Why is People Analytics so Important for HR?
Over the last decade we’ve seen HR professionals all over the world begin to recognise the importance of people analytics as critical to the future of HR. Driven by widespread adoption of cloud services within HR, companies are beginning to invest heavily in programs, platforms and tools that leverage data for all aspects workforce planning, talent management and operational improvement. According to research by the Corporate Research Forum, 69% of organisations with 10,000 employees or more now have a People Analytics team. This raises the question as to why people analytics has become so imperative to HR? In the video extract below, Jonathan Ferrar CEO of Insight222 talks to David Green about the importance of people analytics in HR.
What is People Analytics?
As defined by Jonathan Ferrar in his online learning course “Getting started with People Analytics”, People Analytics is:
“the discovery, interpretation and communication of meaningful patterns in workforce related data to inform decision making and improve performance”.
The primary role of a people analytics team is to provide the organisation with insights that allow them to make better business decisions, thus improving business performance, while simultaneously improving the employee experience and well-being. Essentially people analytics focuses on people and the impact they drive, it provides an outside-in view of the value that HR delivers to the business.
Historically, analytics in HR had been largely focused on tracking basic HR metrics or providing reports to managers on headcount and attrition. However, people analytics teams are now focusing more and more on using data to understand every part of how people impact business value and operations, embedding analytics into real-time applications and the way we work to derive insights and support the business in making data-driven decisions.
The importance of data in HR
Little over a century ago, oil was considered the most lucrative resource in the world. Well times are changing and there is a new commodity on the block. Data, the oil of the digital era. Data is the new currency and is deemed to be worth more than oil. Nine times the amount of data has been collected in the last two years than previously collected in all of humanity. And as Jonathan explains, this shift in the value of data has had an impact on the currency of an organisation and HR as a function.
“Data is the new currency. I mean the world runs on data everywhere. Personal life, professional life. Every type of business you can imagine. So, when you look at the HR function the data is all around people. So therefore, analytics and data become the currency by which business or any business runs”
The speed at which insight can now be gathered, analysed and derived has been one of the driving factors in the value that data now holds. According to Nucleus Research for every dollar invested in people analytics organisations receive a return of $13.01.
“Data is useful because it becomes fact-based and it becomes something unequivocal as opposed to opinion, judgement, and other things. As the profession has developed in the world, and has become more equivalent to other functions, it runs more on the data and that data is about people and therefore people analytics is becoming the relevant part of a successful HR function in any business”.
This increase in data is having an impact on the entire organisation. CEO’s are having to continuously transform their organisations – acquiring new skills and capabilities to survive and thrive in this digital era. It’s not just the world of the CEO that’s being transformed, but employees are also being impacted. There is a growing expectation for a similar experience at work as employees have as consumers. There is the need for readily available, personalised data to support them in making decisions that drive their career progression.
While the availability of data is definitely driving rapid change, maturity of people analytics function and HR’s ability to leverage this data and the insights it creates to become that strategic partner to the business is slow. During his interview with David Green, Jonathan Ferrar explains “things haven't taken off in HR as perhaps you would expect in the way that maybe consumer market changed dramatically with the onset of consumer data”.
How can HR build their capability in People Analytics?
There are a multitude of factors that help explain the lag we see with many HR functions not fully embracing the benefits of people analytics. Jonathan outlines three primary reasons.
Jonathan explains that the lack of capability experienced by many HR professionals, which is largely centred around their learning experience while gaining their professional and university qualifications, being one of the core reasons for HR’s slow response to embracing people analytics.
“Capability, you know people don't fully feel that they have got skills and a lot of that comes back to professional qualifications and the background of where a lot of HR people come from and the sort of root of human resource management at many schools and universities all over the world.”
Many learning institutes across the world tend to focus on training, resourcing, employment law, performance management etc. as opposed to focusing on some of the core subjects required to build a successful analytics function of the future, such as mathematics, statistics and technology and how these elements are changing the world. In order to drive real change within HR, learning institutions need to embrace a new forward focused curriculum that they teach future HR professionals. Combining the traditional aspects of the HR capability with some of the emerging skills such as technology, statistics and AI to really enable HR professionals to future proof their careers.
Jonathan raises two very important questions that we should consider when determining how we build our people analytics ability:
Has the culture of HR as a profession kept up with the pace of change in the world of data?
Is the culture of your HR function supportive to learning and using data?
As a function, HR may not be as well positioned as other functions such as finance or marketing to equip their teams with the ability to build their data literacy skills and confidence. Jonathan explains during the interview that:
“a lot of HR professionals expressed to me that they just don't feel confident in talking about numerical and quantitative subjects, the organisation or organisation set up, to help people strive and succeed.”
As the HR function “continues to drive a change and growth mindset to embrace both intuition and judgement” while combining it with the data to support that intuition, to truly be successful they must build their confidence in data story-telling and the ability to consult and influence the business, to ensure they’re driving business impact that is grounded in data.
Finally, training. When building the necessary skills within your HR functions, it’s important to remember that “its larger than having the right mindset and a culture that supports you. Without the availability of training and access to the right learning content within your organisation at the point of need”, you’ll never be able to truly embed a culture of data and build your people analytics capability. According to the latest Human Capital Trends report from Deloitte, the number one trend for 2019 is the need for organisations to change the way people learn. It’s not enough to think about training or re-skilling as a one-off activity, where one training course or a workshop fixes the problem. Companies need to take action that enables their workforces to continually adapt to change and remain employable.
As Keith McNulty the Head of People Analytics at McKinsey explains on the Digital HR Leaders podcast “In the coming decades of disruption the management of talent will become the main differentiator of high-performing organisations”. As the value of data continues to increase, the opportunity for HR to leverage its people data, the new business currency, to secure its role as a strategic advisor to the business rises. But in order to do this we must invest in building and growing the HR skills of the future.
If you’re interested in learning more about how to build a People Analytics strategy, then you might be interested in our online training courses on People Analytics. They cover a range of topics that walk you through the critical areas to include in your People Analytics strategy in more detail.
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ABOUT THE AUTHOR
Manpreet Randhawa is the Head of Digital Content for myHRfuture.com. In her previous role as the Change Management Lead for People Planning, Design & Analytics at Cisco Systems, she was responsible for defining and executing on the change management strategy to successfully implement and sustain the digital and cultural transformation across the enterprise. Manpreet is very passionate about change management and technology and how to use both to transform the employee experience and prepare companies for the Future of Work.