HR has long been the emotional kid in the management of organizations, making decisions on “soft” reasoning instead of using data. But HR realises that if it wants to earn (or keep) a seat at the big table, it must become more strategic by focusing on data driven decision making. This change, powered by digital transformation, made analytics the new kid on the block.
People analytics allows you to better understand your most valuable asset – people – boosting your performance and improving the bottom line of your organization. People analytics, or even analytics in general, is considered the holy grail in many management disciplines. But it’s not something that you implement overnight. Even if you want to. On the one hand it requires you to ask the right questions. You need to think carefully about the business problem you want to solve, or you will end up reporting at random. On the other hand you need resources with the right skills. Traditional HR professionals typically don’t have the digital or analytical mindset needed to perform data analytics.
So what happens if you’re doing it all wrong? Then things might go awry. People analytics has the power to create tremendous business value, but it has also the power of doing the exact opposite. Data will talk if you ask the right questions and if you’re willing to listen. If not, and used in the wrong way, you might end up demeriting your business instead. Don’t go wasting time, resources and money. Think once before you act, think twice before you start analyzing, and think three times before you present the data.
Think once before you act, think twice before you start analyzing, and think three times before you present the data.
Data will talk if you ask the right questions
HR is the land of milk and honey when it comes to data but unfortunately barely a thing is done with it. The use is often limited to creating operational reports which is great for tracking checks and balances but it won’t tell you anything new. It will just confirm what you already knew, missing out on the opportunity to create valuable insights.
In order to transcend operational reporting you should start by asking questions in line with the business goals. It seems fluffy but it is not. Imagine that your organization plans on opening new locations in the nearby future. The shortlisted locations are often chosen without consulting HR. However, People analytics can provide valuable insights as you can scout the locations without even visiting them. Demographic information is widely available online, use it and start asking the right questions.
- Do they have the right work profiles in the area?
- How do we expect people to travel to work? Is there public transportation available nearby?
- What are the labour costs?
- What makes an employer attractive in that region?
By asking the right questions, the data might show that the shortlisted locations are not a match with the projected business goals or even with the corporate values / culture. These kinds of analysis bring invaluable insights to the big table, making HR a true strategic business partner.
People analytics is definitely not limited to the business strategy. Don’t use People analytics to just please management and the business but also use it to step up the game in HR. Because you can’t manage what you don’t measure. Rise above the traditional key HR metrics and ask yourself if your current reporting creates valuable insights. If yes, kudos and keep going. Otherwise, ditch the metric and start over. Find the metrics that matter. You’re probably reporting in meticulous detail on absences just like every other organization worldwide. But what is the added value if absences are not even an issue in your organization? None. If it is not an issue, then don’t be bothered tracking it. On the other hand, have you ever calculated the replacement cost of a leaver? You will probably lose sleep over it if you do! But imagine the business value of these kinds of metrics. Limited in Europe by GDPR, but you can even use predictive analytics to flag potential leavers and take action to avoid the replacement cost.
Data will talk even more if you never stop asking questions
We are all familiar with the key HR metrics. But what business value do they deliver? None. Don’t report on key HR metrics because everyone is doing it. The true business value of People analytics lies in the fact that you never stop asking questions and discover correlations that nobody ought possible. Ask questions. The odder the better. Have you ever asked yourself if overtime triggers more illness? Or if employees are less absent if they have premium coffee at the office? Imagine the business value if you can prove these kinds of correlations. This allows you to take actions that actually impact the bottom line and make the employee experience better.
Data will talk if you’re willing to listen
HR is known for taking decisions based on ‘soft’ arguments, relying on years of expertise and gut feeling rather than data. The habit of soft decision making will be difficult to break for many HR professionals. But there is no point of ‘doing’ People analytics and in the end not using the valuable insights it delivers. The good thing about data is that it never lies, and carefully chosen metrics will tell you what to do next. This sounds cold to the average HR professional, missing the human factor. But it’s nothing more than a necessary paradigm shift in HR – data driven decision making based on facts rather than deciding on ‘what feels right’. Is your HR department ready to take the jump?
Data will only talk if you’re prepared to fail big time
Never stop asking questions means that you will fail big from time to time. Especially if you go nuts with the questions. And remember, the odder the better. You will (and must) mess up at least 10 times before you have a winner, a Golden Metric. A Golden Metric is that one metric that proves an unexpected correlation, gives you invaluable business insights and allows you to create impact by taking data driven decisions and actions. Never stop until you have the Golden Metric and then repeat.
HR without data is like driving with your eyes closed.
You don’t need full time resources or a US military budget to implement People analytics. Have a look at your People analytics maturity level, and define your roadmap in line with the business strategy. Make sure you ask the right questions and solve the right business problems. By implementing fit-for-purpose metrics and tools, and with the necessary training, your operational HR team will be able to start using analytics in their day-to-day work. Improving the overall quality of your HR operations.
The impact of People analytics
- Improved decision making
- Better employee experience
- More efficient operations
- Impact on the bottom line