Banking executives and HR leaders intuitively know that better-informed decision making leads to better business outcomes. And, given that most banking executives responding to our survey put talent retention and employee productivity at the top of their agendas, it is clear that evidence-based HR can deliver significant value.
Many banks even expect the application of evidence-based HR to deliver potential profit uplifts.
Not surprisingly given today’s economy, banking leaders are highly focused on increasing productivity. In fact, almost half of all banking respondents (45 percent) said that – over the next 3 years – their HR function would need to prioritize activities that help enable the business to increase workforce productivity.
Interestingly, banking respondents were around 50 percent more likely to say they would focus on workforce productivity than their peers in the tech sector (30 percent) and the wider business sample (33 percent), likely reflecting the high value and central role that people play in the banking system. But it also reflects banking executives’ desire to get more from their existing employees and their belief that there is more productivity to be gained.
Equally important to banking executives is the HR function’s ability to keep their best and most productive talent. Banking respondents were just as likely to say that talent retention would be a top priority for their HR function as they were to cite increased productivity, once again reinforcing the link between HR, talent and business objectives.
As the previous chapter suggests, evidence based HR and data-driven decision making are key to achieving both of these objectives. Not only can data help identify areas of potential productivity improvements (and drains), it can also be instrumental in reducing churn and improving talent retention strategies.
While talent retention is critical, there is also wide-spread recognition that evidence based HR can lead to bottom-line benefits. This is particularly true where HR functions use their data to identify trends and hence develop a more predictive approach to HR activities. Suddenly the levers that HR can pull – reward, recruitment, development, etc – are backed by clear and expected outcomes. HR activities that were previously a reactive response to a business need can now become a preemptive action that prevents this need. And, not only is prevention better than cure, it is also significantly more cost effective.
Our survey indicates that banking executives see a real and measurable link between the applications of evidence based HR and profits with 30 percent of our banking respondents saying that they would expect evidence-based HR approaches to deliver profitability increases of more than 10 percent over the next 3 years. One-in-ten said they expected profit uplifts of more than 20 percent as a result of using data-driven insights for HR.
However, this must be juxtaposed against the expectations reported by other sectors – most notably the tech sector – where almost two-thirds (63 percent) said that they expected profit uplifts of 10 percent or more as a result of evidence-based HR. Almost half (47 percent) of all respondents from the telecoms sector (which arguably represents a similar services-based model to banking) similarly said they expected profit increases of more than 10 percent over the next three years as a result of making better use of data-driven insights in the HR function.
At the same time, banking executives were also the most likely group out of all sectors surveyed to say that they expected either no profit increases at all or that they expected profit decreases as a result of applying data-driven insights to HR, reflecting some skepticism within the banking sector as to the benefits of evidence-based HR.
“I believe the whole point of evidence-based HR is to drive greater value through the better use of the most important asset an organization has: its people. This shift to this approach is powerful. If you ignore it, you are losing out on opportunities to drive greater customer satisfaction, to drive revenue, to drive higher employee engagement and commitment.”
Tim Payne, Head of People & Change, MC Partners
KPMG in the UK