Want Better Retention? Focus on Big Data For Better Management


When it comes to Big Data and people analytics, "The results can run counter to common wisdom," as a new report from McKinsey & Company points out.

I don't doubt that's true, but the statement came as part of a McKinsey paper titled People Analytics Reveals 3 Things HR May Be Getting Wrong. That's what got my attention, because HR was late to the party when it came to Big Data and analytics, and to many observers, they still haven't gotten there yet.

McKinsey's three areas where HR is coming up short aren't all that surprising, but one of them made me stop and think a little. It's No. 3 on their list, and it says that you should be, "Addressing attrition by improving management."

Throwing money at the problem doesn't help

In other words, organizations need to spend more time on getting their managers to improve if they want to hang on to their talent.

Here's a little of what McKinsey said:

Too often, companies seek to win the talent war by throwing ever more money into the mix. One example was a major U.S. insurer that had been facing high attrition rates; it first sought, with minimal success, to offer bonuses to managers and employees who opted to remain. Then the company got smarter. It gathered data to help create profiles of at-risk workers; the intelligence included a range of information such as demographic profile, professional and educational background, performance ratings, and, yes, levels of compensation.

By applying sophisticated data analytics, a key finding rose to the fore: employees in smaller teams, with longer periods between promotions and with lower-performing managers, were more likely to leave."

Lots of studies have found that money isn't a very good motivator for employees, and bonuses are even more problematic because the positive impact of the bonus is very short-lived. People love getting a bonus or a raise, but that positive feeling doesn't last very long and the employee is left wanting more.

As a story in Entrepreneur last year pointed out, Money Is Nice, But It's Not Enough to Motivate Employees.

More learning, training - and a stronger manager

McKinsey says what we have all heard but few actually follow-up on -- that a positive focus and regular attention along with solid and meaningful feedback is the best strategy for keeping employees in your employee. It doesn't mean that employees don't like money -- they do -- but that they need more than that to keep them happy and motivated.

The McKinsey report goes on to say this:

Once these high-risk employees had been identified, more informed efforts were made to convince them to stay. Chiefly, these involved greater opportunities for learning development and more support from a stronger manager. Bonuses, on the other hand, proved to have little if any effect. As a result, funds that might have been allocated to ineffectual compensation increases were instead invested in learning development for employees and improved training for managers.

Performance and retention both improved, with significant savings left over — showing yet again the value of digging into the data at hand. When well applied, people analytics is fairer, has greater impact, and is ultimately more time and cost-effective. It can move everyone up the knowledge curve — often times in counterintuitive ways."

What HR is getting wrong

My take: The point of all of this is that better management is the key to retaining your most talented employees. Give them more training and development, as well as more opportunities to grow, and you'll have a happier and more content workforce. Plus, you'll probably save some money in the process.

This isn't surprising given the terrible shape of American management today, and it's one reason why the ridiculous notion of self-managing teams -- where you get rid of managers altogether -- has so much appeal. I've gone on record on numerous occasions that the get-rid-of-managers movement is dumb and short-sighted, but that's what bad management does for you -- it makes you think that no management is the answer to so much bad management.

But McKinsey's point -- that HR should be able to figure out how to better keep talent through improved analytics -- is a good one, What it means is that human resource professionals are going to have to get serious about Big Data pretty quickly if they aren't already. Your company, and your ability to hold on to talent, depends on it.

And by the way, here are the three (3) things that McKinsey says people analytics shows us that HR is getting wrong:

  1. Choosing where to cast the recruiting net;
  2. Cutting through the hiring noise and bias; and,
  3. Addressing attrition by improving management.

Employing the latest in data analytics

They also say this, and it's worth keeping in mind:

Some companies are discovering that if they employ the latest in data analytics, they can find, deploy, and advance more people on the right side of the curve — even if the results at first appear counterintuitive."

Yes, sometimes data sometimes throws all those old notions HR has about managing and developing people into question. But unless HR gets into Big Data and analytics quickly, and uses it to make better people decisions, someone else in the organization will instead. And it will make top management wonder: what do we need these HR people for, anyway?