The Problem of HR Analytics

In survey after survey Human Capital is the #1 problem cited by CEOs worldwide. By the way, most of the other top 10 issues are in some way related to Human Capital too. I won’t even cite these – these facts are too easy to find and too obvious.

The best-known CEOs of our time have repeatedly emphasized that getting “people” right is of primary importance to making a business run well. We love them, but we don’t listen to them.

On the other side of the equation, when things go wrong with people they usually go really wrong. Bad leaders run off the best talent and drive businesses into the ground. By the time it has a visible impact it is too late. If that type of injury isn’t enough, class action lawsuits against Fortune 500 companies by former employees mistreated in one way or another frequently result in 100+ million dollar settlements. Google “List of Major Class Action Workplace Settlements”. Has any major reputable organization of our time not lost one of these? What the heck is going on here? This is a deplorable track record.

Bottom line – if you don’t figure out your bias you will go to court eventually and you will lose. You can’t handle the truth, but you also can’t hide from it. Drain the swamp or the alligators will eat you. And they really do.

Your organization probably spends over 70% of its revenue on people in Compensation and Benefits. In addition, HR programs and processes run on budgets in multiple millions of dollars, span all aspects of the employee experience, and ultimately touch everyone in the organization. Think about sourcing, recruiting, compensation, benefits, wellness, training and development, performance, succession planning, employee relations, diversity, etc… If you are in HR you know what sort of money, time and toil goes into these programs. It is a treadmill of endless things to implement or change.

Decisions made about (and for) people by HR and by Leaders touch human lives and have real positive or negative consequences. People live and die by these decisions - they really do.

You can’t manage well what you don’t measure

Despite the importance of Human Capital and HR less than 25% of leaders say they use ANY DATA AT ALL to make Human Capital decisions. Is this a nightmare or a joke? 70% of our annual BUSINESS investment, and we don’t have any idea how it works. If you go to see the wizard you will be a bit disappointed at what you find.

In another survey it was found that nearly 100% of business leaders say they would like to receive more data from HR on important issues –an embarrassing statistic to share given the current state of things. When have we ever found 100% of people agreeing on anything? Look at your last employee survey – 100% doesn’t exist. We usually agree about the things we are best at. In this case, we agree on the thing we happen to be the worst at.

Is HR reputations as a “Business Partner” really where HR wants it to be right now? If not, why not?

Whether it is finances, customers, or personal matters like weight, BMI, cholesterol, blood pressure, etc. we don’t really respect the things we don’t measure. We also don’t know a lot about them. We base decisions on what other people are doing, we believe myths. We guess. We do what others tell us. Frequently they are wrong.

HR knows it needs data. Another survey showed that 95% of Fortune 500 HR executives plan on investing in HR Analytics in the next two years.

 

We know we need HR Analytics but we are struggling to implement it.

I have worked with data in HR for 15 years. A colleague and I recently started interviewing top HR executives to understand their perspective on the problem of HR Analytics and to be sure we haven’t missed anything.

Here are the typical problems of HR Analytics…

It is new

·   There is no established professional framework or guiding practice – we are inventing this thing as we go.

·   We get it but we don’t have a place to put this in our budget – we need help to make a business case – how do you make a business case that we should have more data, with no data!?

·   Lack of higher-level training in science, technology, engineering and math (STEM) in traditional Human Resource profession.

·   Lack of experience managing STEM in HR.

·   Lack of experienced HR Analytics professionals ready to hire now.

·   We are overwhelmed by the opportunity of all the data and various possibilities– we have difficulty figuring out where to start, or train our eyes on where to focus. 

HR systems

·   No matter what the sales person tells you, the real story is that HR operational systems are not designed for reporting and analytics. I don’t care if it is PeopleSoft, Oracle HR, SAP, Lawson, ADP, Ultimate Software or Workday these systems were designed primarily for operational purposes with reporting only as an after thought. Table structures are complex and the implications for analytics profound. The data simply must be removed from these tables and reworked.

·   On the other side of it, there has been a proliferation of “best of breed HR systems” over the last several years resulting in overwhelmed HRIS and IT staff, isolated data stores, integration challenges, multiple standard reporting interfaces, and confusion…

·   There is a phenomenon in HR of “blame the system” that results in HR system changes every 3-5 years. In rushing to implement a new system on budget and in timeline we abandon historical data and destroy most of the possibility for quality analytics. You wait 2 more years for this to accumulate again, however at that time you realize you didn’t collect all the right data. So 5-7 years after you are started the journey you are starting over! Ironically, if you hold time period of acquisition constant satisfaction between systems and complaints is roughly equal. There are some dogs but for the most part we are equally dissatisfied with our HR systems and equally likely to purchase another. We swap.

HR data and analysis

·   We are too busy doing the basic blocking and tackling, how do we get time for this?

·   We have data, but don’t have quality data or the right data.

·   We have data, now what? Reporting isn’t enough – we go to a lot of effort to get data to people but these reports don’t provide enough insight or tell a story - nobody looks at the reports.

·   HR is oriented around functional silos, processes and systems – yet key drivers work together and span across silos.

·   We do HR Metric reporting, we do employee surveys, we do exit surveys, we “check the boxes” of all sorts of things with data, but these data and analysis are never connected together. We are patting ourselves on the back for completing these activities, but we haven’t really created anything of profound or lasting value.

·   HR’s roles, teams, process and systems are oriented around functional silos – yet people problems span across silos. For example, decisions about “Pay relative to market benchmark” affects “time to fill” and “quality of hire”, and “time to fill” and “quality of hire” affects engagement and retention of existing high performers, and these in turn affect other people variables. If you isolate and reward HR professionals according to functional boundaries you will really have no idea what is going on and your organization will not function right. But since we don’t really report these data well you will never know that anyway.

·   We know we need to be more proactive and we want more advanced analysis like “prediction”, “big data” or “machine learning” – we are bored of the old stuff. The answer to our general malaise with HR data always lies around the corner.

Reporting and Analysis Technology

·   We have illusions that systems will solve all the problems for us and inevitably they do not.

·   Business reporting environments are not designed, marketed or oriented for HR data and despite the attestations of the sales people that they do, they don’t handle HR data well “out of the box”. All these systems require substantial investments prior to getting any value out of the HR data.

·   It is difficult for HR professionals to convey “requirements” to technologists in their language and difficult for technologists to understand HR professionals in their language. HR professionals are dismissed with terms like “fluff”. A real HR professional can’t help but be insulted by these degradations - if only someone could understand how to measure what it is that they refer to, which they know by experience to be real. People matter and have profound implications for organizations. Only we usually don’t know this until we have sunk the ship. Then we all jump aboard new companies, those of us who don’t drown.

·   HR Analytics requires a series of interdependent technologies working together well simultaneously: source systems, other data collection systems, Database / ETL / Data Warehouse, Reporting, Statistics, Visualization. I say this over and over again; only to be met with someone who insists when he or she gets the whiz-bang application set up right everything will be great. It takes too long to implement systems, budgets are too tight and it is hard to get all the pieces aligned. Support falls apart.

·   All comprehensive analytical tools require skilled operators that are difficult to source and keep and that have no particular interest in HR really. This is a painful uphill battle, and you usually lose. By the time you realize you lost, you are on to the next hill. This sounds like Vietnam to me.

Support

 

·   HR is not a top priority for internal IT or Business Reporting functions. We get pushed off, our timelines get blown, we wait.

·   We hired someone for this, but for some reason it wasn’t enough. We are not sure what is wrong.

·   We hire people for HR Analytics. They keep leaving.

·   The people who are best in one necessary skill area are not the best in another, requiring a team with a diverse skills spanning: IT/ETL/Data warehousing, Reporting, Statistics, Behavioral Science Research, Business Analysis, HR, Dashboards/Visualization, Presenting, and Consulting…)

·   We are hiring “young smart people” to take on this new exciting work, but they don’t know anything about HR yet, we have difficulty interfacing their work, we are afraid to put them in front of the business, and they are not ready to lead in HR.

Wait a minute, what else do I need? ... I need great new HR systems? I need a quality survey provider? I need a data warehouse? I need a reporting application? I need a statistics application? I need a visualization application? I need a team? What else do I need for this thing to work?

Do the needs ever end? Can someone just give us the complete list up front? Now you have it.

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