Sponsored by Credit Suisse
“Know thy client” is a business mantra that companies have sworn by seemingly forever. In fact, new technologies, a sharp rise in e-commerce, and savvy marketing techniques have allowed many companies to know their clients so well that they now are able, in many cases, to predict client behavior with a high degree of accuracy. Paradoxically, companies are not nearly as advanced when it comes down to knowing their own employees: What makes them happier or more efficient? How to best attract and retain top talent? When to promote and how to determine competitive compensation?
Taking a page from their marketing departments, many savvy employers are beginning to look for answers in Big Data. Google, for example, has drawn plaudits for its People & Innovation Lab, an in-house team charged with studying employee satisfaction and improving productivity. The search giant is not alone: The application of massive data collection and analysis to human resources, known as “people analytics,” is catching on among innovative companies that believe they can harness Big Data to reap enormous business and cultural benefits. By measuring the effects of an array of workplace variables, these companies seek to engage their workers in the same direct and targeted manner that marketers use to connect with consumers.
“People used to joke, ‘I know I’m wasting 50 percent of my marketing budget, but I don’t know which half,’” says Will Wolf, the Global Head of Talent Acquisition & Development at Credit Suisse. “That’s not true in marketing anymore because of technology and the Internet.” But it is still true for most human resource departments. That’s why Wolf has spent over three years developing Credit Suisse’s People Analytics effort, a program that strives to find insights in human capital data that will lead to new approaches to attracting, retaining and growing talent at Credit Suisse. He has enlisted a small global team comprised of data reporting and statistics experts to research a number of high priority questions (e.g., what is the value of promoting from within vs. hiring externally?) in order to develop smarter people management practices. The results of the team’s work are being embedded in a variety of processes and approaches from improved hiring and internal mobility processes to targeted leadership and management programs.
John Boudreau, a professor of management and organization at the University of Southern California’s Marshall School of Business, echoed Wolf’s analogy: “I think what we see is sophisticated by HR standards and rudimentary by marketing standards. There’s great potential to tap what the marketing profession already has discovered about Big Data and analytics.” Boudreau, who studies the strategies used by organizations to utilize human capital and gain competitive advantage, speaks both of the promise of HR data and the danger of ignoring it. “There’s vastly more that organizations can do to optimize the way they mobilize their talent,” he says.
Credit Suisse has made a deliberate investment in developing its own analysis on human capital management. According to Wolf, “We view so-called ‘best practices’ as helpful to know and useful in generating hypotheses for testing. But so much of the work we do occurs in our own cultural context with regional or business-specific nuances that our CEO Brady Dougan routinely challenges us to ‘define our own best practices.’” Wolf agrees that having the ability to react to company and industry specific context is critical. Getting a full picture and ranking the ways to create value through better people practices first requires a structured approach. Credit Suisse has developed its own taxonomy of people issues and works closely with HR and business leaders to define topics for analysis. Early tenure success is one such topic. Credit Suisse is evaluating nuances in the sources new hires originate from, the way they are hired into the bank, and the events that occur in their first two years. “So much happens in your first couple years at Credit Suisse to impact your acclimation, productivity, and motivation, and understanding those variables can help us enhance our employees’ engagement and connection with the Bank.”
Unwanted attrition is a source of enormous waste for many companies, particularly in highly skilled professions like banking or medicine. The cost of hiring and training new personnel, as opposed to simply retaining existing staff, is so burdensome that the great manager Henry Ford famously doubled salaries in order to quell the rapid turnover in his factories. Given the value at stake, Wolf and the Credit Suisse analytics team have studied the attrition topic closely and the work has shaped a number of new practices aligned with a company-wide commitment to people strategy called “Grow Your Own.” The team has studied variables that may potentially relate to attrition likelihood such as compensation, performance ratings, supervisor skill, and time in role to identify concrete measures to address costly attrition. The work has resulted in a number of initiatives, for example the institution of an internal employment search function within Credit Suisse Recruiting that targets and pursues talent potentially ready for career change or advancement. Wolf says, “The work has helped us determine, with ever-greater accuracy, an employee’s probability of quitting. If we know who is likely to be restless and why, we can help provide new avenues for them, for example. Even if they’re not interested in the roles our internal search function is offering, they’re blown away that we’re going out of our way to try to find them something interesting and new,“ he says.
Being responsive to observable behavior allows Credit Suisse to implement the cultural changes necessary to bind human capital closer to the company. For several years, senior management has been leading a shift away from the finance industry’s seeming fixation on expensive outside hires. Based on this commitment and informed by data, Credit Suisse has implemented policies and metrics to reinforce the shift toward “Grow Your Own.” These include measures such as initiating a two-week search period within the organization for available positions before searching elsewhere. “As a consequence, the average employee tenure at Credit Suisse has increased significantly,” Wolf says. “Today we fill 65 percent of senior roles with insiders—that’s up from 40 percent three years ago. We’re building a stronger and more resilient culture here with these measures. The economic benefit of promotion from within compared to external hiring is considerable.”
It is an approach made possible by twenty-first century data accumulation, but Boudreau describes it as merely a modern take on the classic principles of effective management: “It’s a Big Data-enabled version of what I think is a very sound human capital expectation,” he says. “That leaders will know enough about their people and the professional choices they’re making, that they’ll see [dissatisfaction] and flag it to talk about it. And if Big Data can help with that, maybe by taking some of the burden of monitoring all the data or making predictions more precise, then I think that’s terrific.”