Optimize Your Greatest Asset – Your People. Pease Gene

and putting up with my crazy ideas and unpredictable schedule.

      For the past decade, I have been blessed to have the good fortune of working with a tremendous amount of talented colleagues at Vestrics (formerly Capital Analytics). Thank you for your inspiration, mentoring, and collaboration. Dr. Phil Buchanan, Barrie Trinkle, and Dr. Andy Collins have been my investment partners this entire journey and deserve a special thank you. Thank you, also, to Dr. Joan Troy-Ontjes, who has also been my business partner since the beginning.

      I have known Brian Kelly for over five years, and recently he joined Vestrics as our first president. It was time for me to hand some of the day-to-day responsibilities over to someone, and I couldn't be more pleased that he shared our vision and decided to join. Thank you, Brian, for writing the Foreword.

      Stacey Boyle, PhD, deserves credit for coordinating the Vestrics/ROI Institute research project and for her contributions to Chapter 3. It was also a pleasure to collaborate with Jack and Patti Phillips, specifically on that project and other initiatives our two organizations are working on. John Zonneveld, thank you for your continued collaboration and contributions to our work.

      I also want to acknowledge a few pioneers who have inspired me in this journey of optimizing human capital investments: Donald Kirkpatrick, Jack Phillips, Jac Fitz-enz, Tom Davenport, Ed Lawler, John Boudreau, Mike Echols, Jeffrey Pfeffer, and Marshall Goldsmith.

      I offer hearty thanks to the executives who contributed their thoughts, sprinkled throughout this book. I hope they offer some context and inspiration that with conviction, advanced analytics can be applied to human capital investments, and significant insights can be found. Thank you, in no specific order:

      AD Detrick — Learning measurement consultant, Xerox

      Amit Mohindra — Vice president, talent management and diversity, McKesson

      Brad Pearce — Vice president, analytics manager, Wells Fargo

      Buddy Benge — HR analytics leader, Monsanto

      Ian O'Keefe — Formerly senior direct, head of talent analytics and reporting, Sears Holdings Corporation

      Lisa Van Cappelle — Vice president, global human resources, Quintiles

      Mark Berry — Formerly vice president, human resources, ConAgra Foods

      Ron Lawrence — Vice president, global talent management, VF Corporation

      Tracey Smith — President, Numerical Insights

      Melissa Arronte — Senior vice president, HR analytics, Citizens Bank

      Candis Fields-Johnson — Manager, organizational effectiveness and talent development, Saint-Gobain

      David Kuhl — Executive vice president, chief human resource officer

      RJ Milnor — Manager, planning and analytics, Chevron

      I would also like to acknowledge and thank our strategic partnership with Bellevue University, Bellevue University's Human Capital Lab, and its PhD program: specifically, President Mary Hawkins, PhD; and Executive Vice President Michael Echols, PhD.

      I want to thank our editor at John Wiley & Sons, Sheck Cho, for being such a pleasure to work with. We want to thank the Wiley editorial team, particularly Stacey Rivera, who reviewed every chapter and offered substantial feedback.

      Chapter 1

      The Need for Measurement in a Changing Environment

      Have you ever heard of a company requiring a business case for investing in marketing? Or having a sales force? For that matter, what about training? Although specific budgets require justification, you'd be hard pressed to find a business leader who doesn't believe in developing the company's human capital. We dream of a day that the same will be said of measuring investments in human capital. From our perspective, as well as that of a growing cohort of HR and business leaders, evaluating these investments and using that intelligence to improve them is simply common sense. This day is coming, but for now such measurement is still seen as a competitive advantage — or worse, something nice to have but just not worth the trouble.

      As this is my third book, written after practicing human capital analytics for over 10 years, I've written extensively on the justifications for measurement. For those of you who haven't yet seen the light, I present the arguments here again.

      Analytics Give Companies a Competitive Edge

      Recent studies by Deloitte and Bain have proven that the more advanced an organization's analytics capabilities, the greater the margins by which they outperformed their competitors. We'll go into more detail on these studies in Chapter 2, but for now suffice it to say that HR analytics can directly impact a company's bottom line. The Bain study in particular looks more broadly at the impact of analytics applied to nearly every aspect of business performance, which brings us to the next point.

      Everybody's Doing It

      The old adage from your mother about everybody else jumping off a bridge simply doesn't apply here. The other departments in your organization leverage their data and advances in analytics to make more intelligent, strategic decisions. Every time you scan your customer loyalty card at the supermarket, you're exchanging valuable information about your shopping habits in exchange for that buy-one-get-one deal on Cheez-Its. Marketers analyze patterns in the immense amount of data they collect to figure out how to get you to spend a little more on your next trip. This is predictive analytics.

      Think about supply chain management. An automotive manufacturer bleeds cash for every minute its assembly line has to shut down because it has run out of a car part. Using analytics, it manages inventory to assure this doesn't happen, while simultaneously avoiding an overstock on a costly component. This, too, is predictive analytics.

      Buddy Benge, HR analytics leader at Monsanto, says, “Imagine having a piece of traditional capital in a manufacturing facility and not realizing its full potential; this is what we do with our talent.”1 I could list countless examples of analytics at work throughout your organization. The point is, all of these functions have figured out how to harness the power of analytics to help them work smarter. Why not apply that same methods and science to the organization's most valuable asset — its people?

      Transcending Borders

      You don't need us to tell you that the leading organizations in almost any industry are experts at competing in the global marketplace. This includes competing for talent. The rise of technology has enabled companies to go anywhere in the world to find top people in their fields, spurring the rise of virtual teams, a 24-hour workday, and flexible working arrangements. Managing people across borders, cultures, time zones, and environments has required new thinking about the very pillars of traditional team management. Predictive analytics allows you to look at how people are performing and calibrate investments to maximize that performance. Further, the calibrations can be tailored to the wide variety of types of people that make up a global organization, allowing you to turn a one-size-doesn't-fit-all investment into a targeted experience capable of moving the performance needle for many different types of people.

      Slim Down, Do More

      Since the 2008 recession, HR leaders are all too familiar with directives to do more with less. As the economy has slowly improved, many organizations have more resources available to develop their people, but the need to eliminate and avoid waste is still top of mind. Analytics shows you where your investments are working and where they aren't. It's critical intelligence for a budget of any size, in times of boom and bust.

      Our colleague, A.D. Detrick, learning measurement