Today’s leading companies use talent metrics to drive management action, behavior change and results, and they’re doing it with a methodology that goes beyond dashboard insights. Dashboards offer a crucial tool in an analytics arsenal, tracking per-head productivity, job applicants, recruiting efficiency and new-hire performance. But this data reporting is only one step toward understanding talent investments.

Some of the most exciting innovations in human capital analytics lie not in new technologies and tools alone, but in new ways to understand and leverage human capital data for continuous improvement. To begin, executives must embrace the idea that soft investments, such as performance management, leadership development and social learning, can be accurately measured and analyzed for results.

Link Investment to Achievement
The investment must be placed into a strategic business context that links talent investments to corporate goals. It’s the elusive but ever-present demand for alignment. The difference lies in looking outside of the HR department to measure performance using data from across the business. For example, a leadership development initiative may impact HR metrics such as turnover and retention, but it also may affect sales numbers, safety metrics, corporate productivity and profitability. By understanding a specific investment’s potential to change business performance, talent leaders begin to see what defines success for that investment and how it fits into the overall corporate context, potentially illuminating ways they can partner more effectively with their line of business peers.

The framework that links talent investments to corporate goals provides a starting point for a targeted study into an investment’s business impact. A business impact study pulls data from throughout the organization and uses a statistical methodology to isolate the investment’s effects. This piece will examine two such methodologies: demographic segmentation and isolation of business impact.

Demographic Segmentation
Demographic segmentation takes data from disparate systems and organizes information about different employee groups. When combined with performance data, companies can use demographic segmentation to understand impact and optimize investments in human capital. For example, let’s say a multinational energy company found that manager involvement was a key factor in a participant’s success in a leadership development program. Optimization leverages impact findings to change the investment for greater impact in the future. The energy company initiated a step to ensure manager support before an employee was ever sent to the leadership program. Not only did this change increase program success, it also provided cost savings by ensuring that employees without manager support were not permitted to attend the training.