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Data-Driven Impact:
Why HR Needs to
Get Serious about People Analytics
By Erik van Vulpen, Founder, Academy to Innovate HR & 2021 C2HR CON Speaker
< Without
running the risk of exaggerating, it is safe to say that HR
has recently undergone a revolution. With the outbreak of
COVID-19, HR departments went from being mostly seen as responsible
for mundane and transactional tasks to all of a sudden becoming
indispensable to business survival.
HR
has thus become even more strategic, and its expertise has
gained in importance among C-suite and business leaders—a
trend that started well before 2019 but has been rapidly
accelerated by the pandemic. However, while the urgency
of COVID-19 and the atmosphere of survival have propelled
HR into prominence, HR departments need to up their game
and go that one extra step further to keep their seat at
the leadership table. How? By becoming more data-driven
to make more business impact.
People
Analytics: A Data-driven Approach to Complex Issues
If
the past year has taught us anything, it is that the companies
that are most future-proof and crisis-resilient are those
that leverage two assets at the same time: humans and technology.
Or, in other words, talent and data.
In
HR, these two intersect in a discipline called people analytics.
In more academic language, people analytics is the practice
of collecting and applying organizational, people, and talent
data to improve critical business outcomes. In more simple
terms, people analytics is a data-driven approach to managing people at work (Gal,
Jensen & Stein, 2017).
And as HR departments are facing increasingly complex challenges,
there is a growing need for data-based decisions.
Traditionally,
HR
lags behind other business functions in being data-driven.
However, as HR transitions from being transactional to helping
the business deliver on its goals, and to further creating
a great employee experience in order to reach those goals,
it is time for HR professionals to become more data literate.
This makes perfect business sense. Organizations using people
analytics to support their HR functions and business decisions
see an 82
percent higher-than-average profit over
three years compared to their low-maturity counterparts.
To
give an example of how people analytics can create a positive
business impact through HR, one US retailer has driven efficiency
by developing an app that allows it to screen potential
employees, gather feedback, collect credentials, schedule
interviews, and track candidates as they move through the
pipeline. As a result, the company has seen a 60 percent
faster process from first contact to hire, an 80 percent
reduction in paperwork and higher retention rates. All of
which has a positive impact on the company’s bottom
line.
But
talent acquisition and management are not the only way people
analytics can have a positive business impact. An insurance
company, Protective Life, has used people analytics
to
help employees roll over their unused days of paid holidays
accrued over the COVID-19 pandemic to the next year in a
way that does not significantly impact the company economically.
The
HR department reviewed month-to-month data to determine
how many employees were behind on claiming their holidays.
The company policy was then adjusted to accommodate the
interests of both the employees and the business itself.
Turning Data into Actionable Insights
To
be able to drive business impact with data, HR professionals
need a few key skills. And data analysis is not necessarily
one of them. The truth is, only very few of us will become
professional data analysts and many companies already have
strong analytical teams. According
to research,
more than two-thirds (69%) of organizations with 10,000
employees or more have a people analytics team.
HR
professionals, therefore, do not need to develop data analysis
skills as much as they need data literacy skills to be able
to understand and use the data provided by tools and other
professionals. Moreover, looking ahead, analytics as a discipline
will, at some point, be fully automated. We will teach machines
to answer analytical questions but asking the right question
and turning the findings into business outcomes will require
HR to be data literate and have a data-driven mindset.
In
practice, HR needs to be able to use data to inform key
strategic decisions and communicate their findings with
intuitive data visualizations.
When
it comes to mastering data
literacy
as a competency, there are two important aspects to consider:
#1.
Being data-driven: This is the ability to read and use data,
as well as understand and utilize metrics, reports, and
determine KPIs.
#2. Analytics translation: This is the ability to translate data insights into action, policies, and decisions that have a direct impact on the business.
<
On an individual level, mastering data literacy means that you need to be able to:
-
Understand
and set metrics and KPIs
- Read
and interpret reports
- Create
data visualizations (i.e. dashboarding) and tell stories
with data
- Understand
the relationship between people data and the business
(which requires some level of business
acumen)
On
a team or HR department level, in order for data literacy
and people analytics to have as much business impact as
possible, you will need a shared understanding of the
data generated and used. In other words, you will need
a data-driven culture.
Without a data-driven culture, your organization and HR department won’t be able to leverage data to its full potential and your HR professionals won’t feel empowered to become data literate.
To
forge a data-driven culture, you will need to have the
right:
-
Mindset (i.e. socialize your team into considering data useful
in their day-to-day work)
- Skillset (i.e. you will need to help your HR practitioners become more data literate and gain new skills)
- Toolset (i.e. you will need to work closely with your IT department to set up the right tools for the right job to automate and augment people’s work and to collect and process data efficiently)
- Dataset (i.e. you will need to constantly assess the quality and usefulness of the data collected, analyzed and used to ensure it still brings added value)
In today's dynamic world, data is power. But without the HR insight into employees and people challenges, data is but an empty vessel devoid of wisdom or prospect of delivering anything meaningful—especially when it comes to people data and analytics.
That's why we need HR to guide companies in turning HR data into actionable insights and business outcomes that will lead to a positive impact that benefits the whole company. To do that, HR will need to build data literacy among its ranks, complementing people skills with the ability to read, interpret, and communicate data as information to business stakeholders. This ability will help HR professionals be more intentional in their decisions and leverage past experiences with data-fueled insights to predict the future and get ahead of the curve in today's dynamic world.
For more information on the topic of people analytics, please visit the HR Knowledge Center, a curated collection of 750+ timely articles on HR topics.
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