Director Human Resources at MTU Maintenance Serbia

Žaklina Teofilovic

According to behavioral perspective of Human Resources Management companies do not perform themselves. Instead they use HR and People practices to encourage employees’ productive behaviors. Consequently behavior and performance of the workforce influence meaningful financial outcomes. When employees behave in productive way desirable operational and financial objectives are met. Therefore it’s human capital that creates value for the company.

Companies that effectively manage human capital are doing great in developing understanding of the causes and consequences of workforce productive behavior. They are successful in measuring and managing all cultural elements that drive workforce behavior and performance. Companies focused on measurement of indicators that really make difference and impact on business result have value creating HR function that drives business performance. That kind of companies strongly rely on People Analytics and use data to solve people related issues. They use data to show human capital value and impact. They use data to influence and contribute towards strategic decision making. We can see that most companies measure solely employee engagement. But employee engagement covers less than third of all important cultural features that drive business performance. Including other relevant measures to get insight into how successful we manage behavior and performance of our people brings several benefits.

People Analytics rely on identifying cause-effect relationships (explanative analyses) and the prediction of future developments (predictive analyses) in order to derive appropriate action strategies and identify starting points for measures. People Analytics helps us to understand internal and external environment and to shape strategic objectives. It help us to make informed people decisions and to generate meaningful insights. People Analytics is the super power that can show an important distinction between managing strategic workforce that drive organizational performance and managing the HR function. Indeed, we can make distinction between “traditional” HR measures and more insightful HR measures. Traditional HR measures like cost per hire, benefits expense as a proportion of revenue focus on the performance of the HR function and tend to rely on external benchmarks. They are typically used to analyze and benchmark the efficiency of a company’s HR function. That kind of measures are descriptive but not at all predictive. Why is that so? Because efficiency with which HR activities are conducted has little visible impact on value creation. More insightful measures with capacity to answer a strategic HR questions for an organization are needed. The fact that human capital is intangible makes things even more complicated. How we can measure intangible? Challenge is in the fact that we use outdated reporting and measurement system although we are for several decades in knowledge economy. In most of the companies costs on physical assets and equipment are accounted for and reported as investments, while costs on workforce are accounted for and reported as a cost. Companies can easily identify defect in material and do the root cause to identify responsible supplier but they have no indication as to the source or reason for their defective (or high-quality) managers. Companies entrusted managers with the most valuable resource they have - their human capital. Therefore measuring the effectiveness of people management is important part of People Analytics.

"Companies that effectively manage human capital are doing great in developing an understanding of the causes and consequences of workforce productive behaviour."

Going one step behind we can ask what is actually behind People Analytics? Is it curiosity, wonderment? Is it all about applying scientific mind-set toward decision making? Despite the field, process of applying scientific mind- set is universal and easy to apply: start with some general question based on your experience; form a hypothesis that would resolve the riddle; collect data to test prediction; evaluate hypothesis and make meaningful conclusion.

How the things look like in practice? According to research on HR and People practices conducted by HR World Research in 2022 (104 organizations from South East Europe participated) 43% of participants agree, 33,7% are neutral and 24% of participants disagree with the statement- HR team use qualitative and quantitative data analytics to generate insights and solve problems. In the same research only 9% of participants stated that they use some form of prescriptive analytics. 91% of participants do not use any form of prescriptive analytics. Results clearly indicate that curiosity is important but not at all enough. Within HR team we need to develop competence for performing People Analytics. The question is how to nurture professional curiosity? How to develop capacity to ask the right questions? How to encourage scientific mindset and scientific approach to business topics?

While we are thinking about the right answer to those questions there is one exciting people analytics tool named Orgnostic that help us in MTU Maintenance Serbia to ask and answer the most important human capital and organizational health questions. Questions that affect the bottom line. We use data analytics tool Orgnostic for surveying, analytics and insights. We run organizational diagnostic surveys and conduct Culture, Team Effectiveness, Employee Wellbeing, e-NPS and Talent Management processes assessment. Our data are enriched with automated surveys. We fill-in the qualitative gaps in our data with automated data-fillers like Onboarding and Exit surveys. In addition Orgnostic provides the answers behind the data.

Therefore we can rely merely on intuition in decision making process or engage in People Analytics to tackle the most important people related issues and position HR function as a future oriented strategic partner with capacity to measure and manage the most valuable asset companies have- human capital.