Why Corporate Leadership Should Care About Talent Analytics

Talent analytics have a vital role to play and management should utilize it


Hiring the top talent remains a challenge in many industries. The skills gap has been around for a while, with recruiters struggling to match candidates to jobs across a range of industries and professions, with STEM and construction in particular suffering a shortfall.

There have been a variety of solutions put forward. Former Minister of State for Universities and Science in Britain, David ’Two Brains’ Willetts, is among those to argue that the issue begins at university level, and various programs have been put forward to better integrate higher education establishments with businesses to ensure students are better prepared.

The skills gap means that the balance of power has shifted from employer to employee, and recruitment is more important for HR departments than ever before. Most organizations now spend in excess of 40% of their total revenue on talent, and hiring the wrong person can be extremely costly. As a result, firms are increasingly looking to implement analytics programs in their HR departments.

The High-Impact Talent Analytics: Building a World-Class HR Measurement and Analytics Function report by Deloitte, has revealed the importance of advanced talent analytics for achieving better talent outcomes in terms of leadership pipelines, talent cost reductions, efficiency gains, and talent mobility — ensuring that the right people are moved into the right jobs. Deloitte found that share prices of the 14% of the 436 North American companies they surveyed who had mature talent analytics capabilities outpaced the S&P 500 by 30%, on average, over the three-year period from 2011 through 2013. According to Josh Breslin, the report’s author, ‘companies with a mature talent analytics function — one that allows HR to use advanced statistical models or predictive analytics to improve their business planning and performance—are deriving value from their efforts in nearly every talent area — recruiting, talent mobility, leadership pipeline and cost reduction.’

Analytics can be used by HR departments in a number of ways. HR leaders at ConAgra Foods, for example, are using analytics to calculate and report the total cost of its workforce instead of leaving it to the finance function to do. It is particularly important for filling leadership positions. Another study by Deloitte, Global Human Capital Trends 2015: Leading in the New World of Work, found that leadership gaps were the most critical issue, with 86% of HR and business leaders saying it was the biggest obstacle they face this year. Analytics can be greatly useful in finding those who have the necessary attributes to be effective leaders, and pinpoint what training they will need to fulfil their potential.

Despite the obvious advantages for firms, there are still a number of obstacles. One talent analytics study found that just 14% of companies studied have mature talent analytic capabilities. This is the result of many HR organizations not knowing where to begin with implementing an analytics program, and lacking the skills to do it. Companies need first to train them in dealing with the data, or even have a specialist brought in with the required skills to assist them. It is also important that the data be as clean as possible, which is not necessarily an easy task in some HR departments which are yet to fully digitize.

Hiring talent also still requires a certain degree of common sense on the part of leadership. According to Vicki Gavin, head of business continuity and information security at The Economist, the shortage of talent is largely down to unrealistic recruitment criteria. It is important to remember that young people graduating have a fundamentally different outlook on life to the older generation, and it can be difficult for leaders born in a different era to know exactly what skills they are looking for, and appreciate the value that they can add. According to David Willetts, there is a ‘mismatch’ between graduates' skills and the demands of employers, but it may be that employers need to adjust their demands to suit graduate skills, as their ways of working could well be those businesses use in the future.

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