Why Risk Scoring in HR Analytics is the New Black for CHRO’s
Interview with Luk Smeyers, HR Analytics Expert
Interviewer: Luk, in a recent conference you spoke about ‘Risk as the language of the CEO’. Could you explain this a little more?
Luk: Yes, of course. Quick changes seem to be all around these days. Doing business is going ever faster and becoming ever more complex. Disruptive innovations in technology are gaining more and more the upper hand. People dynamics keep evolving and workforces are becoming an increasingly complex mix of fixed and all sorts of temporary contracts. This and many other trends have brought about new dangers, meaning that CEOs need to be able to trust HR with analysing the right (people-related) risks that could jeopardise business continuity.
So, should we stop reporting about the past?
Dynamic environments mean that HR, too, must regularly ask itself how well it is doing with its risk management capacity, a subject which, peculiarly enough, is not being addressed in HR. Emailing the management long reports on staff turnaround, absenteeism or accidents won’t help you and won’t move the needle enough.
I heard you saying that HR won’t get on the CEO’s agenda with their HR dashboards…
Believe me, reports with the people movements of last month, quarter or year won’t get you on the CEO’s agenda. In my experience, you do have a good chance if you talk in terms of future risks. CEOs have a gigantic number of priorities and everyone is trying to get their attention, so it’s a matter of looking ahead and no longer only at the past.
That’s why HR should pay much more attention to people risk scoring?
Yes. One of the lessons we’ve learned in the past few years has been that every predictive HR analytics project should pay plenty of attention to people risk scoring, whilst attaching as much importance to HR’s communication about this within the organisation in general and to the CEO in particular. Such risk scoring can go very far: blind spots in the organisation that deserve attention, risks in terms of staff turnover, absenteeism and accidents, but also dysfunctional leadership that might make a company take too big risks or even studying the risks of unbalanced salary structures that could encourage mismanagement.
It seems that HR could add a lot of value with those risk analyses?
Definitely. However, HR still has a very long way to go in this area. Despite risk management becoming ever more important, certainly in terms of people risks, predictive risk management is a subject not to be found on HR’s radar, strangely enough. As I said before, in my experience the management doesn’t so much worry about last month’s staff turnaround or absenteeism, but they do about the most important future people risks and their potential impact on the business.
Do you have a secret tip for HR to learn more about doing such risk prediction?
These predictive analytics represent HR with an excellent opportunity to strengthen their partnership with the business and add real value. As I said before, major people risks definitely do find their way to the management’s agenda. So, here’s my ‘secret tip’: HR should maybe have a peek at other experts or functions that already adopted predictive risk management many years ago, such as credit risk scoring in the banking or insurance industry, customer churn scoring with marketing, crime risk analysis within large cities around the world or fraud risk scoring with credit card companies. The techniques they are using are not different from what HR can start using tomorrow.
Seems to be a great suggestion. Thanks for the interview, Luk.
Your are very welcome.
About Luk Smeyers
Luk Smeyers is an experienced senior HR executive who has lead complex transition projects for compelling Fortune 500 companies, such as PepsiCo, Starbucks and Nielsen. In 2008, Luk started a cutting-edge predictive HR Analytics consultancy, together with academic partner Dr. Jeroen Delmotte. Luk is widely recognized as one of the few European top HR analytics experts. He is revered as a leading thinker, educator, influencer and is a well-known content contributor, blogger, columnist and author of many articles. He is an invited speaker at international conferences and academic programs and helps clients set a higher ambition for strategic HR intelligence, leading consultative projects in several European countries with such organizations as Ahold, ING, KPN, ABN-AMRO, Deloitte, AXA, Zurich Insurances, Philips, Rabobank, UWV, RealDolmen, Acerta, NS, BASF, Besix, Strukton, Bekaert, Randstad, Eandis, AG Insurance, Postnl, AON, Raet, etc.
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