Demystifying People Analytics: Part I

Is People Analytics a new fad in the market? What is this buzz all about, after all?

The answer to this has to be an emphatic no. And why is that so, is what we will delve deeper into, through a series of articles on this subject.

Analytics as a field is not something that emerged yesterday. The statisticians have been using analytics for ages for policy-making. Even in all MBA curriculums, “quantitative techniques for business decisions” is a mandatory course. The field of data science is essentially rooted in Mathematics and Statistics. We have been using probability and frequency distributions, forecasting techniques, and trend analysis for making well-informed decisions in business and otherwise. Analytics has proved to be of great value even for support functions, be it finance, marketing, or HR. However, what has changed is the amount and variety of data available now. And, thanks to technology, our ability to make sense of it has increased manifold.

The marketing departments have been using Business Intelligence and Analytics for a while now. The need to adapt quickly to the market and changing customer needs necessitated the use of advanced analytics and data science capability early on. The same goes for the finance function, in a rapidly changing environment, an organization will be doomed if it didn’t use scenario planning and forecasting for making important decisions.

The Human Resource functions in most organizations are the custodians of a vast amount of usable information and data about their critical assets. However, the ability to derive much value from it is still limited in most organizations. The primary focus has always been on dashboarding and tracking key HR metrics. Although, now there is a felt need to have an integrated platform that can also give meaningful insights into the workforce so that CHROs and CXOs can look beyond metrics like attrition rates, per employee spend, learning hours, etc.

Across different forums, discussions are happening for the role of HR to shift from administrative tasks, which can be automated, to more strategic priorities that directly impact organizational goals. During 2020, this became even more apparent as HR needed to partner with the business in a real sense. HR leaders stepped up their game big time, from creating a remote workforce without affecting productivity to creating an environment where the employees still feel connected and valued. And that is when the need for advanced analytics and automation started to gather momentum.

A lot of questions arose, some of them revolving around critical business decisions:

• How to ensure that the person is productive, engaged, and able to build skills needed for the future?
• Should the focus be on the number of hours worked or outcomes generated?
• What is an optimum number of leaves allowed now when the dynamics have changed? What is the pattern of availing leaves?
• Are employees picking the new skills and how to ensure that learning gets transferred on the job?

With questions, the need to relook at the existing way of working also has gained ground. Is there a better way to make evidence-based strategic decisions? Is there a way to look at HR decisions holistically and be cognizant of how one variable will impact another and choose the best-case scenario? From a simple decision like which recruitment channel is best to optimize hiring cost, to assessing the complicated ones which can predict possible outcomes of certain policies on attrition and engagement, analytics support all the critical aspects of decision making. More the questions, cleaner the data, better value an organization can derive from these algorithms. The first step in this direction has to be an open mind and willingness to see beyond the ordinary. The first question has to be if there is a better way of doing what we have been doing. And then, immense possibilities open up.

 The second step is, to assess the existing data sources and the quality of data being collected. Having detailed information on employees’ addresses may have seemed like an unimportant piece of information earlier, however, it became the most critical information when decisions had to be taken regarding shipping desktops and laptops or identifying employees living in Covid hot spots.

 The third step is to define the specific context in which the organization operates and its purpose. What are those specific things, if known, will aid in better decision-making? It is imperative to have an outside-in approach and staying connected to external realities. The talent pool available, the competitors, advancements happening in the industry are some of the key considerations that go beyond designing policies.

 The fourth step is taking an inside-out approach and further solidify the purpose and aspiration. Aligning HR strategy proactively to the overall business outcomes is the key to get the most out of any form of analytics. Some of the aspects that need attention are the quality of talent required, creating a thriving work-environment to boost productivity, and creating a learning organization in real terms.  Essentially, having a sharper focus on making workplaces people-focused and outcome-driven.

And then one of the most pertinent questions is if there is enough capability in the team to look at the data and make sense out of it, beyond dashboarding and tracking pre-defined metrics. Is there a readiness and willingness to read the data differently? The ability to create hypotheses, test them, and being ready to acknowledge the surprises that it may throw up from time to time?

The organizations may be at different points in the data maturity and capability continuum but the exciting part is that we have already started asking the first question and exploring the answers. When applied in a structured manner, people analytics leads to a far greater impact, aids unbiased decision-making, and proves to be cost-effective. A hidden benefit is that it leads people to think holistically by understanding the causal relationships between variables and in turn helps in breaking the existing silos in the organizations.