It isn’t often that a group of professionals can say with confidence that they stand at an important moment in history. This is one such moment for HR.

If that sounds like overreach, step back and consider the moment in which we find ourselves today. Over the past decade, we have seen the convergence of three historic shifts that are reshaping business and technology.

• Data – The volume, velocity, and variety of data and analytics provide more granular and customized information about not just past patterns and trends but inferences from the “big data” created by the internet revolution and predictions about the future. Analytics change how we do work and make decisions. Predictive analytics have led to prescriptive analytics and reshaped entire industries, as Netflix has done in home entertainment.
• Cloud – This is not just a source of greater productivity but the basis for fundamentally new business models. Information (data, movies, high-school term papers, etc.) can now be managed and stored “as a service,” without the need for on-premise servers and licensed applications. This allows for much more flexibility, mobility, and agility in managing information.
• Social engagement on mobile platforms – Individuals are now interacting in new ways with institutions, reframing their relationships. Physical locations matter less than social connections. Facebook-type technologies inside the enterprise have allowed people to share and build on one another’s ideas, data, and work products, creating a richer dialogue and workspace than ever before (and certainly a step change from email).

Any one of these forces would have been enough to usher in a new era of technology. Together, they are redefining the agenda of global business.

And these technology trends are reshaping HR. For example, we can now buy HR software and HRIS as a service on the cloud, instead of investing in costly and inflexible on-premise systems. We now make people-related decisions and compensation or training investments through advanced analytics rather than standardized processes or benchmarking. We now serve up more and more of our programs—from learning to health care enrollment—on mobile devices. We use social chat features to enhance management development or respond to issues. And we find ourselves managing a litany of new business controls to ensure protection of personal and confidential data.

But while advancements in recruiting offer a glimpse into the future, by and large the rest of HR services still feel less like Zappos and more like the IRS. So how can we modernize our approach? I believe there are two main areas that will have a disproportionate influence on the future of our profession—analytics and engagement.

IMPORTANCE OF HR ANALYTICS
There was a time when HR advice relied heavily on benchmarking. We would ask, “What do most/other successful companies do?” Today, with analytics, we can mine huge amounts of data and offer more granular, customized solutions, including more flexible responses. Using outcome data like revenues, productivity, hiring yield, individual performance, or employee engagement, we can help our leaders understand the probability of success of certain decisions. For years, we have struggled with sales incentives and tried to create norms and rules for how incentives would change people’s behaviors. With modern analytics, we can define more accurately which incentives work with each employee and for which assignment. We can also define the extent to which goals should be “stretch” versus doable, and we can change goals depending on the situation. 

At IBM, analytics now enable us to predict an employee’s propensity to leave. In fact, several of our HR employees have obtained a US patent for our proactive retention algorithms. Each year, we run proactive retention programs where we increase the salaries of employees with a high propensity to leave. This program has resulted in net savings of $131 million, with savings measured as the avoided cost of hiring a replacement, net of the investment to retain the employees. Using control groups, we have validated the “propensity to leave” calculation within less than one point of attrition.

With the availability of social engagement and analytics, HR programs have moved from annual events to ongoing works in progress. For example, at IBM, we recently rolled out a recognition program where 57 percent of receivers were very satisfied or satisfied. Our vendor informed us this compared favorably to the industry average of 40 percent in the first year of implementation—but is this really acceptable? We were able to quickly ask those not satisfied how we might modify the recognition program to better meet their needs. We now have a granular understanding of what kind of recognition has the highest impact on different populations.

Social analytics also give us advance warnings of what might be happening among our employees. We monitor blog posts about the company by employees and others. While respecting privacy, we can gauge positive, neutral, or negative trends from social media. We have been able to anticipate employee engagement scores by tracking social media trends. In some emerging markets, we have been able to anticipate labor unrest and respond before the unrest led to disruptive actions.

Another strategic use of analytics is workforce management, where headcount management has given way to skills management. Skills—including depth of skill—have become an important currency in flatter, more fluid organizations, and there is an increasing need for real-time assessment of skills gaps and redundancies. Analytics can be used to infer employee expertise from the vast data sources inside companies—blogs, publications, resumes, projects, and so on.

Because skills are changing so rapidly in technology, skills inventories are hard and complex to keep up to date. At IBM, we developed an app to find employees with specific expertise, anywhere in the world. The search returns each expert’s areas of expertise, organizational chart, common connections, and smartphone contact information. This is now being used at an enterprise level for workforce planning, such as to identify gaps in “hot” skills for recruitment and training investments.

HR professionals need to develop analytics capabilities. Hard as it is to imagine, there was a time only 30 years ago when professionals believed that typing proficiency was not a necessary skill. I believe we are now in the same situation with analytics. HR professionals have rich data at our fingertips, and tools to undertake predictive and prescriptive analytics. It won’t be long before analytics departments go the way of typing pools.

I am an optimist about the future of our profession. For years (or even decades), HR has sought to make an impact. Technological advances are once again enabling HR to shift to higher ground, just as we shifted from personnel to human resources years ago. Today, it’s about how we capture the incredible wealth of data and insight about talent that will shape a company’s future. Talent is the center of everything we do. To compete in new industries, we have to create an environment that builds talent—with people who can learn, adapt, lead, and innovate in a workplace that is interactive and transparent. HR, with a focus on analytics and employee engagement, becomes the transformative force to shape the future of the enterprise.