HR professionals are struggling to keep pace in a world where data has become the most valuable currency, and where the use of analytics to drive decision-making has become the norm in many business functions.
Becoming more conversant at people analytics will help to you to gather more valuable insights for your organisation, and thereby increase your influence in the boardroom.
There’s a cultural issue here; traditionally, HR professionals aren’t used to crunching numbers and working with large data sets. Up to now, we’ve been a people-focused bunch that thrives on the intricacies of human emotions. This has, however, resulted in a lack of credibility at board level.
Capability, a lack of confidence and training that still focuses on well-trodden areas of HR such as law and employee relations are all reasons why this change is struggling to take hold. This slow pace of change is in direct conflict with most senior business leaders’ wishes. A recent study found that 70% of company executives cite people analytics as a top business priority.
So how do we make sure we’re staying at the cutting edge of our field, are seen as influential and trusted business partners to our senior leaders, and deliver the value that we need to demonstrate to our organisations?
Delivering greater insights
Whilst there are clearly gaps in competence and confidence for many in HR, it seems that the tide is starting to turn. Research by the Corporate Research Forum found that 69% of organisations with 10,000 employees or more now have a people analytics team, including Google, that stated: “we believe instead that an analytical approach incorporating facts and science can lead to more effective and fair solutions and decisions”.
The CIPD Profession Map, updated in 2018 to include people analytics as one of the specialist knowledge areas, mentions that “individuals in organisations with strong people analytics cultures also report strong business outcomes”, and that “people analytics cultures are also positively related to perceptions of HR strategy, demonstrating their importance in organisations wishing to improve overall outcomes”.
With a need to find a suitable balance between the traditional ‘human-centric’ HR operation and the hard data that appeals to the board, people analytics are, slowly but surely, being utilised to provide senior leaders with insights that allow them to make better business decisions.
Why people analytics are so impactful at board level
There are a number of reasons why people analytics can be used to influence senior leaders:
- Time efficiency: with competing priorities, time is of the essence for influencing at the board level. People analytics provides an opportunity to do this, with data visualisation allowing quick and easy reporting and analysis of the numbers in a format that resonates with those on limited time schedules.
- Objectivity: even with the best intentions, people can lie, exaggerate or hide. Emotions are involved, and no two people are the same. Data, on the other hand, has a tendency to not fall victim to such traits. Hard numbers can be used to provide an objective assessment of the situation being analysed.
- Trends: data speaks volumes when proving a case for a recommended approach. People analytics provides an opportunity to demonstrate trends, i.e. what’s worked and when, to then make suggestions in an action-oriented manner.
Steps to establishing people analytics capability
Hopefully by now you’re convinced that people analytics is something you need to focus on, but where do you begin?
McKinsey lists five steps to establishing a successful people analytics function:
- Step 1. Gather and clean your data
- Step 2. Utilise your data for basic insights
- Step 3. Data can be used for analysis
- Step 4. Advanced analytics capabilities
- Step 5. Predictive analysis
One of the other reasons often cited for a lack of people analytics capability is the fragmented selection of tools available. The choice of software is an important consideration, and with so much choice, you’ll need to conduct your research based on your ongoing needs.
Every organisation will be at a different stage of its people analytics journey, and moving to the higher echelons of these steps may not be necessary, depending on the size and complexity of your organisation. At the very least you’ll want to aim to reach the third step, where data analysis can be conducted from the range of available data in order to drive valuable insights and recommendations to the senior leadership team.
While the future of HR is clearly looking increasingly data-driven, if you’re keen to build your people analytics capabilities it’s important to not get overwhelmed with the wealth of information at your disposal. As with all HR strategies, this should be first and foremost underpinned by the priorities of the organisation and its overarching strategy and vision.
As an example, last year my organisation experienced an issue with a backlog of annual leave towards year-end, meaning some tough decisions needed to be made in order for us to maintain operational efficiency. Learning from this experience, we now have a report that is presented within monthly leadership team meetings, showing:
- Number of annual leave days taken
- Number of annual leave days scheduled
- Number of annual leave days outstanding
- Figures broken down by team
This can then be used to guide recommendations around any toughening or loosening of leave approval strictness with senior management, as well as empowering team leads to better plan the periods of leave within their own units.
Other reports you may find useful may include:
- Pay equity – particularly around important topical considerations such as gender diversity and race
- Recruitment – such as time and cost to hire
- Retention/turnover – allowing you to spot trends at certain times of the year, and planning any ramp-up in recruitment activity
- Time to promotion – to help better drive capacity and recruitment forecasting
It’s well worth taking a look at some of the most common metrics recommended by Google’s people analytics team as a starting point.
Positioning for the future of HR
It’s clear then that becoming more conversant at people analytics will help to you to gather more valuable insights for your organisation, and thereby increase your influence in the boardroom. This is an area that is only going to become more important, and those that are starting to focus on building capability in this area now will be the ones that have a distinct advantage in the years to come.
That being said, the human element of HR won’t and shouldn’t go away. As the world of work becomes increasingly AI-driven and automated, the human edge is in the ability to analyse data and apply it based on the context of an organisation and the specific people and relationships within it.
Interested in this topic? Read How HR can unlock the treasure trove of workforce data.