What Does “Generating Insights” Mean for HR Analytics?

A primary role of HR Analytics is to generate insights.

Sure, we can play around with data modeling and come up with all sorts of facts and data points, but what does it really mean to generate insights?

I think it’s an important distinction for HR analysts, or those hoping to get into the field to make because essentially, this is the part that makes the role worth doing. It’s also the part which demonstrates that worth to senior managers and other stakeholders in the organisation.

Let’s take a closer look:

HR analytics – generating insights

From an HR analytics perspective, “generating insights” means discovering information that is vital to making good business decisions. That’s where the true value of the role lies for your managers and executives.

For your part as an HR analyst, this means you need a thorough understanding of what the business problems and priorities are first. You must be able to generate insights that are useful and help the business achieve its goals.

This might seem obvious, but missing the true business need is a common mistake. There are so many data points for HR to work with that it’s easy to go off on a tangent, finding information that may be interesting, but isn’t useful for the priorities of the moment.

The bottom line is that if senior executives are investing in HR analytics, they’re acknowledging that they want HR to play a strategic role. In general, they’re hoping to derive some competitive advantage through HR analytics. Your insights, when directly influencing key problems, can provide that advantage.

As Deloitte puts it:

“No longer is analytics about finding interesting information and flagging it for managers: It is now becoming a business function focused on using data to understand every part of a business operation, and embedding analytics into real-time apps and the way we work.”

Insights that are actionable

The focus is actionable information and insights for the whole business, not just an HR silo. HR becomes a strategic partner for the business units that need it. Take this example from a sales department:

“The sales organization at a major consumer products company has partnered with HR to develop a complete model for sales productivity, which helps predict and diagnose problems, pinpoint training solutions, and improve quality of hiring.”

This highlights a key role for HR analytics – showing the connection between talent decisions and value. McKinsey sees this as necessitating a shift in the role that senior HR managers play:

“The starting point is for HR business partners—those senior HR individuals who counsel managers on talent issues—to stop acting as generalists and show that they really own the critical talent asset. This is a big enough change that it calls for a change in roles: replacing the business-partner role entirely with a new talent value leader (TVL), who would not only help business leaders connect talent decisions to value-creating outcomes but would also be held fully accountable for the performance of the talent.”

The role of HR analytics in business decisions

This raises a few questions about the role HR plays in business decisions. Traditionally, HR didn’t take that strategic role – they were about people management and policy. Now, many companies are giving HR a seat at the table in terms of strategic decision-making.

Admittedly, the field of HR Analytics has been slow to catch on. While around 69% of companies either have or are developing an HR analytics database, many have talked about it as a goal, but haven’t yet done anything about it.

Still, proponents of HR Analytics have got proven results. Take this article from Chantrelle Nielsen and Natalie McCullough of Microsoft’s Workplace Analytics Division – they’ve observed HR analytics driving process, cultural and strategic transformation. The role HR Analytics plays is usually advisory – take this story as an example:

“One people analytics team at a financial services company was trying to help the CEO manage growth while he worked to instill a new culture in which departments would be asked to run leaner and more competitive in the market – “scrappy” and “hungry” were terms that often came up. As the transformation accelerated, teams were asked to do more with less, generate more data, and make decisions faster.

Amid this, department leaders began to hear anecdotes about burnout and change fatigue and questioned whether the pace was sustainable. To address this, the people analytics team provided their CEO with a dashboard showing the number of hours that knowledge workers were active for in different teams. When an entire team is over-utilized, he knows they can’t handle more change, while under- or unevenly utilized teams might be more receptive. He can also slice the dashboard by tenure, to learn whether recent hires have been effectively onboarded before approving new hire requests to absorb extra work.”

Key outcomes of HR insights

When the HR analytics role is embraced as a key player in the strategic direction and decisions of the company, there are some important outcomes being observed – here are just a few:

1. They can help to minimize human error. Data analysis via automations reduce the likelihood of error through manually-encoded reports. In turn, this means that decisions made based off the data are more likely to be accurate. It also reduces the need for opinion-based decisions. Consider for example the performance appraisal – modern data systems can make the appraisal almost entirely objective
2. They can provide senior managers with a more macro-level view of their human talent. Data such as salary and performance is easily accessible and viewed in a quick-to-digest format
3. They can ensure that talent is deployed appropriately. Data insights can show things like performance, training, workload, sentiment and likelihood of attrition. In the example earlier, it was highlighted how this data can also be used to avoid burnout in situations of business transformation
4. They can play a key role in risk management, particularly where people-related. HR analytics can provide early warning of risks that will require the attention of upper management. For example, if the company is at risk of losing key people in a tight labour market, if the hours and patterns of employees are putting them at risk for burnout and other health issues, or if overall levels of employee satisfaction are diminishing, representing a risk to productivity as well as turnover.
5. They can identify people-related areas of revenue leakage. For example by analysing overtime patterns, travel and other pay or expense-related areas
6. They can help with employee well-being. For example, data analysis can identify human performance indicators that can help employees maintain energy, wellness and take much-needed breaks.

Final thoughts

The role of HR analytics is to analyse data and generate useful insights. HR is taking a more strategic role in many businesses and it is important that the insights generated provide value. This means informing key business goals or problems.

Every HR analyst should ask these questions when analysing data:

1. How does this relate to business priorities?
2. How will I present this to show the value of it?
3. What decisions could be drawn from this?