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leadership lab

This column is part of Globe Careers' Leadership Lab series, where executives and experts share their views and advice about leadership and management. Follow us at @Globe_Careers. Find all Leadership Lab stories at tgam.ca/leadershiplab

Almost all leaders say their most important asset is their people, but when seeking counsel on strategic direction, they go to finance and marketing – the data-driven bastions of any organization. But today, with the increasing use of data analytics everywhere, leaders in outperforming organizations are looking more to their chief human resources officers to have a direct effect on business performance.

They know that as work force challenges become more complex, they need fact-based insights – not intuition – to address difficult people-related questions that are central to success. The power of work force analytics is its ability to challenge conventional wisdom, influence behaviour, and enable HR and business leaders to make smarter work force decisions that are good for business.

Just as data analytics has reshaped marketing, strategy development, finance, the supply chain and information technology, it is now being used to better understand, monitor and develop employees. The results are incontrovertible. Companies that use data outperform the ones that don't. They make people a competitive advantage.

In fact, according to joint research by MIT's Sloan Management Review and IBM's Institute of Business Value, top-performing organizations use analytics five times more than lower performers.

For example, retirement home operator Revera Inc. uses resident satisfaction data and employee survey data to target managers who need coaching. They have found links between employee engagement and improved resident satisfaction. The more engaged the employees were in their jobs, the better care they gave and the more satisfied residents were. That increased resident satisfaction tied directly to better business performance for Revera.

Some other examples: A fast-food chain used work force science and predictive analytics to hire better candidates for management positions, resulting in a 25-per-cent reduction in time for hire; a global pharmaceutical company improved its leadership succession plan by using data to predict performance and the likelihood of a successor to be placed in the role.

In another case, a global financial services organization wanted to prove that better employee engagement and performance excellence (a measure of continuous improvement practices) would improve gross profit margin. Analyzing data from its annual employee engagement survey, linked to business performance, the organization found that its operations in countries where employees ranked in the upper half on engagement, gross profit margin was two percentage points higher, and those in the top half in terms of performance excellence were four percentage points higher.

Examples like those show that rather than focusing entirely on managing HR compliance and implementation of the rulebook, chief human resources officers can use data tools to find the right employees, match them with the right roles, enable the right collaboration and give them the right tools and training to align with the business strategy and specific business needs.

The result is employees who are more engaged, more productive, and better able to perform, which means happier customers (and shareholders).

Right now, the application of data analytics to HR provides a competitive advantage because fewer than 20 per cent of companies do it. Those that do use it are using it to identify:

The cost of missed opportunities, for instance, when positions are filled by ineffective people.

The impact of employee disengagement on revenue.

Role mismatches. When employees are in the right roles, with the right training and tools, they are happier and more productive.

Talent gaps, or whether your work force is able to deliver on strategy.

Most effective and least effective collaboration styles for specific teams. This examines how people work best together, and how changes in the working environment affect employee morale and performance.

Opportunities to improve leadership.

In our economy, a smarter work force, or one eager to learn new skills, is able to adapt to changes and willing to collaborate with people across continents and time zones. That can make a real difference in business performance.

Social, mobile and digital technologies have democratized the relationship between organizations and their customers. In that environment, customer loyalty is affected by the organization's ability to engage, develop, recognize and support employees, so they are engaging with customers.

Applying data analytics to your most valuable resource – your employees – is smart leadership that can result in competitive advantage and high-performing organizations.

Dino Trevisani (@DinoTrevisani) is president of IBM Canada.