HR Analytics - You Need The Skills To Pay The Bills

HR Analytics, People Analytics, Workforce Analytics - all once simply 'buzzwords' for providing organisations with data-driven insights. Today, looking at how many organisations have individuals charged with the responsibility for delivering these types of insight, it's clear that data analytics is fast becoming an essential component of any HR team's architecture.

However, Human Resources leaders need to strike a delicate balance in their thought process when it comes to data analytics. If HR teams adopt a micro-level perspective, they are in danger of missing the big picture and failing to deliver the most strategic insights. On the other hand, with only a macro-level view, broad trends are identifed but critical details may be missed or ignored.

Taking a step back, is there any point to investing in HR Analytics in the first place? A recent survey from KPMG illustrates the dilemma. More than half of survey respondents cited analytics as a key skill. More than 80% agreed that HR can provide value through analytics. Yet, the survey also revealed that analytics initiatives ranked next to last among 10 potential HR initiatives for 2019. With more and more organisations assigning indivudals the responsibility for data analytics, and a clear opinion around the upside potential of data analytics, this limited action seems odd.

Part of the hesitation may be around the question of whether an investment in HR analytics will ultimately increase organizational effectiveness and efficiency, or help a company produce a return on that investment? These are some of the key concerns of C-level management, and afterall, that's often where the purse strings are held!

The Case Against

Workplace insights, gained through data analytics, can offer essential information to a business. However, this only applies if HR is able to use the right analytics in the right way. Even before this, if the appropriate amount of time isn't spent in considering which business questions would be the most impactful to have answered, then it would be unwise to invest in a data analytics function charged with providing the answers.

Elevating the Human Resources department to an appropriate level of organisational importance should be a non-negotiable first step in establishing an HR analytics function. At a minimum, the CHRO (or equivalent) needs a seat at the table with the C-suite and presented the opportunity of truly understanding the key strategic business questions. Many organisations already do this successfully, others have some way to go. If internal consensus is not reached around the purpose of the analytics function, the danger is that any mis-directed efforts lead to a waste of time and money. Not the recipe to inspire companies to continue an investment in data analytics. This may be one of the reasons why a recent Mercer survey found that only 12% of organisations are currently using predictive analytics.

This is where we meet a secondary challenge. Assuming that company management has opened the door to analytics, then in order to step through and truly take that seat at the table, HR professionals need a certain set of skills. The skills required in order for HR to plan, strategize, execute and visualize an HR data analytics plan are not commonplace. A certain amount of technical ability and being able to handle fundamental analysis is almost a pre-requisite. Much hiring within HR teams still leans towards soft skills, and the people management side of the profession. There is nothing wrong with this. However, to fully capture the opportunities in HR data analytics, more technical rigor will be required. Before taking up the data analytics charge, the HR team should reflect on whether they have the requisite internal skills and knowledge.

The Case For

 In companies of any size, making bad decisions on hiring, training or compensation can come with huge downsides. HR teams have an important role to play in, planning and meeting organizational goals, and in theory, HR analytics allows them to do this more effectively! For example, data analytics can help:

 ?   Improve an organization’s productivity through employee performance-related decisions

?   Identify top talent through employee training and development

?   Identify main reasons for employee turnover

HR analytics correlates people data and business data and establishes a connection between them. In this way, managers, HR teams and anyone involved at the leadership level can better understand meaningful data patterns and in turn, support better decision making around those processes.

Future-Proof

Should you be concerned if your organisation doesn't have the skills necessary in order to make the most of HR data analytics? That depends on both your time horizon and your belief in the upside of data analytics. In the short term, you might feel that escaping the required investment of time and money into data analytics could be the best course of action. However, if in the end, HR data analytics is going to be an intrinsic part of any winning business, then it may be wiser not to kick this particular can down the road.

Such discussions about enhancements to HR skillsets and thereby operational capability, are especially important given the changing nature of the workplace. Today’s work environment is becoming project-based, mixing full-time, salaried employees and "gig economy" freelancers. In an ideal scenario, HR departments can optimise organisations by using data analytics to build these ad hoc teams based on individual skills, talents, and strengths. They can also use data analytics to make sure these different types of workers are compensated in the most efficient way in order to maximize performance.

To The Top

Such changing trends mean that concerns about data analytics are certainly not isolated to the HR function. Over the past 10 years, the role of the C-suite has been redefined when it comes to data overall. Indeed, it would be fair to say that many executives recognize big data and predictive analytics as key areas in which to build competitive advantage. Hence, the trend of Data Scientists becoming part of the DNA of all parts of an enterprise.

This actually makes it more important than ever for HR teams to adapt their approach to data analytics. In doing so, it’s much easier for HR teams to stay relevant to the ‘business’.

Here are a few approaches which HR teams might want to think about when looking at data analytics;

1. Admit to not knowing. Bring in data scientists to help innovate, automate and structure existing and new data sources.

 2. Increase analytical DNA. Cross-pollinate the HR team with analytical talent from functions such as finance or business operations and challenge the team to know their data and come up with new ways to capture and analyze data.

3. Foster a data-driven culture. Encourage employees at all levels of the organization – not just HR departments - to think bigger about the possibilities of data analytics.

4. Pay for skills. Appropriate rewards for upskilling should be an essential part of driving enhancements to the technical capability of both the HR function and the wider organisation. Interactive tools such as SkillsVue from Willis Towers Watson, which allows skill-based pay modelling are the latest innovative steps towards enabling organisations to truly pay for skills.

Data analytics can be profitable. Perhaps, highly profitable. Indeed, it would be an oversight for any organisation to ignore the potential upsides presented by data analytics. By being realistic about the skills needed within the HR department and wider organization in order to adopt a data-driven approach, companies can set themselves up well for the future, as technology, data and innovation start to permeate enterprises in ever more ways.