The human resources department is known for being touchy-feely, but in the age of big data, it's becoming a bit more cold and analytical. From figuring out what schools to recruit from to what employees should be offered flexible work arrangements, data analytics are helping HR professionals make more informed decisions.
The success of Oscar nominated film Moneyball isn't hurting either, said James Raybould, director of insights at LinkedIn. The movie, based on the Michael Lewis book, tells the true story of Oakland A's General Manager Billy Beane. Using statistical analysis, Beane was able to recruit undervalued baseball players and lead his underfunded baseball club to the playoffs.
"We're seeing a lot of companies actually aspire to that movie," he said last week during a panel on big data at the Impact 2012: The Business of Talent conference convened by consulting group Bersin & Associates. "How do I make Moneyball for HR?"
Capital One, the credit card company and bank, has automated data reports on employee attrition, headcount and promotions. It is also beginning to analyze the characteristics of its most successful employees, like what schools they went to and what their majors were, said Mark Williams, statistical analysis manager for workforce analytics at Capital One. "Now we're going back through resumes and creating a lot of that data," he said.
Joseph Walker of FINS talks about the use of statistics by HR departments.
In the wake of the financial crisis, when the compensation structure of many banks were criticized for incentivizing excessive risk-taking, Williams has also been asked to do an analysis of how pay is linked to sales performance.
"We do risk very well; we don't lend to people who won't pay us back.... Part of that is we have really good governance over our credit models; we have a staff of statisticians and that's their job," he said. "What I'm looking to do is a very similar thing in creating a governance process around some of the risk metrics for compensation."
The big data revolution is just beginning to penetrate the HR industry, said Josh Bersin, chief executive and president of Bersin & Associates. Some companies have a progressive view of how data analytics can help their HR departments. Most don't. "Of the companies we talk to, five to 15% are very sophisticated at analyzing people data," he said.
At Luxottica Group, the Milan-based eyeglasses conglomerate, data analytics have disproven assumptions about gaps within the company's recruiting strategy, said Sean Dineen, vice president of talent management and organizational development.
The data showed it took on average 96 days to fill a position with an external candidate. The management team believed that the company's recruiters acted too slow, but a statistical analysis found hiring managers dragged their feet about making decisions about who to hire, Dineen said. It now takes the company 46 days to hire external candidates.
Luxottica, the parent company of brands like Ray-Ban and Oakley, is also using analytics to see how well it is does in promoting its best employees. "Are we actually moving high potential people?" he said. "Why is this person [who rates highly] in the way we evaluate talent in the same job they were four years ago?"
Write to Joseph Walker at Joseph.Walker@dowjones.com