HR Analytics: Improving People-Related Decisions in Challenging Times
Most large organizations now have a wealth of people-related data residing with a multitude of systems, such as the HRMS, performance management, learning, compensation, survey, etc. These data are assets of the organization, as are the technologies that house them. Unfortunately, few human resources leaders perceive the data as valuable enough to warrant an investment into a system that can aggregate and analyze them.
The human resources leaders who are, in fact, making investments in people-related data are presiding over organizations that are winning the talent battle in their industries and in the geographies in which they operate. They are using the data-driven insight to make better decisions in terms of how they recruit, whom they hire and how they onboard and train employees, as well as how they keep employees informed and engaged through their tenure with the organization. Examples include well-known brands such as Google, Best Buy, Genentech and Aetna, yet smaller, lesser-known brands are also succeeding at aggregating human resources and other formerly disparate data (e.g., customer satisfaction, financial).
Given the current economic environment, this notion needs to be placed in context, and we need to ask the question: "Should the implementation of an HR-focused Business Intelligence (BI) tool be a priority during these challenging times?" Not surprisingly, the answer is very likely, "Yes." Why? Because every new hire, every employee who’s retained, every compensation adjustment, every training program, every customer interaction means much more today than it did a few short months ago.
People-related investments in human resources need to hit the mark. They need to have a high likelihood of achieving the desired return. The costs of a poor hire, keeping the "wrong" people, or sub-optimal compensation or training strategies are just too high. They will put the organization at risk and make it less competitive.
The Value of HR Analytics
HR Analytics is the practice of researching what is happening in the workforce and exploring where and why performance targets are being achieved (or not). It can be done either on an event-driven basis, in which case a BI tool will not be required, or on an ongoing, on-demand basis, in which case a BI or similar tool would be essential. On an event-driven basis for HR Analytics, the tools that are used include Excel, SPSS, SAS and the like. On an ongoing, on-demand basis for HR Analytics, the tools that are used include Business Objects, Cognos, MicroStrategies, SAS and Crystal Decisions, among others. There are also similar data warehousing and analytic tools associated with ERP and HRMS systems such as Oracle, PeopleSoft and SAP.
Aggregating data from numerous systems, cleaning it, reconciling hierarchies, etc. is a difficult endeavor; however, it can be done with patience, focus and ample resources. Should this be done successfully, an organization would then have the means to explore patterns among metrics and investigate root causes of downstream outcomes. In doing so, human resources leaders obtain data-derived insight that informs decisions that were formerly based on experience, anecdotal feedback from direct reports, or "leading practices." As is too often the case, such considerations are incomplete as they may not be appropriate for the organization at a given point in time.
Accountability in HR Analytics
What lurks within the HR Analytics value proposition is the very real notion of accountability. In other words, by using analytically-derived insights, people-related investments will be expected to deliver the purported return; and HR Analytics will be a means in which to evaluate whether or not that return was realized. This irony is, in part, why HR Analytics has not been adopted in more organizations.
As a function, human resources has existed for much of its history devoid of accountability, and because of this, measurement and analytical capabilities have frightened away many human resources leaders (although few would admit it). This then begs the question: "Should HR Analytics reside within HR or outside of it?" I will leave this answer to you. What I will say, however, is that if human resources does not do it, someone else will: Operations or Finance, for example. No longer is HR Analytics constrained by technology or know-how. It is constrained by a lack of willingness to make it a priority and devote ample resources to making it happen.
Finally, as we enter a new economic reality and, in turn, a new reality in the labor market, the ways in which people-related data are utilized will be critical to mitigating risk, creating business capability and driving outcomes such as customer satisfaction and sales. With this in mind, an HR-focused BI strategy should play a vital role in any talent management or HRIT strategy.
Not including a BI-type solution will underutilize existing HR data assets, increase the risk of poor decisions and marginalize the stories HR leaders will be able to tell about how they manage human capital. Like we expect from organizational leaders, let us all keep an open mind and seek to continually enhance our learning. Humility, assertiveness and a teachable spirit will get us far.
First Published on e-BIM.