How is the field of HR Analytics shaping up? Why should companies pay attention?
These are questions that are important to answer. HR Analytics is still a burgeoning field and, while companies are catching on to its usefulness, many are yet to explore how they can use it.
Here are some of my answers as to how HR Analytics is developing:
Here’s why companies should pay attention to HR analytics…
Across all industries, we live in an increasingly data-rich environment. This means that a strong grasp of data science is required to maintain competitiveness. In the last two years alone, 90% of the world’s data was created – the scaling of data that is available is immense. By 2020, it is expected that the same amount of data will be created in a much smaller amount of time.
There are two main, tangible types of benefits from better use of HR data in organisations: avoiding opportunity costs and enhancing processes. An opportunity cost might occur when a competitor implements and generates value from data before your own company, for example.
On the other hand, processes within your company can be enhanced by transforming the large amounts of data you gather into insights which inform those processes. In my view, engagement is one area that would benefit in all workplaces from more HR data-driven decisions.
A Forbes article outlines the inevitability of digital transformation across industries. They highlight a three-step process to becoming more data-driven:
- Develop business-relevant analytics models
- Embed analytics in simple tools for workers in the business
- Develop capabilities to exploit big data
I think we’re reaching a point where so many companies have already put in place steps #1 and #2, that using big data in the business, including with HR decisions, is the next major step to remaining competitive.
How HR Analytics is applied
“HR” and “Analytics” are traditionally two separate fields. One specializes in all things “people practices,” while the other has specialized knowledge in data extraction and analysis. With HR Analytics, we’re bringing together two specialist fields, so it’s little wonder that it still tends to be very new for HR professionals.
Most HR professionals do not yet know how to utilise powerful analytics tools professionally. Let’s briefly discuss what can be inferred from our digital footprint, from our communication exchange, and from online reviews:
Digital footprint
Think for one moment about how it was prior to the digital age. Our identity, style and values were mainly revealed by our material possessions. Nowadays, our digital footprints give out much more information to the outside world, more than many people would even consider. Web searches and web page visits, emails and social network activity contain traces of your personality, traits, interests and values. Digital footprints can be highly predictive of how we behave at work.
At work, we often utilise written communication. Most people regard their work email or instant messaging chat conversations as private, but this isn’t always the case. Many employers make it very clear that written communications at work can be scrutinised for any business purpose.
Workplace Analytics deliver powerful new insights. These help business leaders to understand collaboration patterns across organizations that influence productivity and employee engagement. Any of the data that makes up our digital footprint can be used to gain these insights.
Online reviews
Online reviews are an important reality to consider. Thought leaders in the HR Analytics space estimate that sooner or later, something like online reviews, based on employee data, will be introduced to evaluate the performance of individuals. This scenario is happening already for Uber drivers.
It is well known to HR that in many cases performance at work is evaluated based on what people perceive of it. Your reputation at work defines you and is intrinsically subjective and biased. A shift toward reviews based on real data helps to dial back that subjectivity.
While some of this might seem obvious – it matters. The way we find work and how we are evaluated for our contributions is changing. The question will be whether individual employees resist these changes or embrace them. This is a key challenge for HR.
As you know, HR information, like many other types of information, is subject to confidentiality, privacy and data protection laws. To realise the full benefit of workforce analytics, genuine employee data is the key. This means that you need the buy-in and trust of employees, to ensure that they’re giving you accurate data.
How HR Analytics can create a competitive advantage
HR Analytics will help HR practitioners to identify the employee groups they should focus on. This is a paradigm shift, representing the exact opposite of standardisation and the usual “one-size-fits-all” HR approach.
Here some examples of questions that could be answered thanks to data science, helping companies gain a competitive advantage:
- Shall an organisation invest in HIPO strategies?
- Should the company devise a better onboarding programme than what employees received in the past?
- Should temporary workers receive less favourable treatment than a permanent worker?
- Who are the key influencers below management level that are essential to involve in change management initiatives?
- Who are the team players in an organisation that need to be promoted and acknowledged?
Making the shift to an approach where the individual needs, wishes and capabilities of candidates and employees are the starting point is difficult. HR practitioners often need to prioritise among conflicting interest groups within the organisation.
Where is HR Analytics heading?
Admittedly, one cannot talk about the future trend of HR Analytics without thinking about Tom Haak’s daring attempt in an article for HR Trend Institute. Haak highlights a number of areas where HR Analytics can play a key role for the future of HR.
One interesting, personalised approach to onboarding and learning is the idea of “development as a service.” This is where an employee-focused, data-driven consultant can help people analyse their own data and look for ways to improve. This is currently used in executive and high-level sports coaching.
The issue of trust is an important one that will be ongoing for HR practitioners to deal with. Haak points out that the premise of many current initiatives is based on what the company wants, rather than looking at employee needs. Perhaps there is room to better balance the two.
I personally I am very sceptical that big players will be able to manage transforming HR into digital within a short timeframe. Large companies make sub-processes very efficient, however, they notoriously do not work seamlessly together. This can lead to silos of information which is not helpful from an analytics perspective.
Experts in connecting and assembling information will be required to plug the gaps. ETL (Extract, Transform, Load) is a common paradigm by which data from multiple systems is combined to a single database for analytics, but this comes with its own complex challenges.
Final thoughts
HR Analytics is a young field, but it is already providing companies with valuable insights, perhaps even competitive advantages. This makes it an area that I believe will continue to grow strongly, although not without a few challenges.
Whenever there is personal data involved, people are often sceptical about handing it over. They need to know that they can trust the company and that it will only be used for genuine improvement.
Larger companies are also challenged by the fact that they often silo information. It is difficult to build a complete picture without access to all data, and sometimes systems don’t “talk.”
For HR practitioners overall, it’s important to take those steps to learn about analytics and what it can do for you. Doing so can add a whole new dimension to your work, opening up more opportunities.