In the last few decades, the Human Resources (HR) function has come a long way - from a ‘back-room’ team dealing with trade unions and untangling the maze of labor laws to playing a more strategic role today for the organization focusing on leadership and talent development. It has been a long, slow journey adapting constantly to business needs and shifts in the way organizations look at their employees. More recently, as companies go through an era of unprecedented change, the expectations from HR are evolving rapidly. HR Leaders are realizing1 that to match step with the change and claim a truly strategic role in business, the function needs to evolve its ways of working and leverage digital technologies and data analytics.
Corporates have been using data and analytics to support decision-making in many commercial areas (like pricing, marketing, customer experience, etc.) for a long time. Yet, people-related decisions such as those relating to hiring, retention, promotions, etc. have often been largely guided by the ‘gut-feeling’ of senior executives involved. Even though HR has always been one of the most prolific data generating functions in an organization, this data has traditionally been used only for keeping records, meeting regulatory requirements and basic management reporting. With the adoption of cloud management systems and the move to digital transaction processing, the nature and volume of data being captured and available to the organization about their workforce has expanded manifold. However, most companies have not been able to use even a fraction of the data they collect - and remained ‘data-rich’ but ‘insight poor’.
All this is changing fast. Companies today understand that to stay ahead in the game and continue to create value, they need to proactively identify problems, predict outcomes, and prescribe actions for their workforce. The same tools and techniques that have proven so effective in driving decisions in many business areas are slowly finding their way to the human side of the enterprise and changing the way people-related decisions are made. Today, People Analytics functions are quite common in large companies with more than 80% saying that they consider people analytics to be a high priority2
The journey of creating a people analytics function starts with data. Having clean, reliable people data across the lifecycle of an employee is the key to build a world-class analytics capability. This requires companies to put in place the strong processes supported by appropriate data infrastructure to collect, secure, maintain, and analyze people's data. The other important ingredient is having the right talent to make sense of this data in the context of the organization. Data analytics is now the ‘hot new skill in HR’; with a 242% increase in analytics professionals in HR in the last 5 years3. With accurate data, appropriate infrastructure, and the right talent; companies can start to build the foundation of a people analytics capability.
One of the ‘early-wins’ for people analytics is building tools to visualize people metrics and democratize access to them across the organization. This can be achieved through digital self-service dashboards with key HR KPIs that are simple to navigate and understand. These are typically easier to create but require a lot of initial investment in sourcing, cleaning and analyzing the core people data for the organization. Not only does this process help in creating a ‘golden source’ for HR metrics in the organization but also helps foster a data-driven culture in the company, putting data at the core of people's decision-making. With a solid foundation in place, teams can start leveraging analytics tools to diagnose people's issues and propose actionable insights. Recent advancements in machine learning and AI coupled with the emergence of multiple avenues of people data have accelerated the adoption of predictive models and sophisticated analytics techniques for a variety of use cases in HR. Today, teams are using analytics to for and screen candidates with higher chances of success, outline key skill gaps for business leaders and generate potential leadership pipeline from across the organization.
The use of analytics in HR offers tremendous opportunities. It has the power to re-shape the role of HR and add incredible value to the business by providing leaders with insights that allow them to make better people decisions, thus improving performance with employee well-being and experience. To be seen as truly strategic partners, HR teams need to think about the most important things they can do to attract, develop and retain the best talent in the organization; and automate the rest. The focus needs to be on tasks that leverage their creativity, problem-solving and interpersonal skills (empathy). However, getting real value from people analytics demands strong leadership commitment and patience to build the capability to deliver value over time. It not only requires technical smarts but also shift in mindsets to allow data a seat on the decision-making table. Once analytics is embedded in day-to-day decision making, a new model is established which is often faster, more objective and more effective.
Please note the article was originally published in the BWpeople.in in November 2020.
The opinions expressed are author's own. Fidelity International is not responsible for the author's opinions.