HR Analytics in brief
HR Data has become incredibly varied and complex and since it is a well-known fact that gut feelings simply won’t do the job anymore, having or initiating the training of 'analytics' experts within your HR team will give you a huge advantage over your competitors.
With the purpose of better understanding what qualities and characteristics make a top performer, the technology isn’t as yet perfect though.It nevertheless has been proved that companies which fully entered into the world of HR Data management significantly improved their results in quality of hire, leadership development and employee turnover.
From a brief introduction on the purpose and uses of HR analytics to common pitfalls that might affect its efficiency, let's embark on a short journey through this topic.
Know(-how) of HR analytics
Know
'HR analytics refers to the application of a methodology and integrated process for improving the quality of people-related decisions for the purpose of improving individual and/or organizational performance' (HR Analytics Handbook - Laurie Bassi, Rob Carpenter, Dan McMurrer - Reed Business, 2012)
It should be used to help address the below:
- How to engage and retain top talent
- How to optimize compensation process
- How to improve leadership effectiveness
- How to create and sustain collaboration
- How to increase workforce diversit
What's more, it may grant HR professionals the long-sought opportunity to seriously engage into a strategic relationship with key stakeholders at every level of an organisation, working collaboratively to help improve their most critical outcomes thus becoming a true business partner.
Know-how
Identifying the key stakeholders and their requirements is the basis of a well-designed HR analytics process.
Quoting Salvatore Falleta: 'To effectively build robust HR Intelligence capabilities that are both proactive and systematic, HR intelligence must be positioned as an ongoing cycle involving the following critical steps:
- Determining stakeholder requirements,
- Defining the HR search agenda,
- Identifying data and information sources,
- Gathering data and information,
- Transforming data and information,
- Communicating and using intelligence results,
- Enabling strategy creation, decision-making, execution and learning'
Skill sets:
'Though computers and data drive analytical decision making, they are not nearly as vital as people: we've never seen an analytically oriented firm without plenty of analytically oriented people. Finding, developing, managing and deploying analysts - the people who make the day-to-day work of such organizations possible - is critical to a firm's success'. ('Analytics at Work - Thomas Davenport, Jeanne Harris and Robert Morison)
So what does it take? Along with an extensive proficiency with data, Analysts should also have the following skill sets:
- Quantitative and technical analysis,
- Business knowledge and organisational design,
- Relationship and Consulting,
- Coaching and Staff Development
Pitfalls and other thoughtful considerations
Before going holus-bolus into the HR Analytics world, it is worth bearing in mind a few pitfalls and considerations to avoid a somehow unpleasant journey.
HR Analytics is not a way to prove the value of the HR Function
As previously said, purpose of HR analytics is to provide insights that can be used to improve individual and organizational performance.
Going into analytics for the sake of justifying HR budgets, programs, headcounts would probably bring some reservation and wariness against the HR team.
Data isn’t perfect
Through reading on the topic, I came across a simple example: imagine if a candidate has a year gap on his CV. Any algorithm or tool looking for top performers would most likely ignore this candidate, but what if he needed to take a year off for family care or something even more severe?
The lesson out of this is that data shouldn’t be used blindly but as back up or supporting figures to strengthen hypotheses and facts: don’t let data alone make all the decisions.
Do not confuse benchmarking with analytics
Benchmarking will never provide you with actionable insights for improving performance. It is only a tool for measuring efficiency of particular HR functions.
Do not only focus on ROI
While it may prove useful to assess the ROI in HR programs, those are primarily used to demonstrate the value of HR plans after the fact. Exclusively focusing on ROI beforehand may alter the whole analysis and lead your perception away from the initial plan.
Identify what needs to measured, not necessarily what already is
Quoting Gibbons and Woock's 'Evidence Based Human Resources': "While the scorecard approach serves as a valuable means of determining how to use human capital metrics, it doesn't provide the more important insight into why metrics are important, which metrics to choose, or what they represent in terms of how human capital generates value."
Transferable solutions will not make it
Each business has its particularity - even within the same industry. A customized approach is thus compulsory. This is particularly relevant when it comes to work on employee engagement which is, as a well known fact, consistently more different than similar across different organisations.
HR Analytics are not the sole territory of the HR function
Collaboration and interaction are essential.
"By definition, because it concerns assessment of the interaction between HR investments and the rest of the business, human capital analysis is a multidisciplinary activity, and not should not be seen as one that is solely the responsibility of the HR function". (Philip Whiteley, 'Making it count: Human capital investments that deliver improved business performance' - 14, Logica 2009)
As a Conclusion
Linking measures on the people side of the business to organizational results doesn't go without its loads of challenge: identifying KPIs, shaping the best possible and most customized method, effectively communicating the results and, most important, building a follow through strategy.
While the path may look uneasy and challenging, the outcome has already proved to be tremendous in many ways. Companies having embedded HR analytics into their business processes and performance management system have this significant advantage of knowing exactly what human-related factors may drive their key-business outcomes and work on improving them against major investment and strategic choices.
Learn More About HR Analytics
HR analytics being in its early childhood, there's a great deal of passionate activity, writing, research and contribution on the topic.
Some especially noteworthy books to provide valuable guidance on how to get started on the topic:
1- HR Analytics Handbook - Lauri Bassi, Rob Carpenter, Dan McMurrer (Reed Business)
A groundbreaking publication for HR professionals by analytics expert Laurie Bassi, the HR Analytics Handbook collects in one handy volume the most vital, practical information on HR analytics.
It explains what HR analytics is (and what it's not), why it is of such growing importance today, and provides a guide for how to get started thinking analytically in your organization.
2- Investing in People: Financial Impact of Human Resource Initiatives - Cascio and Boudreau (Pearson FT Press)
This book provides detailed guidance for undertaking a wide variety of HR Analytics calculations
3- The Business of Learning - David L. Vance ( Poudre River Press)
Detailed guidance on how to apply analytics and the logic of economics to all aspects of the L&D function.
4- The New HR Analytics: Predicting the Economic Value of Your Companys Human Capital Investments: Predicting the Economic Value of Your Company's Human Capital Investments - Jac Fitz-Enz (Amacom)
Through a wide range of 'how to essays, case studies and sample worksheets, readers learn how to measure and evaluate past and current returns, using Fitz-enz’s proprietary analytic models.
5- Analytics at Work: Smarter Decisions, Better Results - Thomas H. Davenport (Harvard Business School Press)
This book provides broad-based guidance on how to create a more analytically-oriented culture withing an organization.