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I n S e a r c h of HR I n t e l l i g e n c e :

E v i d e n c e - B a s e d HR A n a l y t i c s P r a c t i c e s
i n H i g i i P e r f o r m i n g C om p a n i e s
By D r . S a l v a t o r e F a l l e t t a
28 I PEOPLE & STRATEGY
There is a dawning awareness that data and information, as a commodity in and of itself, has
little value to an organization unless it is transformed into meaningful intelligence. The sheer
volume of Big Data that organizations can and do amass is overwhelming. What is needed is
the type of alchemy that transforms data and information into analytics and intelligence vis--vis
an evidence-based approach. In the context of human capital management, HR intelligence, as
derived from HR research and analytics practices, is a fast emerging mandate for organizations
seeking strategic competitive advantage.
Advancing HR
Analytics
T
he topic of HR intelligence or what is
more popularly and perhaps narrowly
referred to as human capital, talent,
people, and/or HR analytics is one of the hot-
test trends in the context of HR strategy and
decision making. Several notable thought-
leaders have called for the HR profession to
adopt an evidence-based management, deci-
sion science, HR intelligence, and predictive
analytics approach to understanding and
managing human capital in order to improve
individual and organizational performance
(Pfeffer & Sutton, 2006; Boudreau &C Rams-
tad, 2007; Falletta, 2008; Fitz-enz, 2010
respectively). With the exception of a handful
of high-profile case studies (e.g., Google,
IBM, and Morgan Stanley), little is known
about the extent to which Fortune 1000 and
select global companies are performing
broader HR research and analytics practices
This article summarizes
the results of The HR
Analytics Project
conducted by the
Organizational Intelligence
Institute and Drexel
University.
beyond simple descriptive metrics and score-
cards, and more importantly how such
activities are being used to facilitate HR strat-
egy, decision making, and execution.
This article summarizes the results of The HR
Analytics Project conducted by the Organiza-
tional Intelligence Institute and Drexel
University. The HR Analytics Project is the
largest study to date on the topic of HR
research and analytics in terms of the number
of participating companies representing the
Fortune 1000 and select global firms.
The purpose of the study was to gain insight
into the extent to which these high perform-
ing companies (i.e., high performing firms in
terms of annual gross revenue) are conduct-
ing a wider range of HR research and
analytics practices in the context of human
resource strategy and decision making. Sev-
eral key areas related to HR research and
analytics were explored, including:
1. The types of HR research and analytics
practices being performed in high perform-
ing companies
2. Organization and structured of HR
research and analytics
3. HR research and analytics role in HR
strategy, decision-making, and execution
4. The meaning of "HR intelligence"
5. The emerging ethical implications associ-
ated with the predictive analytics movement
Methodology
Over 3,000 HR professionals representing the
entire Fortune 1000 as well as select global firms
were invited to participate in the survey. The
survey included 29 core items with a number of
secondary items and various response alterna-
tives (e.g., Likert-type scale, yes/no, rank order),
as well as several open-ended questions. Some
of the items were adapted from a benchmark-
ing study conducted in 2001 by the principal
researcher on the topic of HR intelligence prac-
tices (Falletta, 2008) while other variables were
adapted and used from a survey instrument
developed by senior research scientists at the
University of Southern California's Center for
Effective Organization (Levenson, Lawler, &
Boudreau, 2005; Levenson, 2011). In addition, a
targeted, snowball sampling approach was used
to promote and generate interest in the project
through several notable membership consor-
da such as The Mayflower Group, Information
Technology Survey Group (ITSG), and Attrition
and Retention Consortium (ARC), as well as a
number of Linkedin groups dedicated to HR
metrics and analytics, HR intelligence, employee
engagement surveys, workforce planning, and
human capital strategy.
Participants
In total, 220 distinct companies completed
the web-based survey representing 47 differ-
ent industries. No duplicate responses were
received (i.e., all recipients of the invitation
to participate in the survey forwarded the
survey URL to the best individual or group
responsible for HR research and analytics
within their company). Of the 220 com-
panies that participated, 195 were Fortune
1000 companies and 21 were global firms
headquartered outside of the United States.
Of significance, 39 participating compa-
nies were Fortune 100 firms. In terms of
respondent characteristics, 87% (n = 187)
were senior HR leaders and specialists who
regularly perform broader HR research and
analytics work (e.g., metrics, employee/orga-
nizational surveys, assessments, evaluation,
applied human capital and organizational
behavior research).
Evolving Practices
The first research question focused on the
types of HR research and analytics practices
that are currently conducted in high per-
forming companies. The survey asked par-
ticipants to rate the importance of 18 HR
research and analytics practices in terms of
influencing HR strategy and decision-mak-
ing (see Table 1). >-
VOLUME 36/ISSUE 4 2014 29
Employee and organizational sur-
veys received the highest impor-
tance ratings in the study, (overall
mean rating of 4.15), which isn't
too surprising given that surveys
are one of the most prevalent and
widely used methods for collect-
ing data and information about
employee's thoughts, feelings,
and behaviors. While a mainstay
for years among HR research-
ers and skilled OD practitioners,
employee and organizational sur-
veys appear to be evolving in importance
with respect to HR research and analytics
capabilities at high-performing companies.
Surveys are
still the most
important
HR research
and anaiytics
tooi at our
disposai!
Surveys in general are com-
monly used for varied pur-
poses in the context of human
capital strategy and manage-
ment (e.g., assessing training
needs, evaluating programs
and solutions, measuring
employee perceptions and
attitudes, conducting organi-
zational research). The larger
companies in the sample
(e.g., Fortune 100), however,
tend to construct and deliver
strategically focused employee and organi-
zational surveys that account for key fac-
tors and variables that enable, inhibit, and
T A B L E 1 . I M P O RT A N C E RA T I N G S O F HR RE SE A RC H A N D A N A L Y T IC S P RA C T I C E S
HR Research & Analytics Practice
Empioyee and organizational surveys (e.g., employee opinion surveys, engagement surveys,
organizationai cuiture/climate surveys, organizational health surveys, organizationai effective-
ness surveys, organizational alignment surveys)
Employee/talent profiiing (i.e., tracking and modeling individual data on critical talent or high-
potential employees)
HR metrics and indicators
Partnership or outsourced research Inciuding membership-based research consortia such as
the Corporate Leadership Councii,The Conference Board, university of Southern Caiifornia's
Center for Effective Organizations, Corneii's Center for Advanced Human Resource Studies, and
the institute for Corporate Productivity (4CP) to name a few
HR scorecards and dashboards
Workforce forecasting (e.g., workforce suppiy/demand and segmentation analysis to forecast
and plan when to staff up or cut back)
Ad hoc HRiS data mining and anaiysis
HR benchmarking
Training and HR program evaiuation
Labor market, taient pool and site/location identification research
Talent supply chain (e.g., anaiytics to make decisions in reai time for optimizing immediate
talent demands in terms of changing business conditions)
Advanced organizational behavior (OB) research and modeling (e.g., linkage studies, driver
anaiysis, correlation and regression anaiysis, factor analysis, path analysis, causai modeiing,
and structural equation modeling procedures)
Seiection research invoiving the use of validated personality instruments that measure various
empioyee traits, states, characteristics, attributes, attitudes, beiiefs, and/or vaiues
Return-on-investment (ROi) studies
Qualitative research methods inciuding case studies, focus groups, and content or thematic
analysis
360 degree or multi-rater feedback (e.g., 360 degree leadership and management assess-
ments)
Literature review (e.g., a review and synthesis of existing or secondary data sources such
articies and research reports including evidence-based and schoiarly/peer-reviewed journai
articies)
Operations research and management science (e.g., optimization methods such as iinear
programming; stochastic processes/Markov anaiysis; Bayesian statistics, computational
modeiing, and simuiations)
Mean
4.15
3.64
3.63
3.60
3.57
3.55
3.50
3.27
3.27
3.23
3.23
3.13
3.07
3.05
3.01
2.93
2.86
2.33
N
220
215
218
213
211
215
218
215
220
215
172
208
210
212
212
218
214
148
Source: Falletta, S., Organizational Intelligence Institute, 2013
in some cases predict employee engagement
and other important individual and orga-
nizational outcomes (Falletta, 2008b). For
many, the annual, company-wide employee
survey serves as the primary data feed for
HR strategy formulation and human capital
decision making.
In terms of the type of HR research and ana-
lytics practices, a closer examination of the
data gleaned the following observations and
insights.
Fortune 100 and large global firms rated
"employee and organizational surveys" as
slightly more important (4.33 and 4.24
respectively) as compared to the overall
mean rating (4.15) and other Fortune cat-
egories.
High-performing companies in terms of
size and gross revenue tend to invest a
significant amount of resources and time
on employee and organizational survey
initiatives. Over a third of all respondents
(36.4%, n = 80) reported employee and
organizational surveys as the most ex-
pensive or costly to perform and the third
most time-consuming HR research and
analytics practice.
The larger companies, such as Bank of
America, Dell, Eli Lilly, Ford, Google,
Intel, Microsoft, Nike, IBM, Target,
and SAP, benchmark and compare their
survey results through employee re-
search membership consortiums, such as
The Mayflower Group (www.mayower-
group.org) and Information Technology
Survey Group (www.itsg.org). In doing
so, member companies can make indus-
try and cross-industry comparisons by
job family, similar groups, business units,
and/or functions.
Respondents rated advanced OB research
and modeling as the most time-consuming
and most difficult to perform. Whereas,
talent supply chain (e.g., analytics to make
decisions in real time for optimizing imme-
diate talent demands in terms of changing
business conditions) was rated the second
most difficult to perform, which is consis-
tent with previous research and observa-
tions (Davenport, Harris, &C Shapiro, 2010).
Surprisingly, the literature review re-
ceived the second lowest importance rat-
ing (2.82), while global firms (companies
headquartered outside of the US) rated
the importance of literature reviews sig-
30 PEOPLE & STRATEGY
nificantly higher than all other Fortune
categories, thereby suggesting a greater
interest in and orientation towards evi-
dence-based HR in terms of HR strategy
and decision making.
Operations research and management
science received the lowest rating (2.33)
in terms of facilitating HR strategy and
decision making although interest
in optimization methods as well as the
emerging application of artificial intelli-
gence (i.e., expert systems and machine
learning) to HR management decisions
are likely to increase as advancements in
skills, capabilities, and technology con-
tinue (Sesil, 2014).
Organization and
Structure of HR
Research c Analytics
The second research question explored how
HR research and analytics activities and
groups are organized and structured within
high-performing companies. Over three-
quarters of all participating companies
(76.8%, n = 169) indicated that they have
an individual or function dedicated to HR
research and analytics. In terms of staff-
ing levels for the HR research and analytics
function, 62% of the companies reported
staffing levels of five or less people in the
group, and 92% reported 12 or less people
assigned to this function. Additional analy-
ses found that the staffing level of this func-
tion was higher in companies with higher
gross revenues and a larger workforce.
It important to note that these results merely
refiect the staffing levels within dedicated
HR research and analytics groups. It is quite
likely that overall staffing levels of those who
perform HR research and analytics work
may be underreported since many large
firms typically decentralize and embed HR
professionals through the organization (e.g.,
HR business partners, OD consultants).
There also may be those outside of the HR
function (e.g., IT or Finance specialists) do-
ing some form of analytics work in context
of human capital management. Further,
these results do not suggest that the remain-
ing participating companies (those without
a dedicated function or group; 23.2%, N
= 51) are not engaged in HR research and
analytics practices. It is clear that all of the
participating companies are performing HR
research and analytics work at some level
(as evidenced in Table 1).
TABLE 2 . M O S T C O M M O N F U N C T IO N OR G R O U P N A M E S
HR Analytics
HR Intelligence
Workforce Analytics
Talent Analytics
HR Insights
HR Reporting
Employee Insights
Global HR Insights
HR Technology
HRIS
Human Capital intelligence
Talent Management & Analytics
Empicyee Surveys & Insights
N = 13
N = 7
N = 7
N = 6
N - 5
N = 5
N = 4
N = 3
N = 3
N = 3
N = 3
N = 3
N - 2
HR Quality & Analytics
HR Research
HR Strategy
Organizational Insights
People Analytics
People Metrics
Peopie Research
Surveys & Assessments
Workforce Intelligence
Workforce Measurement
Workforce Planning
Workforce Research
N = 2
N = 2
N- 2
N = 2
N = 2
N = 2
N = 2
N = 2
N = 2
N=2
N=2
N = 2
Nearly a third (31.4% N = 53) of all dedicat-
ed HR research and analytics groups report
directly to the Chief HR Officer (i.e., head of
HR) suggesting that these functions are stra-
tegically positioned in terms of organizational
structure, whereas, the mean and mode were
only two levels down from the top, indicating
a substantial degree of organizational status
being accorded to this function.
Source: Falletta, S., Organizational Intelligence Institute, 2013
While the function or group "names" vary,
the nature and content of the practices and
activities appear to be HR research and ana-
lytics related. Table 2 lists the most common
functional or group names. HR analytics
was the most common function or group
name (N = 13), followed by HR intelligence
(n = 7), workforce analytics (N = 7), and tal-
ent analytics (n = 6) respectively.
E X H I B I T 1 . HR RESEARCH A N D ANALYTICS ROLE I N FACILITATING HR STRATEGY
60'
A N D D E C I S I O N M A K I N G
50%
40% I l l s
30%
30%
20%
10%
0%
Overall (N=218)
Fortune 1-100 (N=39)
Fortune 101-500 (N=74)
B Fortune 501-1000 (N=82)
Global (N=21)
Select $1 billion + (N=4)
-
HR anaiytics
plays no role
in HR strategy
formulation and
decision making
6.4%
2.6%
9.6%
7.3%
0.0%
0.0%
nil
h l l | |
JH. iB L
HR anaiytics
is involved in
impiementing/
executing HR
strategy
30.3%
21. 1%
32.9%
29.3%
38. 1%
50.0%
HR analytics
provides input to
the HR strategy
and helps
impiement it
after it has been
formulated
49.5%
50.0%
50.7%
47.6%
57. 1%
25.0%

1 i
lili
HR analytics
piays a
central role in
formulation and
implementation
of HR strategy
13.8%
26.3%
6.8%
15.9%
4.8%
25.0%
Source: Falletta, S., Organizational Intelligence Institute, 2013
VOLUME 36/ I SSUE 4 2 0 1 4 3 1
Role in HR Strategy &
Decision Making
The third research question addressed the
extent to which HR research and analytics
facilitate HR strategy, decision-making, and
execution.
The response alternatives and their frequen-
cies of choice are reported in Exhibit 1.
HR analytics is characterized as having input
into HR strategy formulation but not play-
ing a central role in its formulation in about
half (49.5%) of the companies in the study.
A central role in HR strategy was reported
for less than 15% of the companies, whereas
in nearly 37% of the sample, HR analytics
is characterized as playing little or no role in
HR strategy formulation.
When asked to elaborate or provide addi-
tional informa-
tion about the
HR research and
analytics role in
infiuencing HR
strategy formula-
tion and decision-
making specifical-
ly, an overarching
theme emerged in
which broader HR
research and ana-
lytics practices were
largely described as
an exhaustive data
gathering exercise
(i.e., a data dump),
whereby pre-con-
ceived notions or
and decisions drove
T h e r o l e of HR
r e s e a r c h an d
a n a l y t i c s i s
l a r g e l y a n e n a b i e r
a n d / o r d a t a fe e d
t o t h e s t r a t e g y
fo r m u i a t i o n an d
d e c i s i o n - m a k i n g
p r o c e s s .
after-the-fact, HR strategies
the actual data requirements.
In short, HR analytics has a long way to go.
More often than not, data and analytics are
used to support decisions that have already
been made rather than to question the cur-
rent path of HR strategy and planning within
large companies.
According to Pfeffer and Sutton, in their
book Hard Facts, Dangerous Half Truths,
and Total Nonsense (2006), the idea of
using data to make decisions changes the
power dynamics in a company. For ex-
ample, a powerful and/or narcissistic leader
would probably prefer to make decisions
based upon his or her opinions and intu-
ition rather than relying on the good facts
and figures (i.e., evidence). Similarly, Sesil
explains in his recent book. Applying Ad-
vanced Analytics to HR Management Deci-
sions (2014) that those in positions of pow-
er might have fragile egos and be primarily
concerned with advancing their own agen-
da rather than dealing with actual facts.
Indeed, further work is needed in terms of
Results, describe the limitations of analytics
and the role of quantitative and qualitative
data. For example, a purely analytical and
dispassionate approach to human capital de-
cisions is a recipe for organizational analysis
paralysis. Likewise, making critical HR deci-
sions solely based on prior experience, intu-
ition, gut feelings, and/or management fad du
jour could have disastrous effects. In short, we
EXH IBIT 2 . T H E HR INT ELLIGENCE VALUE CH AIN
intuition intelligence
Human capital decisions
are \arge\y based on
prior experiences,
opinions, gut feelings,
current trends and/or fads.
0 1 2 3 4 5 6 7 8 9 10
data information analytics
Human capital decisions
are based on insightfui HR
analytics that are largely
predictive and supported by
a synthesis of the best available
scientific evidence
(i.e. evidence-based HR).
Source; Falletta, S,, Organizational Intelligence Institute, 2013
elevating the status and legitimacy of HR
analytics and its infiuence on HR strategy
and decision making.
The beauty of advanced
analytics, according to Sesil, is
that it "does not care who it
annoys" (2014, pg 11).
While speaking truth to power can be risky
(and a little fun), we need to recognize that
HR analytics is both an art and science. That
is, we shouldn't abandon our intuition and
well-seasoned expertise (Sesil, 2014). Daven-
port, Harris, & Morison (2010) in their book
Analytics at Work: Smart Decisions, Better
need to balance the art and the science of HR
analytics while adopting an evidence-based
HR orientation and raising the bar in terms of
advanced analytics literacy (Bassi, 2011).
Core HR Intelligence Capabilities
and Processes
The second group of survey items included 24
HR practices and processes that were rated on
an 11-point scale of HR Intelligence, refiecdng
degrees of HR research and analytics capabilities
(i.e., level of sophistication) in terms of human
capital decision-making (refer to Exhibit 2).
For the purposes of this study, the HR Intelli-
TABLE 3. H R INT ELLIGENCE CAP ABILIT IES BY H R P R ACT ICES , P R O GR AM S ,
AND P R O CES S ES (T O P 12 )
Highest rated HR practices in terms of HR inteliigence capabilities
1, Employee & organizational surveys
2, Employee engagement & retention
3, Compensation
4, HR strategy
5, Workforce planning
6. Competency & talent assessments
7. Benefits
8. Performance appraisal & management
9. Reduction in force & downsizing
10, HR legal & compliance
11, Succession planning
12, Recruitment
Mean
6,59
6,05
5,90
5,62
5,54
5,35
5,34
5,29
5,14
5,11
5,09
5,03
N
214
212
215
215
215
214
215
214
206
212
215
214
Source; Falletta, S., Organizational Intelligence Institute, 2013
32 PEOPLE & STRATEGY
TABLE 4. HR INTELLIGENCE CAPABILITIES BY HR PRACTICES,
PROGRAMS, AND PROCESSES (BOTTOM 12)
Lowest rated HR practices in terms of HR intelligence capabilities
1 . Knowledge management
2 . Organization design
3. Organizational learning
4 . Employee on-boarding
5. Career development
6. Diversity & inciusion
7. Change management
8. Selection
9. Advancement & promotions
1 0 . Organization deveiopment
11.Training and development
1 2 . Management & leadership development
Mean
3. 4 8
3. 86
3. 92
3. 95
4 . 0 7
4 . 53
4 . 58
4 . 76
4 . 81
4 . 83
4 . 88
4 . 99
N
2 1 3
2 1 2
2 1 3
2 1 4
2 1 5
2 1 1
212
214
215
213
215
211
gence Value Ghain was adapted from HR In-
telligence Hierarchy which included three
levels namely Data, Information, and In-
telligence (Falletta, 2008). While the HR In-
telligence Value Ghain is by no means a vali-
dated scale in terms of measurement validity
and reliability, it does provide a practical
framework with which to estimate and gauge
HR intelligence capabihties as a first step in
conducting applied research on the topic.
The ratings of these 24 HR activities are re-
ported in Table 3 and Table 4 respectively.
Employee and organizational surveys re-
ceived the highest "HR intelligence" ratings
(mean score of 6.59 on the 11-point scale)
Source: Falietta, S., Organizational Intelligence Institute, 2 0 1 3
and was the only HR practice on the cusp
of what could be considered "analytics"
(7 and 8 on the scale) in terms of HR intelli-
gence capabilities and level of sophistication.
Employee engagement and retention (6.05),
compensation (5.90), HR strategy (5.62),
and workforce planning (5.54) rounded out
the top five. As expected, the larger Fortune
100 firms were slightly ahead of the curve in
terms of their HR intelligence rating across
all of the HR practices.
Knowledge management received the low-
est "HR intelligence" ratings (mean score
of 3.48 on the 11 point scale) in terms of
HR intelligence capabilities and level of so-
phistication. Organization design (3.86),
TABLE 5 . EF F ECTIV ENESS RATINGS OF CORE HR INTELLIGENCE ACTIV ITIES
Core HR Intelligence Activity
Performing value-added HR research and analytics that enables strategy
formulation, decision-making, execution, and organizational learning.
Gathering external or competitive data and information on other best-in-
class companies/organizations
Gathering internai data and information to better understand your people,
taient and workforce in the context of the business
Linking multiple data and information sources to predict, modei and
forecast individual, group and organizational behavior and performance
outcomes
Anaiyzing and transforming data and information into knowledge, insight
and foresight
Communicating and reporting insightfui and usefui research findings and
inteiligence result
Mean
3.4 2
3. 56
3. 73
2 . 71
3. 2 8
3.4 2
N
2 1 4
2 1 8
2 1 8
2 1 8
2 1 7
2 1 7
Source: Falletta, S., Organizational Intelligence Institute, 2 0 1 3; Falletta, S., HR Intelligence, 2 0 0 8
organizational learning (3.92), employee
on-boarding, (3.94), and career develop-
ment (4.07) rounded out the bottom five.
Again, the larger Fortune 100 firms were
slightly ahead of the curve in terms of their
HR intelligence capabilities across all of the
HR practices.
It shouldn't be too surprising that knowl-
edge management and organizational learn-
ing were in the bottom five. Definitional
problems persist and many companies still
struggle to effectively implement these evolv-
ing practices. Organization design has been
around for years in OD circles and there are
a number of excellent publications on the
topic, yet internal HR or OD practitioners
rarely get to play in this space. Senior execu-
tives typically sort out such matters on their
own behind closed-doors - either as a senior
leadership team or in consultation with one
of the big Ivy-League consulting firms.
Lastly, it should be noted that no HR practice
was rated at the "intelligence" level (9 to 10)
for any of the Fortune categories - thereby
suggesting that HR inteUigence is much more
of an analytical aspiration at this point for
many companies. The route to building HR
intelligence capability that can improve hu-
man capital decision making will depend on
the level of HR analytical maturity as well
as the extent to which a given company em-
braces evidence-based HR.
The third and final group of survey items in
the Core HR Analytics Capabilities & c Pro-
cesses section of the survey asked partici-
pants to rate their effectiveness on a 5-point
scale (1 = very ineffective, to 5 = very effec-
tive) on six core activities associated with
HR research and analytics work (see Table
5). These six statements were derived from
a previous study conducted in 2001 which
asked participants to describe what "HR
intelligence" (i.e., broader HR research and
analytics activities) meant to them (Falletta,
2008).
The mean rating for linking multiple data
and information sourc es to predic t, model,
and forec ast individual, group, and orga-
nizational behavior performanc e outc omes
was relatively low. For many participating
companies, this particular activity is still a
very challenging and emerging core capabil-
ity. As described earlier, respondents rated
"advanced OB research and modeling" as the
most timing-consuming as well as most dif-
ficult to HR research and analytics practice
to perform.
VOLUME 36/iSSUE 4 2 0 1 4 33
I
O B S E R V A T I O N S & I N S I G H T S - W H O
S H O U L D OR C A N D O A N A L Y T I C S ?
D riving a proactive HR research and anaiytics
agenda is a critically important capability in
terms of enabling strategic human capital
decisions.T herefore, HR researchers and
analysts should bring their own "HR intel-
ligence" and expertise to the table. Many of
the respondents in this study hold advanced
degrees in the social, behavioral, and organi-
zational sciences and are arguably in the best
position to design and interpret robust HR
research and analytics results. W hile an HRIS,
IT, and/or financial analyst might possess the
technological and statistical chops to mine
and model data, it takes an applied research-
er with the right disciplinary background to
accurately interpret the data and identify any
predictive insights in the context of individual,
group, and organizational behavior.
S ource: Falletta, S ., O rganizational
Intelligence I nstitute, 2013
Who Determines the
HR Research and
Analytics Agenda?
Respondents were asked to indicate whether
the company conducts a formal HR research
and analytics agenda process. Interestingly,
only 39.5% (N = 87) of participants reported
having a formal HR research and analytics
agenda process despite the fact that 76.8%
(n = 169) of all participating companies in-
dicated that they have a function or group
dedicated to HR research and analytics. This
might suggest that HR research and analyt-
ics activities and its prioritization are large-
ly reactive and stakeholder and customer
driven rather than proactive and research
and analyst driven. However, on average,
nearly 40% of all HR research and analytics
work was identified as "proactive" (39.3%,
n = 215) and determined by the HR research
or analytics team (40.3%, n = 215), while
approximately 60% of all HR research and
analytics work was identified as "reactive"
(59.7%, n = 215) and stakeholder or cus-
tomer driven (60.7%, n = 215). In short, this
demonstrates a relatively balanced approach
in terms of determining the actual HR re-
search and analytics agenda.
EXHIBIT 3. THE HR INTELLIGENCE CYCLE
1 : determine stakeholder requirements
tactical
7: enable strategy +
decision making
imitator+ improver+
innovator * iconoclast
6: connmunicate
intelligence results
descriptive * prdictive * prescriptive
2: define HR research +
analytics agenda
3: identify data sources
puMc- private
4 : gather data
5: transform data
meta- aiulytics
S ource; Falietta, S ., O rganizationai intaiiigence I nstitute, 2013
The Meaning of HR
Intelligence
The forth research question explored the
meaning of "HR intelligence" by those who
perform HR research and analytics. Respon-
dents were asked to rank in order seven items
in terms of how accurately they describe what
HR research and analytics means. The rank-
ings of these items are reported in Table 6.
The rank order is presented in ordinal fash-
ion (i.e., 1,2, 3,4, 5, 6, and 7) for the sake of
simplicity and includes the actual mean rank.
The overall mean rank was 4.09. While there
are certainly a diversity of views, the first two
(Rank 1 and 2) emerged as significantly more
descriptive than the others as to the central
activities of HR research and analytics.
TABLE 6. THE MEANING OF HR RESEARCH AND ANALYTICS (RANK ORDER)
The Meaning of HR Research and A nalytics (Rank Order)
Making better human capital decisions by using the best available scientific
evidence and organizational facts with respect to "evidence-based HR" (i.e., get-
ting beyond myths, misconceptions, and "plug and play" HR solutions, fads, and
trends)
Moving beyond "descriptive" HR metrics (i.e., lagging indicators - something that
has already occurred) to "predictive" HR metrics (i.e., leading indicators - some-
thing that may occur in the future)
S egmenting the workforce and using statistical analyses and predictive modeling
procedures to identify key drivers (i.e., factors and variables) and cause and ef-
fect relationships that enable and inhibit important business outcomes
Using advanced statistical analyses, predictive modeling procedures, and human
capital investment analysis to forecast and extrapolate 'what- if scenarios for
decision making
S tandard tracking, reporting, and benchmarking of HR metrics
A d-hoc querying, drill- down, and reporting of HR metrics and indicators through
some type of a HRIS and HR scorecard/dashboard reporting tool
O perations research and management science methods for HR optimization (i.e.,
what's the best that can happen if we do XVZ or what is the optimal solution for a
specific human capital problem? )
Rank Order
1
2
3
4
5
6
7
Mean R ank(N )
2.63 (N = 219)
2.66 (N = 219)
3.4 7 (N = 219
4 .37 (N = 219)
4 .67 ( N - 219)
4 .92 (N = 219)
5.90 (N = 219)
S ource: Falletta, S ., O rganizational Intelligence institute, 2013
34 P E O P L E & S T R A T E G Y
What Is HR Intelligence?
In the spirit competitive or business intel-
ligence, HR intelligence is defined as "a
proactive and systematic process for gath-
ering, analyzing, communicating and using
insightful HR research and analytics results
to help organizations achieve their strategic
objectives" (Falletta, 2008, pg. 21). In order
to effectively build robust HR intelligence
capabilities that are both proactive and sys-
tematic, HR intelligence must be positioned
as an ongoing cycle involving seven steps
(see Exhibit 3).
Robust HR intelligence capabihties extend
beyond HR metrics. HR intelligence en-
ables human capital decisions that are based
on insightful HR analytics which are largely
predictive and supported by a synthesis of
the best available scientific evidence (i.e.,
evidence-based HR) (see Exhibit 2). The
key differentiator between HR analytics
and HR intelligence is that the latter is sup-
ported by empirical and theoretical research
(i.e., scholarly evidence that resides outside
of your organization).
Lastly, merely mining and modeling your
internal employee data is tantamount to a
theory free, correlation fishing expedition
unless such data and insights can be analyzed
and supported in relation to other sources of
internal and external data. Only then can you
make valid and reliable predictive assertions
and prescriptive recommendations.
"Don't Be Evil"
All professions, like HR, are built around
norms, values, and ethical principles about
how professionals and organizations are to
conduct themselves. In this study, an attempt
was made to investigate ethical judgments as-
sociated with HR research and predictive an-
alytics. Ethical questions have begun to arise
about the potential abuses of HR analytics
with respect to technological advancements
and mining and modeling "Big Data" (Bassi,
2011).
Twenty-one practices were selected and in-
cluded in the survey some of which have
had a long history of controversy from
TABLE 7. APPROPRIATENESS OF SELECT WORKFORCE DATA COLLECTION AND HR PRACTICES
Workforce Data Coiiection and HR Anaiytics Practices
Performance appraisai/evaluation ratings
Pre-coding seemingiy harmiess demographic data for an organizationai or empioyee engagement survey project (e.g. identifying, linking, and retain-
ing employee information in advance such as business unit, iocation, grade or band level on each survey respondent)
Pre-coding "top taient" employees (e.g., high performers, high potentiais) empioyee demographic data for an organizational or employee engagement
survey project (e.g., identifying, iinking, and retaining employee information in advance such as performance appraisai rating, promotion readiness
status, and other high-potentiai attributes on each survey respondent)
The use of 360 degree feedback results designed soieiy for the leadership development purposes (e.g., research has shown that ieadership quaiity/
effectiveness as measured by the 360 degree instrument predicts actuai employee turnover)
Personality assessment results (e.g., Hogan's Big-Five personaiity, 16PF)
The reiative rank of empioyees derived from forced ranking process as part of a company's performance appraisal/evaluation system (i.e., a perfor-
mance management approach that assesses employee performance relative to peers rather than against predetermined goals)
The use of emotionai intelligence (EQ) test scores
Pre-coding diversity related demographic data for organizationai or empioyee engagement survey project (e.g., identifying, linking, and retaining
empioyee information in advance such as gender, age, ethnicity, and marital status on each survey respondent)
The use of Myers-Briggs typologies
The use of inteiiigence (iQ) test scores (e.g., Wechsier's Aduit Intelligence Scale or the Stanford-Binet inteiiigenceTest)
The use of gnerai surveys that explore a job applicant or employee's attitudes, preferences, values and behavior which include seemingiy innocuous
and irrelevant items/questions pertaining to their personal life (e.g., "what magazines do you subscribe to?" and "what pets do you have?")
Public data and information obtained from social media websites (e.g., Facebook and the iike)
The use of standardized academic achievement test scores (e.g., SAT, GMAT, GRE)
The use of electronic performance monitoring technologies (e.g., tracking the number of computer key strokes an employee performs each day or the
amount of daiiy code a computer programmer generates)
Conducting email analysis to identify workgroups/teams who aiways copy (cc) or biind copy (bcc) their boss as a possibie indicator of trust issues
Tracking whether a new empioyee signed up for the company retirement program as an indicator of eariy turnover
The use of surveiilance video to monitor work patterns and behavior
An individuai employee's personal data and information obtained from a company-sponsored "Weiiness" website or empioyee services portal
A job applicant's "hometown" or where they were born and raised
Private data and information obtained from social media websites (e.g., Facebook and the like) whereby the empioyer asks a candidate or employee
to furnish his/her user-id and password
An individual employee's prescription drug usage obtained legally
Mean
4.47
3.81
3.75
3.71
3.64
3.26
3.16
3.08
3.06
3.05
2.79
2.69
2.67
2.53
2.42
2.24
2.16
1.81
1.57
1.48
1.44
N
215
217
217
217
217
217
216
217
212
215
217
213
217
214
215
215
215
216
217
215
215
Source: Falletta, S., Organizational Intelligence Institute, 2013
VOLUME 36/ I SSUE 4 2014 35
intelligence (IQ) and personality testing to
forced-ranking in performance appraisals to
employee performance monitoring and sur-
veillance technologies. These practices have
always incited spirited debates among aca-
demicians and practitioners with respect to
the appropriateness of using such methods
and tools for human capital decisions.
Pre-coding employee survey demographic
variables have raised a few questions in
recent years (Saari &c Scherbaum, 2011).
A handful of emerging and unconventional
practices, such as Google's elaborate survey
that explores a job applicant or employee's
attitudes, preferences, and values on seem-
ingly innocuous aspects of their personal
life (e.g., "what magazines do you subscribe
to?" and "what pets do you have?") (Han-
sell, 2007), as well as identifying a job ap-
plicant's "hometown" as a relatively accu-
rate predictor of attrition (Ganguly, 2007),
are dubious at best. More recently, private
data and information obtained from social
media websites (e.g., Facebook), whereby
employers ask a candidate or employee to
furnish his/her user-ID and password, have
garnered national attention.
The fifth and final research question in this
study attempted to gain insight into the ethi-
cal implications associated with the HR re-
search and predictive analytics movement.
Respondents were asked to rate 21 work-
force data collection and HR analytics prac-
tices on a five-point scale of appropriateness
ranging from absolutely inappropriate to
absolutely appropriate. The appropriateness
ratings of these 21 practices are reported in
Table 7.
There were five practices that had mean
ratings which were both significantly high-
er than the overall mean (2.80) and fell
into the appropriate scale interval. These
are listed below from highest-rated down-
ward.
Performance appraisal/evaluation rat-
ings
Pre-coding survey demographic data
in general
Pre-coding survey demographic data
from "top talent" employees
360 degree feedback results for leader-
ship development purposes
Personality assessment results
Five of the practices had means that were
both significantly lower than the overall
mean and which fell into the inappropriate
scale interval. These are listed below (or-
dered from lowest upward):
An individual employee's prescription
drug usage obtained legally
Private data and information obtained
from social media websites (e.g.. Face-
book and the like) whereby the em-
ployer asks a candidate or employee to
furnish his/her user-ID and password
A job applicant's "hometown" or
where they were born and raised
Surveillance video to monitor work
patterns and behavior
Tracking whether a new employee
signed up for the company retirement
program as an indicator of early turn-
over
It is noteworthy that 76% of the listed prac-
tices were considered neutral or inappropri-
ate by the sample as a whole. Needless to
say, much more research is needed on ethi-
cal issues associated with HR research and
predictive analytics. This study attempted to
explore ethical judgments on select practices
pertaining to human capital decisions in the
broadest sense. However, it is quite likely
that individual ethical judgments will vary
and depend on the type of human capital
decision being made (e.g., hiring, job/work
assignments, performance management, ad-
vancement/promotion, demotion, reduction-
in-force efforts).
i
OBSERVATIONS & INSIGHTS -
FIRST DO NO HARM
One disturbing trend I've experienced first-
iiand involves HR professionals iiaving dif-
ficuity distinguishing between the iaw and
ethics. For example, during a recent confer-
ence in which i was invited to speak on HR
intelligence, i shared a few questionable HR
anaiytics practices, including the one about
an applicant's hometown being used as a
relatively accurate predictor of attrition. Af-
terwards, a weii-known and highiy respected
HR metrics consuitant stood-up and said, "I
have no problem with it as long as it's le-
gal and doesn't involve a protected group."
While sharing the same exampies during
a recent presentation, I've received mixed
reactions, surprisingiy, from a few very ex-
perienced and competent industrial and
organizationai psychologists who seem to
be grappling with their company's workforce
data collection and HR anaiytics practices 1
in terms of their own underlying values
and professional code of conduct (i.e.,
APA's Ethical Principles of Psychologists and
Code of Conduct and in particular the gen-
erai principle - First, Do No Harm). Cleariy, m
further discussion and debate are needed
about ethics in general and the application
of HR anaiytics in particular (Bassi, 2011).
Ali of this begs the question: should HR i
professionais and iine managers make
human capital decisions based on an ap-
piicant's hometown? What about an em-
ployee's pet preferences or favorite ice
cream flavor? i suppose dog iovers from
small towns are more loyal and commit-
ted than cat peopie born and raised in ^
the urban jungie, and just maybe - butter
pecan employees have a higher EQ and '
make better leaders than piain oie vaniiia
foiks. Irrespective to any predictive utiiity,
how appropriate is it to use such data and
information for human capital decisions?
When I got off my soapbox, a quick-witted
coiieague and oid friend said to me that
the "genie is aiready out of the bottie and
it will probably take Federal legislation
to sort it out." Meanwhile, if HR profes-
sionais are willing to proactlveiy address
such ethicai quandaries and challenge
questionable HR anaiytics practices re-
gardless of any real or perceived predic-
tive vaiue - there is indeed a bright future
for HR analytics.
I
PEOPLE & STRATEGY
Final Thoughts
The results of the study suggest that the
landscape for using data and information
has shifted dramatically, and that leading
companies are building strategic capabili-
ties and competitive advantage through ad-
vanced HR analytics practices. As expect-
ed, the companies surveyed are performing
a broad range of HR research and analytics
practices that extend beyond simple metrics
and scorecards. However, the profession
still has a long way to go to play a more
influential role in HR strategy development
and decision making.
Another vexing challenge, that wasn't specifi-
cally addressed in this study, has to do with
making sense of the disparate data sources
from all of the HR research and analyt-
ics activities. Sure, numerous advancements
and innovations have been made by leading
edge software firms (e.g., Oracle, SAP, and
Workday) that have incorporated workforce
analytical capabilities within their suite of
products. None of these SaaS-based tools,
however, can magically codify, analyze, and
interpret all of the "Big Data" at our disposal.
When it comes to a company's annual HR
strategy and planning cycle, much of work is
still done manually by expert HR researchers,
analysts, and data scientists.
Lastly, our success hinges upon our collec-
tive ability to harness the power of advanced
analytics, ethically and responsibility, while
raising the bar to be more evidence-based as
we recommend and implement HR policies,
programs, and practices. In sum, proactive
HR intelligence arms strategists and decision-
makers with pertinent knowledge and insight
to make critical decisions pertaining to hu-
man capital. i ^ S
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Dr. Salvatore Falletta is EVP and Man-
aging Director for the Organizational
Intelligence Institute (www.oi-institute.
com) - a Skyline Group company. Dr.
Falletta also is Associate Professor and
Program Director for Human Resource
Development at Drexel University.
Prior to Organizational Intelligence
Institute and Drexel, he was President
and GEO of Leadersphere, served as a
Vice President and Ghief HR Officer at
a Fortune 1000 firm based in the Silicon
Valley, and has held senior management
positions in human resources at sev-
eral global companies, including Nortel
Networks, Alltel, Intel, SAP AG, and
Sun Microsystems respectively.
Dr. Falletta is an accomplished speaker,
researcher, and author and is currently
writing a book on HR Intelligence,
Strategy, and Decision Making. He can
be reached at sfalletta@skylineg.com.
VOLUME 36/ISSUE 4 2014 37

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