations proficient at analyzing workforce data, more than 3 in 4 are better able to satisfy their business leaders workforce data needs. This suggests that business leaders need intelligence that is accurate, insightful, and actionable and many of them do not have access to it. HR professionals able to provide intelligence that meets this standard are better able to drive organizational success. Data Proficient Organizations (DPOs) Data Proficient Organizations (DPOs) are defined as those respondent organizations that agree they are proficient at analyzing workforce data AND their business leaders are satisfied with the workforce data provided to them. Data Deficient Organizations (DDOs) Respondents who disagree that their organization is proficient at analyzing workforce data AND/OR their business leaders are not satisfied with the workforce data provided to them. Copyright 2012 Human Capital Institute. All rights reserved. 9
14 HCI Research Figure 1: How much do you agree that your organization is proficient at analyzing workforce data? How satisfied are your business leaders with the workforce data that is provided to them? Business Leader Satisfaction With Workforce Data Organization Is Proficient at Analyzing Workforce Data Agree Disagree Satisfied 77% 39% Dissatisfied 18% 50% Not sure 5% 11% To identify differentiating traits for the importance, access, and use of various workforce data, the research results were segmented into two categories. Data Proficient Organizations (DPOs) are classified as those respondents who agree that their organization is proficient analyzing workforce data AND indicated their business leaders are satisfied with the workforce data provided to them. Proficient as we are using it in this paper is about more than mere access to technology, but implies a level of understanding and analytic acumen as well. The more we can relate people metrics to business performance, the more the leaders will pay attention to the people side of the business. When the leaders only receive data on financials, they will only make decisions based on Survey Respondent Data Deficient Organizations (DDOs) include those respondents who do not agree that their organization is proficient at analyzing workforce data AND/ OR their business leaders are not satisfied with the workforce data provided to them. Thirty-five percent (35%) of the survey respondents were identified as DPOs and 65% as DDOs. Connecting Talent Intelligence to Organizational Financial Performance Nearly all of the DPOs agreed HR is better able to use workforce metrics to demonstrate their contribution to their businesses strategies by a nearly 2:1 margin, compared to DDOs. HR at these organizations is better positioned to get a seat at the table, or to contribute to the strategic direction of the organization. DPOs are also markedly better able to analyze and make connections between recruiting and retention, which has a significant impact on the organization s bottom line. 10 Copyright 2012 Human Capital Institute. All rights reserved.
15 The Business Impact of Talent Intelligence Agree HR uses workforce metrics to demonstrate its contribution to your organization s business goals and strategy Satisfied with organization s ability to analyze and make connections between recruiting and retention Data Proficient Organizations Data Deficient Organizations 94% 50% 78% 20% In a sampling of nearly 80 companies from the survey data, DPOs outperform DDOs on key financial metrics. Interestingly, there does appear to be a connection between those organizations that use talent intelligence and financial performance. This was a difficult hypothesis to test, given the myriad of internal and external factors which can affect financial performance. Figure 2: How much do you agree or disagree HR uses workforce metrics to demonstrate its contribution to your organization s business goals and strategy? How satisfied are you with your organization s ability to analyze and make connections between recruiting and retention? While the sample size is low, this research suggests that there is a connection between financial performance and talent intelligence. Such a connection is to be expected given the rapid increase in knowledge work over the past half century. According to McKinsey, knowledge workers have driven more than 70 percent of the economic growth in the U.S. over the past three decades, and 85 percent of the new jobs created in the past decade have required complex knowledge skills. 6 Research by Deloitte states that intangibles (e.g. IP, know how, secret recipes, expertise) which are directly related to talent, now account for more than 80% of company valuations. 7 Given these various data points, one would expect to see a connection between improved talent awareness and management and business performance. Key Financial Measures * Data Proficient Organizations Data Deficient Organizations ROA 7.3% 6.8% Price to Book Stock Value Percent Change Past 12 Months +4.6% -3.0% N * Values for each organization were sourced on Yahoo! Finance on November 21, Economic Conditions Snapshot, 2010, McKinsey. 7 Extracting Maximum Value from Intangible Assets, Deloitte Copyright 2012 Human Capital Institute. All rights reserved. 11
16 HCI Research What is the exact connection? That s a bit harder to determine. Did the talent awareness of data proficient organizations enable them to outperform less talent aware companies? Or were these companies already outperforming peers, enabling them to invest discretionary funds into more talent awareness? To some extent, this distinction may be less relevant for HR professionals. Leading companies are either using talent data to create competitive advantage or they are using it to maintain and extend competitive advantage. In either case, those companies who are not yet leveraging sophisticated TI practices should take notice. A Difference of Opinion A review of the 2011 ratings by type of organization reveals a significant disparity between those who place a premium on key metrics and those who do not see their importance. A higher percentage of DPOs see value in metrics that assess talent alignment and fit. The most important metrics from the survey fall under key questions including: Are our talent needs explicitly defined in order to source the right talent? Is the right talent selected in an efficient manner? Are employees productive and engaged post-hire? Measuring and tracking internal talent demand, quality of hire, engagement, and fit within the organization is clearly more of a priority for DPOs. The most important metrics from the 2011 survey can be categorized as follows: Defining Talent Needs Competency/skills gap analysis Critical roles with no identified successors Evaluating Talent Selection Best sources of talent to fill skill/expertise gaps Quality of hire Average time to hire for critical roles Evaluating Performance and Relationship Productivity Employee engagement levels Top performer retention Total turnover Rudimentary talent metric counts, percentages, and costs were rated lowest for importance. While DPOs also place a higher value on these metrics versus DDOs, the rate of importance is considerably lower than the Top 9. Difficulty incorporating these data points into strategic initiatives, which ultimately 12 Copyright 2012 Human Capital Institute. All rights reserved.
17 The Business Impact of Talent Intelligence impact organizational value, may be the reason these factors were rated lower in importance. There may also be a general lack of understanding how to best use these metrics to improve business decisions. Top and Bottom Nine Metrics Of the 37 metrics measured in the current survey, some were more important to respondents than others. Several of the metrics identified as being more important in 2010 continue to be of great value in Employee engagement and competency/skills gap analysis were frequently sought metrics in both surveys. Most Important Metrics Top Nine: Data Proficient Organizations (DPOs) Data Deficient Organizations (DDOs) Figure 3: How important are the following types of data for your organization? Percentage Very Important Total turnover 61% 77% Productivity Top performer retention Best sources of talent to fill skill/expertise gaps Average time to hire for critical roles Competency/skills gap analysis Critical roles with no identified successors Employee engagement levels Quality of hire 49% 47% 46% 47% 44% 46% 42% 42% 76% 70% 68% 66% 66% 63% 63% 62% 0% 10% 20% 30% 40% 50% 60% 70% 80% Percentage Very Important Copyright 2012 Human Capital Institute. All rights reserved. 13
18 HCI Research Figure 4: How important are the following types of data for your organization? Percentage Very Important Least Important Metrics Bottom Nine: Data Proficient Organizations (DPOs) Data Deficient Organizations (DDOs) Percentage of leadership pipeline filled internally vs. externally 11% 17% Total new hire cost (hiring, onboarding, training, etc.) 13% 22% Percentage of the bonus pool that goes to top performers 19% 33% Percentage of succession plans that are implemented Percentage of complete employee development plans Top performers not on succession plans Offer acceptance rate 26% 24% 23% 27% 37% 40% 40% 41% Performance review scores after talent mobility event 26% 42% Number of applications per hire 25% 42% 0% 10% 20% 30% 40% 50% Percentage Very Important Data Classification Segments The 37 metrics from the survey are organized in this paper as follows: Workforce data Sourcing, onboarding talent Learning and development Succession planning and talent mobility Performance management and compensation For each of the metrics, survey respondents were asked how important each type of data was and whether they have reliable access to this data at their organization. The charts featured in the following sections compares the percentage stating the data was very important to their organization and to the percentage stating they have reliable access to this data by DPOs versus DDOs. 14 Copyright 2012 Human Capital Institute. All rights reserved.
19 The Business Impact of Talent Intelligence Workforce Data There is a mismatch between how important certain types of data and what is available. Companies often are not able to provide the metrics that matter; instead many types of data with lower importance are made available because they are easier to track. Employee engagement levels Competency/skills gap analysis Relative costs to build, buy, rent talent to overcome skills/expertise gaps Turnover cost Revenue per employee Total turnover Open/Vacant positions Diversity Data Proficient Organizations (DPOs) Data Deficient Organizations (DDOs) 22% 15% 26% Access 20% 19% 15% 18% 13% Importance 18% 21% 18% 22% 0% 9% 34% 37% Figure 5: How important are the following types of data for your organization? Are you able to access this data at your organization and is it reliable? Percentages in the right half of the this figure are instances where those who rated that metric as very important were greater than those who had reliable access to that metric. Percentages in the left half, indicate that those with reliable access to the metric were greater in number than those who considered it very important 30% 20% 10% 0% 10% 20% 30% 40% Importance vs Accessibility Gap Analysis Employee engagement levels and competency/skills gap analysis are the most sought after Workforce Data metrics. Many organizations recognize their importance; however this data has significantly lower access and reliability rates among both DPOs and DDOs. Clearly, even those that are proficient at collecting and analyzing workforce data have room for improvement. The best of these companies push this information deep into management ranks instead of reserving their findings strictly for C-suite executives. DPOs are much more likely to recognize the value of employee engagement levels. Slightly more than 3 in 4 DPOs cited this as very important compared to less than half of the DDOs. This is the largest importance disparity Copyright 2012 Human Capital Institute. All rights reserved. 15
20 HCI Research among the workforce metrics and is a clear differentiating characteristic for an organization aiming to provide metrics that are in demand among executives. Figure 6: How important is Total Turnover data for your organization? Are you able to access Total Turnover data at your organization and is it reliable? Total Turnover Data The value of accurately measuring employee engagement and its affect on the organization s financial performance is something several leading companies Data Proficient Organizations (DPOs) Data Deficient Organizations (DDOs) Very important 49% 76% Have access to reliable data 36% 58% 0% 20% 40% 60% 80% 100% exploit. Almost every company we ve studied says it values employee engagement, but some, including Starbucks, Limited Brands, and Best Buy, can precisely identify the value of a 0.1% increase in engagement among employees at a particular store. At Best Buy, for example, that value is more than $100,000 in the store s annual operating income. 8 Total turnover and open/vacant positions data was more available and reliable among the surveyed organizations; however a lower percentage identified these as very important metrics. Figure 7: How important is Employee Engagement Levels data for your organization? Are you able to access Employee Engagement Levels data at your organization and is it reliable? Employee Engagement Data Very important Have access to reliable data Data Proficient Organizations (DPOs) Data Deficient Organizations (DDOs) 42% 62% 57% 84% 8 Davenport, Thomas H.; Harris, Jeanne; Shapiro, Jeremy Competing on Talent Analytics October, 2010, Harvard Business Review 0% 20% 40% 60% 80% 100% 16 Copyright 2012 Human Capital Institute. All rights reserved.