Do you know what value drivers are? In the world of business strategy, a value driver is an activity or input that drives financial and operational results. They are called value drivers to reflect their role in the value creation that your company wants to achieve: 1) Increasing the share price, thus creating more value for shareholders and ensuring your company funds future operations. 2) Creating more value for customers by customizing your product or service to their needs, thus ensuring sales growth.
Why bring up value drivers now? Because they should play the leading role in your efforts to address HR analytics. Value drivers identify what it takes to make your company successful (compared to what it takes to make the company run). Without the defined value drivers for your company, you run the risk of "garbage in, garbage out" in spite of your hard work on HR analytics.
Odds are the executives in many companies have identified the company's value drivers but haven't thought to share them because they don't understand the other, critical roles that value drivers can play beyond pure finance. So if you ask the right people, I bet you can find out what your company's value drivers are.
Then what? Redesign key HR practices to truly impact the bottom line. For example, track where the value drivers are executed in the company to identify key jobs. The answers shouldn't be the same old list. It should go beyond the most senior titles since you're looking for the select jobs that make a disproportionate contribution to the value that the company is working to create. If you can identify these jobs, you'll know where to most profitably target your work of attracting, recruiting, orienting, developing and rewarding.
In case you're worrying whether any HR jobs would qualify, the strategy powerhouse, McKinsey, specifies three categories of value driving functions: Value creators, value enablers (where HR would sit) and value protectors. And if you want a "deep dive" on the potential role of value drivers in HR work, check out McKinsey's podcast, "Matching Talent to Value."
By the way, value drivers also answer the question, "Where should my objectives come from?" You can use them to build an accurate line-of-sight so you can finally measure how well MBOs are impacting your company's bottom-line. (And wouldn't that would be value creation?)
Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. A former Board member for the Bay Area Compensation Association (BACA), Margaret coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.