Analytics holds key to HR’s boardroom ambition

SUMMARY:

Digging deep into data analytics will elevate HR to the strategic player it longs to be, according to CIPD’s Ed Houghton.

Can aping marketing’s approach to data analytics grant HR’s wish to become a strategic force in the boardroom?

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Ed Houghton

Ed Houghton, research advisor for human capital metrics and standards at the Chartered institute of Personnel and Development (CIPD), certainly thinks so.

Linking data on human behaviour to organizational goals presents a real opportunity for HR professionals to ditch their perception as tacticians blinkered by policy and operational procedure and prove that they are truly contributing to business value. Houghton tells diginomica:

We’ve seen a real explosion in how much data there is to play with – a really big data explosion. Parts of the business already use this data – marketing have been quite successful at using data for marketing purposes. Now it’s HR’s turn to step up and illustrate the value of HR data and make clear how HR can drive organisational performance.

The comparison between HR with marketing is a telling one, believes Houghton, because both departments are unlikely to attract professionals with an IT bent and both departments deal with human behavior.

But the difference is that marketing is way ahead in analysing human behavior to drive business value, which has helped earn its leaders a place at the executive top table. As Houghton says:

In marketing they are not IT people at all, but they are good at understanding behavior and insights and they are very good at analysing data – there’s a lot to learn from marketing.

Using data to find the links between employee performance with organizational performance will close the gaps between HR professionals and other business leaders. But there are barriers to overcome first.

Chief problem, and not just for HR, is that data tend to be held in siloes, impacting not only data collection, but also quality. Learning and rewards, for example, often operate in separate HR siloes and many companies have yet to find ways to bring all that data together in a coherent way.

Scepticism

There’s also a problem with HR’s natural skepticism towards allotting a number to the human condition – HR is used to dealing with ambiguity but not analysis. As Houghton adds:

Quantitative data is seen as reductive. It’s not good enough to see people in terms of numbers, so understandably, HR people say there are a number of other things to take into account.

When HR people do use metrics and analytics, according to a 2013 CIPD report, Talent analytics and big data – the challenge for HR, it is on tried and trusted areas such as workforce turnover, payroll issues and absence levels.

The danger is that these ‘housekeeping’, operational statistics do not provide the rest of the business with the kind of useful material they can apply to their business goals. There’s a so-what factor.

Research by Bersin by Deloitte supports this view that HR analytics are too basic. It finds that there are four stages to talent maturity:

  • operational reporting
  • advanced reporting
  • advanced analytics
  • predictive analytics.

The bad news is that the research found that 56% of the organisations surveyed were still at the basic operational reporting level and just 4% were at the highest level. The good (ish) news is that most HR people are at least in the same boat.

Although the level of technical skills is changing as more Gen Y employees enter the workforce, there’s still work to be done to get over the technology fear factor. Says Houghton:

We need to send lot of time upskilling ourselves to be more data aware. HR must get their head around data, because if they don’t, their credibility will go down. We are starting to see that and case studies are happening.

One solution to the skills problem suggests the report is to ‘make and migrate’. A secondment of someone from marketing or any other department with analytical skills could help HR create and build up analytical expertise in the department.

There’s also a perception problem to overcome. The CIPD report found that only 21% of people in the rest of the business felt that HR was using data to cause change. However, 63% of HR people thought they were instrumental in changing the business. HR clearly has its work cut out to demonstrate its worth, believes Houghton:

The rest of the business has an old-world view of HR that’s paper pushing, operationally based and policy driven, but HR is much more professional than that and it is changing. HR’s long-term agenda has been to find a way to the top table.

The economic challenges of the last five to ten years and cultural issues in both the public and private sector have made HR have a much more fundamental part to play in the business to make it sustainable.

The time is ripe for HR to stand up and be counted. While organizations have long spouted the ‘people are our best asset’ mantra, they are actually starting to put effort into making that a reality, fuelled by the knowledge that competitive forces – and the City – demand it. Says Houghton:

I would hope HR increase their ability to interrogate data and knowledge. If you talk to FTSE 100 organizations, they are all going through cultural change. Understanding the role people play in business is something shareholders are sitting up and noticing, so organizations need to what they are doing with people part.

My take

HR is no stranger to the power of big data or analytics, but has yet to embrace talent analytics with the gusto it should have done.

But buying in or building up internal analytics expertise is the passport for HR to win the respect of the business and make it a key contributor to business value.