Big Data. Internet of Things. Driverless cars. Who would have thought about any of these things just five years ago? We are in the midst of a technological revolution that gathers more momentum every day. We are collecting data from multiple sources at an amazing rate.
“Using and leveraging HR analytics is the only way HR can maintain an equal footing with others in the business that are already skilled at utilizing data”
HR faces a big question: Is it going to drown in data or ride the wave?
Twenty years ago, HR was only just starting to be recognized as a profession. It moved from an administrative task to personnel management before–at least in some cases–taking on a high level ‘business partner’ role.
Spurred by legislative action and regulations, HR has long been the focal point for compliance with labor rules and requirements. This meant it was transactional and process driven. While this became HR’s comfort zone, this role is backward looking and far from strategic in nature. Simply performing processes efficiently contributes little to business success.
When it comes to using analytics, most finance, sales, and marketing professionals are leaps and bounds ahead of HR. This may be because HR related analytics are more challenging to gather and analyze. But HR professionals need to rise to the challenge, because analytics are set to transform HR. No longer will “gut feel” be acceptable. Decisions must be driven by data.
With the introduction of full-blown HR Information Systems, one might presume HR has been using data anyway. But the information in these systems tends to be one-dimensional with a historical slant. There have frequently been challenges with the integrity of the data, requiring continuous ‘clean-up’ efforts to keep it up to date.
Because this looks mostly at historical data, it’s like looking in a rear-view mirror to try to see what is on the road ahead; a recipe for disaster! There are too many variables to make this an effective strategic approach. With so much rich data available, HR has an opportunity to move from the interpretation of historical data to forward-looking what/if predictive analysis. That is the only way that HR can demonstrate talent management and other strategic HR activities can contribute to the bottom line; instead of being considered only as an overhead cost.
However, predictive analytics does not negate the importance of gathering historical data; in fact, that is one of the first steps in predictive analysis. By evaluating past information, over time, there emerges a reasonable forecast of the cause and effect nature of data analysis. And it’s not a one time or regularly scheduled task–there must be constant review and validation of the subsequent data to determine other actions that will increase performance or otherwise provide economic benefits to the organization.
The most logical area to use predictive analytics is talent management. Instead of just reciting turnover rates, analytics provide the opportunity to dig deeper to understand the “why” of turnover. For example, evaluating the workforce to determine indicators of why some employees stay while others leave. This involves a lot more than just looking at statistical data; gender, age, education, etc. Predictive analysis gives a much richer picture. Imagine knowing why type of personality is more likely to perform successfully and stay. Are they creative or organized in their approach to work? Does previous experience contribute to longevity?
Another factor is the social aspect of HR analytics. We are in the very infancy of this, but talent acquisition is in of itself a social process. Social learning and collaboration takes networking into a new dimension, as set out in a fascinating recent White Paper, ‘Vertical Networks: An ecosystem for every profession?’
Social data collection through vertical networks will provide a treasure trove of information. Many companies are leery of social media. But if HR is quick to seize the opportunity, it can use social media to its advantage and move into the fast stream of the information revolution.
It is imperative for HR to understand business goals to be able to contribute to them. Using and leveraging HR analytics is the only way HR can maintain an equal footing with others in the business who are already skilled at utilizing data. Tremendous amounts of data are becoming available. HR needs to know how to use it. However, all too often, HR lacks the analytical skills to know how to interpret the data.
There has been an important shift in the availability of resources to assist HR in managing HR analytics. Those who are skilled in data analysis and interpretation are actively seeking to work in HR analytics as this is an emerging area that intrigues them to use their expertise in a new way. With the technical advances in data reporting and dashboard presentations it’s getting easier to succinctly and effectively present hypotheses and strategic recommendations.
This is not to say that HR personnel need to be transformed into data scientists, but it is clear they need to understand and utilize the basic principles. Attending a single training course will not be satisfactory; an ongoing commitment is required because of the rapid changes in data collection and evaluation. Forward-looking HR personnel need to network, train themselves, attend conferences and take every opportunity to enhance their analytical skills.
So why is HR so far behind in utilizing analytics? Many think it is due to the tendency of HR to rely on surveys, past experience and intuition. Others point to the lack of resources available to gather and interpret HR data in a predictive analysis fashion. Finally, HR continues to have the albatross of transactional and operational activities thrown their way; how can they even consider adding something as complex as HR analytics to their already burgeoning workload?
Regardless of the reason, HR simply does not have a choice. Economics, technology, and the success of using analytics in other functions such as sales, marketing and operations demands the logical expectation of making HR decisions based on predictive data analysis. And HR is critical to this as it is much more than just reporting on results; HR are the ones to put the results into context.
Today’s HR strategists have a great opportunity to truly get a “seat at the table” by being able to provide data driven initiatives that contribute to the bottom line. It is not just important that HR professionals train themselves in analytical skills: It’s critical!