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Harnessing analytics for data-powered HR

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As organisations adjust to a “new normal” post pandemic, the HR function has never been more critical in its strategic importance. The roles of Chief Human Resources Officer (CHRO) and Chief People Officer (CPO) are becoming more commercially driven, and companies are looking to populate their teams with digital skills.

Our most recent HR report, Shaping the Workforce of the Future: People, Culture and Talent, saw senior People officers highlight the increasing importance of data-related skills in the HR function. The business leaders we surveyed projected data analytics skills to be one of the top three most in-demand HR skills, and indeed, LinkedIn’s 2023 Jobs on the Rise report reveals that People Analytics Manager is now the second-fastest-growing job in the US.

More and more players in the market are building data-driven HR functions that can deliver greater value to their organisations, and others will be quick to follow. To provide support, we sat down with David Brett, Human Resources Data Analytics and Information Management Leader, Jakob Ejlsted. People & Culture Executive and former VP People & Culture – Strategy & Insights at BP, David Roberts, Interim Chief of People at Appello UK, and John Richardson, Human Resources Director and Transformation Lead, and posed the following questions.

Why are analytics becoming so critical?

HR has become an increasingly strategic function, with a seat at the top table. As Jakob Ejlsted puts it: “When you take a more strategic role, you are expected to produce data to prove your point. Fundamentally, we’re moving up the food chain and, as a result, more is expected.”  Enter: data.

“Look at it this way,” says David Brett. “Finance functions have been using data to run businesses forever. They understand the value of it and they live life through ones and zeroes. HR had to catch up.”

Part of this expectation is to produce what John Richardson calls “better, more insightful decision-making, adding logic to a process where emotion and intuition may take us in a different direction.”

David Roberts also highlights this change in expectations: “No longer do People teams need to do annual surveys, take annual performance ratings and manage unreliable data sets. They need daily health checks, they need to show the link to profitability and drive lead indicators. Data-led decisions have to be the basis of a business, and this includes People decisions.”

What does data allow you to do?

When properly deployed, data allows HR leaders to understand business problems and bring solutions to the table. It can help you understand where issues with workplace processes exist, boost performance and productivity, improve talent acquisition and retention, analyse and address skill gaps, save money, build resilience into your organisation, and more. In short, HR can use data to help businesses stay competitive in an ever-changing marketplace.

“Data analytics for HR is about identifying issues, challenges and opportunities and providing information to help the business make the best possible decisions,” says David Brett. “Think of it this way – when driving down a road, you know what the speed limit is, but you can’t drive safely without a speedometer. You can’t just guess how fast you’re driving. Why would you possibly try to run a business without data?”

“And it’s more important than ever,” stresses Jakob Ejlsted. “Uncertainty is rising and the world is becoming more complex. Your organisation needs to be able to scale up and down, shift geographically, upskill your workforce and more. You need the data about your work ecosystem upfront so you can make decisions. And once you’ve made those decisions, you need to collect even more data so you can make improvements as you go along.”

Making the change

At the level of the individual, gaining the necessary skills and adjusting to the evolving requirements of the function can be difficult. “A lot of HR leaders struggle to move out of that transactional mindset that was traditional in HR and bring the necessary commercial edge to the conversation,” says David Brett. “Data provides that absolute edge.”

As with any organisational change, it’s vital to build credibility and trust. You need to bring people along on the change journey, which requires collaboration both within and beyond the HR department.

“You’ve got to partner with whoever has the data you need, otherwise you risk not actually getting that data in the first place,” says David Brett. “If you don’t have strong partnerships, you won’t progress. You can’t build your data plan in a silo, it can only be done collaboratively.”

John Richardson recommends starting small to demonstrate the potential. “Start with quick wins from reliable data sources – payroll is seldom wrong, for obvious reasons – and build a suite of metrics over time.”

Facing up to the challenges

The limited range and quality of data can be a real obstacle. As John Richardson notes: “I’ve seen a lot of big, good organisations with bad data”. Jakob Ejlsted agrees, adding: “As soon as you have people manually inputting data, mistakes will happen. As we don’t have as much data as other parts of the organisation, we have to accept weaker correlations inherent to psychology and have a few more caveats in our storytelling than we might like.”

What’s more, the data that exists may not be accessible. As John Richardson points out: “HR professionals may not have access to all the data they need to make informed decisions. This can be due to privacy concerns, data protection laws, or other factors that restrict data sharing.”

Ethical concerns must also be considered. For example, some forms of accessible data require employee monitoring software. “While it may generate more data, viewed over a longer period, that sort of data collection is often detrimental to performance,” explains Jakob Ejlsted. “After all, people don’t like being monitored. There’s been a rise of data ethics to try and overcome this challenge, so we’ll have to wait and see what transpires.”

What can HR professionals do to harness the value of data?

In order to make the most of the data, HR professionals need to have a full understanding of the business – and not just through an HR lens. “Competitive advantage is effectively the proposition that People analytics is set up to deliver, and to deliver that you need to have broad commercial acumen,” explains David Brett. “Not to mention a strong grasp of the financials of an organisation.”

This takes a wide range of skills. “Alongside frameworks, tools and buy-in, building competencies is important,” says David Roberts. “You need to understand technology and know how to mine data, and then you have to be able to present that data in a way that adds value and correlate it to business outcomes.”

To deliver the value required in the current fast-paced business environment – and address some of the challenges facing companies today, including the skills and labour shortage in the wake of the Great Resignation – HR professionals should consider the following.

  • Take a step-by-step portfolio approach: Analyse the strategy of your company, make a People strategy to address it, and tailor your data analytics strategy to support that. Include shorter-term projects, so you can keep telling the story and maintain momentum.
  • Get buy-in early: HR analytics are often not a top priority for executive leadership. Ensuring senior leaders are on board can help avoid under-resourcing in key areas, like funding, staffing and technology.
  • Educate, educate, educate: Embrace training – both internally and externally – to help your current team develop their skills. HR analytics goes well beyond the traditional HR skillset, requiring data analysis, statistical modelling, machine learning, and more.
  • Develop a mindset of continual learning: Everyone can stand to learn more about using data, even those who are already competent. Being inquisitive and open to constant learning can only benefit individuals, the team and the company.
  • Create a safe space for the team: They need to be able to learn and operate and, on occasion, make mistakes. If your team can’t own up to mistakes and get them corrected, there’s a risk that the wrong data gets to C-suite and the wrong decisions could get made.
  • Embrace and invest in technology: Collecting data from multiple sources (HR systems, internal platforms, etc.) and using platforms that can integrate the data will result in better insights, and better decision making.
  • Employ data democracy: The key is straightforward self-service. Get the data out there and give everyone visibility of what’s going on. Easy-to-use dashboards can promote the use of HR analytics beyond the department, thereby boosting their impact.
  • Work on communication: For the data to be used effectively, the wider business has to understand it. Communicating insights and recommendations based on the data takes practice and, often, training.
  • Keep up the momentum: Data gathering is not a “one and done” exercise. Collect it, analyse it, use it and keep returning to it. You want to track your progress and keep making improvements. And be sure to keep the business informed along the way. After all, they get monthly financial reports, why not give them HR data on a similar frequency?
  • Use analytics to assess success: Don’t think the success of your HR initiatives will speak for themselves – use tools to measure them and report back to the business on the return on investment. Build that narrative and you’ll build credibility and trust.

It’s clear that People Analytics is here to stay. If you would like more advice and guidance on how to introduce and make the most of data capabilities in your organisation, feel free to reach out to our People & Culture Leadership Team.

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