Research shows that technology-driven insights are a key trait of high performing HR teams, yet the adoption of analytics in HR remains the exception. Human capital analytics is one of the most powerful levers for business impact, helping companies address the global war for talent as labour demand outstrips supply in many industries and the COVID-19 resignation apocalypse continues.
Even so, many companies have either not invested in human capital analytics or fully realised the expected impact of past investments. A recent Harvard Business Review (HBR) study revealed how HR can build a workforce analytics strategy that uses people data to inform talent and company-wide decisions.
Start with a strategy for using HR and people data
To be valuable, HR data analysis must be geared toward answering a specific question. Such questions can be extrapolated from the five main types of actions McKinsey identified that companies would need to take in building the workforce of the future.
Retrain: What are the specific employee skills that we need to increase proficiency in, or do we need to focus on new skills?
Redeploy: Do we need to shift parts of our workforce by redefining work tasks or redesigning processes?
Hire: Do we need to acquire individuals or teams with the requisite skills, increasing the workforce?
Contract: Do we need to leverage external workers, such as contractors, freelancers, or temporary workers?
Release: What skills are no longer needed? Can we remove skills not needed by freezing new hiring, waiting for normal attrition and retirement, or in some cases, laying off workers?
Connecting people data analytics to a clearly identified business process, goal, or metric yields the greatest operational benefits and business value. The HBR study also found that digital companies were front-runners when it came to adopting automated techniques for the talent chase, and analysing HR data to retain their highly skilled and mobile workforce.
Continuously analyse HR data in business context
Too often, people data remains siloed in HR systems and used primarily by HR departments. In the HBR study, 89 percent of the 180 executives surveyed said that HR or people data was most valuable to an organisation when combined and analysed in conjunction with financial, operational, and other enterprise data. What’s more, 92 percent of respondents believed that all business leaders ─ not just HR executives ─ needed to review and analyse HR data.
The study found that the business benefits of sharing people data company-wide included faster visibility to better predict hiring and retention needs, improved budgeting and planning capabilities, greater agility in staffing projects, and the ability to proactively address potential hiring compliance.
For example, the Coca-Cola Company’s Botting Investments Group (BIG) data strategy focuses on a platform that integrates and analyses HR data daily to identify reasons for attrition, including the trend amongst “millennials moving in and out, and not just assume they’ll stay for five years or miss the opportunity to give them a better package and get them to stay longer. These are the questions we want to answer. We want to see the bigger picture. That’s the kind of HR department the enterprise needs, and HR wants to be.”
Be prepared to make organisational and tech changes
Embedding analytical capabilities and recommendations into the organisation’s decision-making processes and workflows increases both the accessibility and actionability of people analytics.
Perhaps most importantly, we need to recognise that while the fundamental business of running a business hasn’t changed with the balance sheet the ultimate measurement tool, the role of HR has significantly transformed from administrative transactional processor to strategic advisor. This transformation is still, in part, aspirational at many organisations today. It’s time to jettison long-held perceptions about HR as just a cost center. Senior leadership and every business team including HR need to get on board with modern workforce analytics. Using integrated HR and people data will allow organisations to link both the people and finance perspectives in all mission-critical decisions, operations, and planning ─ a must for survival for organisations both today and of the future.
This article also appeared on SAP BrandVoice on Forbes
