The drive to connect employee performance and business success is leading organizations to apply analytics to a broad range of human capital management processes, including return on human capital investment, employee lifecycle management, recruitment, performance management, learning and e-learning, succession planning, capacity planning and outsourcing. This is a development that is overdue. In almost all other facets people already use analytics to generate metrics and key indicators to improve the assessment of performance, processes, operational status, risk and even governance and compliance. Earlier benchmark research in this area showed that few then had applied analytics to the performance of their workforces.
The expanding use of human capital analytics stems from increased attention to performance management in human resources departments. Lacking the right analytics capabilities, many HR-led performance management initiatives have failed to live up to their potential. In large part, this is due to business decisions frequently being made in the context of limited resources, and virtually every important decision requires trade-offs (such as salary against experience, for example). In addition, executives and managers lack guidance on how to select the measures most useful for them. They also need reliable advice about integrating historical and predictive analytics into systems and processes so they can make better use of existing investments and plan new ones.