HRM textbook

88 PART 1 INTRODUCTION
This enabled Alliant to predict unusually high turnover in one important group and
to take corrective action. 33 IBM uses workforce analytics to identify employees who
are idea leaders to whom other employees frequently turn for advice (for instance
based on e-mail interactions and e-mail mentions by colleagues).
DATA MINING Such efforts usually employ data mining techniques. Data
mining sifts through huge amounts of employee data to identify correlations that
employers then use to improve their employee selection and other practices. Data
mining is the set of activities used to find new, hidden, or unexpected patterns in
data. 34 Data mining systems use tools like statistical analysis to sift through data
looking for relationships. Department stores often use data mining. For example,
Macy s captures huge amounts of data on its customers what they buy, when
they buy it, how they pay for it, and what day of the week they tend to shop. Macy s
can use data mining to make sense of it. For example, data mining reveals that
some customers often come in to redeem 20% off coupons they get in the mail.
Other customers are more apt to buy new electronic gadgets with coupons than
are others.
Thanks to data mining, the manager can discover patterns that he or she can
then use to make predictions. He or she can answer questions such as Which of
our products would this customer be most likely to buy? Which of our customers
are making too many returns? , and What is the likelihood that this candidate will
succeed here at Google? The accompanying HR as a Profit Center presents other
examples.
HR AS A PROFIT CENTER
Using Workforce/Talent Analytics
Talent analytics can produce striking profitability results. For example, Best Buy
used talent analytics to determine that a 0.1% increase in employee engagement
led to a more than $100,000 rise in a Best Buy store annual operating income. 35
Employers are using talent analytics to answer six types of talent management
questions: 36
Human capital facts. For example, What are the key indicators of my organization
s overall health? JetBlue found that a key measure of employee
engagement correlated with financial performance.
Analytical HR. For example, Which units, departments, or individuals need
attention? Lockheed Martin collects performance data in order to identify
areas needing improvement.
Human capital investment analysis. For example, Which actions have the
greatest impact on my business? By monitoring employee satisfaction
levels, Cisco was able to improve its employee retention rate from 65% to
85%, saving the company nearly $50 million in recruitment, selection, and
training costs.
Workforce forecasts. For example, How do I know when to staff up or cut
back? Dow Chemical uses a computerized model that predicts future
required headcount for each business unit based on predictions for things like
industry trends.
Talent value model. For example, Why do employees choose to stay with
or leave my company? For example, Google was able to anticipate when
an employee felt underutilized and was preparing to quit, thus reducing
turnover costs.
Talent supply chain. For example, How should my workforce needs adapt
to changes in the business environment? Thus, retail companies can use
special analytical models to predict store volumes and release hourly
employees early.