People Analytics: Challenges and Opportunities in Talent Management

Talent management, grounded in concepts such as people analytics, may be the greatest competitive advantage for companies in the coming decades

Talent as the main driver of value has been changing alongside digital transformation. Certain roles are becoming increasingly complex and require highly qualified and experienced personnel. Technological innovations lead to an accelerated obsolescence of skills, thus requiring people to constantly upgrade their qualifications to remain competitive, while the generational cycles are shortened, causing disparity in job expectations and perspectives. 

Given the increasing complexity of Human Capital Management (HCM), many companies are betting on people analytics, partly because these initiatives help collect large amounts of valuable data and, most importantly, because the applied data analytics algorithms produce insights that substantially improve decision-making and value creation.    

In my experience, the main challenges faced by talent management departments (be it Human Resources, Talent and Culture, Human Capital, etc.), are the following:

  1. Defining positions and roles in an organization has become highly complex. Activities change constantly and it is not easy to define what type of preparation and experience will guarantee the necessary competences and expected performance. Companies are now leaning towards matrix or flat organizational structure, which means that there is no longer a hierarchical relationship that could help breakdown what the required competencies should be.
  2. The variety of generations in the workforce has increased and it is very difficult to establish roles within the company because there can be up to four or five generations that can fill the same position. Each generation has its own expectations regarding salary and benefits, value prioritization, stability and rewards.
  3. Given the aforementioned, recruitment processes have become very complex. In most cases, outsourcing is required, which increases hiring costs.  It is complicated to define who the ideal candidate is.
  4. Training and onboarding costs are very high because of the complexity of the processes. Thus, new hires are required to go through a much thorough program in order to reach their potential in the company.
  5. Staff turnover is becoming a critical and expensive issue: if we take the previous factors into account, losing a successful and trained employee is a serious problem.

These five issues turn talent management into a challenge, but at the same time, into a great opportunity. Those companies that succeed in solving these challenges will gain a competitive advantage. This is where people analytics rises as a new model. 

This concept relies on the use of business intelligence and advanced analytics in talent management processes. The main goal is to gather as much valuable data in each and every process in order to develop and implement solutions based on digital transformation that can significantly improve the planning and decision-making processes. Companies can create value in human capital management through various initiatives, including:

  1. Analytics and talent search tools to optimize recruitment through the correlation of performance indicators against sources and profiles.
  2. Versatile compensation schemes that are tailored to each position and employee profile. These tools help leaders design effective teams that maximize performance indicators.
  3. Talent retention plans based on analytics, which are customized and aligned with business performance.

The innovation behind these processes is that they are based on big data and artificial intelligence. It is recommended to first identify areas of opportunity and embark on a business intelligence project to collect as much valuable data as possible. The next step would be to implement agile developments with advanced analytics, in order to improve complex decision-making processes and automate as many of them as possible. The success of these initiatives can become a company’s most powerful competitive advantage.

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