This article was written by Jeremy Langley, Marketing & Business Development Director at Lumesse.

The landscape of data analysis is changing. With professional information accumulated at greater rates due to increased online interaction and advancing technology, taking a dedicated approach to analysing big data in order to boost an organisation’s effectiveness and potential can give businesses a competitive edge. In 2011, a prediction from McKinsey, the global management consultancy firm, claimed that big data would be the ‘next frontier’ and it is now being realised by HR departments worldwide. The analysis of the wealth of data that HR has accumulated on employees is today an invaluable asset for decision makers across organisations in the creation of business strategy.

Big data and the HR function: promise or pitfall?

The volume of data, the speed at which it is created and variety of data points are growing exponentially as well as the speed of technology adoption is accelerating significantly. There are 1.8 zettabytes of data being produced a year – that’s 1.8 trillion gigabytes – and this is doubling every two years, with 30 percent adoption of mobile in just five years..

Technology analyst, John Sumser believes the scale and speed at which data is being created requires HR to re-examine how it operates and in particular how HR teams make decisions. The sheer quantity of data available means that companies risk inundation unless they select and shape this information in accordance with their specific strategies and aims. In doing so, they can understand the broader business requirements and ask the right questions so that data is collected that shows the true impact of people policies and investment in the business.

HR teams can get their house in order by taking the following steps:

Look at the data currently collected and see what insights it provides to support the business strategy.

• Make sure the HR strategy is fully aligned with the business strategy. Only then can HR leaders start to understand where the people agenda fits in.
• Identify the gaps in data, stop collecting data that is not useable and start collecting the data needed to help solve current and future business challenges.
• Bring siloed information together to provide greater insight and value.

The cultural revolution

Yet before a decision is taken to get the ‘big data house in order’ it must be certain that the HR department is committed to the process. Reliance on dedicated data analysis for a sector which has traditionally valued personal contact and judgement in their decision making represents something of a cultural shift.

Many in HR consider basing a strategy on data as risky because it can take away the human factor from the decision making process. Yet the case for data bias is strong. The Economist argues that bias is everywhere – in data, but also in people, particularly when it comes to cultural/racial/academic discrimination. In short, many in the industry, from The Economist to McKinsey provide a strong case for data driven HR strategies.

Cultural change within an organisation must always driven by a convincing senior member of the organisation that believes strongly in the process. Everyone needs to be sold into a data driven HR strategy, from the employee to the HR manager.

Reaping the rewards

As many say, the road to success is dotted with many tempting parking places. Yet, if HR is willing to overcome the challenges of implementing a data driven strategy, the benefits of a successful data driven strategy are far reaching; from understanding how to best recruit employees to gain a competitive edge in the war on talent, to predicting future business needs accurately or spotting a future problem before it has time to develop, they all positively impact on the business.

For example, a recent video in the Economist on big data and hiring explains the benefits of taking advantage of employee data for enterprise recruitment. Large companies often receive thousands of candidate applications for a limited number of jobs, leaving HR staff feeling overwhelmed by the amount of admin time needed to assess each CV and candidate for the role. Once it is agreed internally which set of skills or relevant experience is needed for the role, data algorithms can be set to automatically search and select only the right applications for consideration, significantly reducing the manual HR admin burden.

Google, a company well known for its data crunching, also proactively collates and analyses employee data. The company once conducted a study, to examine whether good managers matter within Google’s specific culture and found that there existed positive relationships between good management and the retention and performance of teams. Having established that good managers are key to the business, Google sought to understand which eight behaviours make a good manager and five pitfalls to avoid. These are now incorporated into its manager-training programmes and coaching sessions, finding that the vast majority of lower-rated managers have improved as a result.

The key to a successful data driven strategy: alignment with business goals

With an aligned HR strategy and clarity on the people data that exists, HR teams can start to find answers to pressing business questions and start to relate these to people issues. The upshot is that HR teams will need the skills and capabilities to collect, analyse data and share meaningful insights from it to help the business develop.