HUMAN Capital - Summer 2013 - (Page 26)

FEATURE How Google is Using People Analytics to Completely Reinvent HR BY DR. JOHN SULLIVAN IF YOU HAVEN’T SEEN it in the news, after its stock price broke the $800 barrier last month, Google moved into the number three position among the most valuable firms in the world. Google is clearly the youngest firm among the leaders; it has surprisingly been less than a decade since Google’s IPO. Most companies on the top 20 market cap list could be accurately described as “old school,” because most can attribute their success to being nearly half a century old, having a long established product brand, or through great acquisitions. Google’s market success can instead be attributed to what can only be labeled as extraordinary people management practices that result from its use of “people analytics.” A New Kind of People Management The extraordinary marketplace success of Google (and Apple, which is number one on the list) is beginning to force business leaders to take notice and to come to the realization that there is now a new path to corporate greatness. “New path” firms dominate by producing continuous innovation, and executives are 26 O beginning to learn that continuous innovation cannot occur until a firm makes a strategic shift toward a focus on great people management. unless your managers are making accurate people-management decisions. A strategic focus on people management is necessary because innovations come from people, and you can’t maximize innovations unless you are capable of recruiting and retaining innovators. And even then, you must provide them with great managers and an environment that supports innovation. Many argue that product R&D, marketing, or resource allocation decisions are instead the most impactful decisions. However, each one of those business decisions is made by an employee. If you hire and retain mostly mediocre people and you provide them with little data, you can only assume that they will make mediocre decisions in each of these important business areas, as well as in people-management decisions. Unfortunately, making that transition to an innovative firm is problematic because almost every current HR function operates under 20th century principles of past practices, efficiency, risk avoidance, legal compliance, and hunch-based people management decisions. If you want serial innovation, you will need to reinvent traditional HR and the processes that drive innovation. No one in finance, supply chain, marketing, et cetera, would ever propose a solution in their area without a plethora of charts, graphs, and data to support it, but HR is known to all too frequently rely instead on trust and relationships. People costs often approach 60 per cent of corporate variable costs, so it makes sense to manage such a large cost item analytically. Shifting to Data-Based People Management Another major problem in HR is its traditional reliance on relationships. Relationships are the antithesis of analytical decisionmaking. The decision-making “currency” for most business decisions has long been data, but up until now, HR has relied on a different currency: that of building relationships. The basic premise of the “people analytics” approach is that accurate people-management decisions are the most important and impactful decisions that a firm can make. You can’t produce superior business results

Table of Contents for the Digital Edition of HUMAN Capital - Summer 2013

Leadership Matters
Economic Pulse
Association News
What's Next for HR? Trends and Competencies
The Emergence of HR Shared Services
The Future of HR Shared Services
Linking HR Strategy to Business Strategy
How Google is Using People Analytics to Completely Reinvent HR
CHRP Credibility on the Rise
Looking to the Future: What Will Make HR Successful?
Games People Play: Shaping a Strategic Workforce
HR LegalEase
Suppliers Guide/Index to Advertisers/

HUMAN Capital - Summer 2013