WINNING THE HR ANALYTICS ARMS RACE
Alec Levenson wants “the equivalent of a Hippocratic oath for people-related data.” This is the first of 10 points in a manifesto for human resources data and analytics that Levenson, a senior research scientist at the University of Southern California’s Center for Effective Organizations, recently blogged at https://www.linkedin.com/pulse/i-solemnly-swear-hr-data-analytics-manifesto-alec-levenson.
His manifesto’s first point continued, “ If doctors have to swear to first do no harm, can’t we ask the same of our data analysts and business leaders? The equivalent oath would go something like this: ‘I promise to take no actions based on any piece of people-related data without first doing a careful diagnosis of the drivers of individual and organizational behavior, including team dynamics’.”
There’s more on those drivers and their relation to analytics in the article below by Levenson and Alexis Fink, General Manager, Talent Intelligence and Analytics, at Intel. They draw on decades of work with leading companies in a wide variety of industries including consumer products, technology, professional services, life science, and financial services.
The results are in: Human resources analytics has won the battle in the court of public opinion and all companies know about HR analytics. Yet they still struggle to understand what to do with it.
In a recent survey of 528 chief human resource officers across the U.S., consulting company Evanta found that they rated “leveraging HR data and tools to create business solutions” their top priority, ahead of improving HR as a business partner, succession planning, workforce planning, recruiting, and diversity. Yet they rated “developing best practices for predictive analytics” much lower, at eleventh, behind all those.
Our conclusion? Most companies still struggle to get business insights from their HR data, and can’t yet focus on advanced analytics and prediction.
So how can companies win the analytics war? Every campaign is a series of battles. Here we provide advice for winning the initial skirmishes. The first step is knowing which analysts can best battle on your behalf. The second step is knowing how to deploy them to work most effectively with both the business and HR. Do both steps the right way and you’ll be well on your way to winning the HR analytics war.
Choose the Right Analysts
In principle, any data-savvy person can contribute to HR analytics, including engineers, R&D scientists, market researchers, financial experts, accountants, actuaries, and more. All are good with numbers and know key things about your business. That puts them in a potentially good position to contribute to the analysis of HR data, right? Sometimes, but not usually.
We have seen more than a few big, well-known companies go down this exact path, hiring into HR analytics groups people with no HR background who have strong analytics skills in finance, market analysis, and even nuclear physics, proving perhaps that HR analytics really is a type of rocket science.
Yet, appearances can be deceiving. For every analytics whiz kid hire like that, those big companies usually complement them with multiple people who are content experts in HR, and others who are skilled at the behind-the-scenes tasks of data extraction, cleaning, manipulation, and storage and visualization. However, companies with the resources to build big HR analytics teams like that, with both rocket scientists and many other types, are the exception.
How should typical companies with limited budgets prioritize which skills are most important? Although diving into big data approaches to HR problems is seductive, in our experience, HR analytics cannot be successful without two skill domains: understanding people and understanding the business.
Understand the People
This skill embraces the fundamentals of human psychology: motivation and behavior. It includes why people work, what they want from their careers, and what leads them to leave. It also includes understanding group dynamics: why groups behave the way they do, and how to get people aligned and working in the right direction.
Which people have these skills? Industrial-organizational psychologists are strong in this area, but you don’t have to have a Ph.D. or even a Masters degree so long as the person has the right basic understanding coupled with a lot of experience working with people in organizations.
Deep content expertise in a field like industrial-organizational psychology is a classic example of necessary but not sufficient. We have met more than our share of Ph.D.s working in organizations who are really good at understanding a small set of issues, such as how to design training programs or scientifically valid screening procedures, yet who are not sufficiently well-rounded.
In addition to content depth, great HR analytics requires identifying the true root causes behind the broad set of human behaviors on display every day in organizations, and how to think systematically about which behaviors or outcomes genuinely affect business success. Thinking systematically requires considering the complex interrelationships among factors like business strategy, the business’ operating model, organizational structure, organizational culture, and work processes.
Understand the Business
Understanding the business means knowing the business’ operating model, why work is organized the way it is, and, most important, how the different work processes contribute to business success. Finding people who know this is rarely an issue; the real challenge is finding people who are equally good at understanding people and understanding the business. That should be at the top of your list if you want to win the HR analytics arms race.
Work Closely with Business and HR
Which brings us to our second point: the best way to collaborate to realize the full potential of HR analytics. In HR analytics there is common practice and there is best practice, but unfortunately the two are not the same, despite all appearances to the contrary.
If you look at the huge number of conferences convened and articles written on HR analytics these days, you see a multitude of analyses on existing data. They include everything in your HR information system or enterprise warehouse data system, and HR data on a wide variety of things including headcount, turnover, spans of control, career paths (job changes), recruiting, competencies, performance management, training, leadership development, employee engagement (from surveys), and more.
There are always attempts to link the data and analysis to something that matters for the business, with varying degrees of success. But in the vast majority of cases, these end up being exercises in frustration because they start with the data and ask what can be done with that data, how they can be applied somehow to glean important insights. And that’s a classic case of putting the cart before the horse.
The best way for HR analytics to partner with both the business and HR is to start by asking the right questions: What are the critical issues keeping your line leaders up at night? Where is the business in greatest need of help? Where do organizational silos stop critical work dead in its tracks? Where are people working at cross-purposes in ways that drag down key business processes? What do our best managers do that is different from what our worst managers do?
If you start with questions like these, your HR analytics will add real value.
The hard part of starting with these questions is that the data sitting in your systems are generally transactional and fairly superficial. Such data typically can provide only a small part of the answer. For example, span of control doesn’t actually tell you much about manager effectiveness, and organizational hierarchy is fairly independent of actual work processes.
Getting to truly actionable insights almost always requires collecting new data in collaboration with the business and the rest of HR. Sometimes that data will come from the business systems, sometimes through new surveys, and often through interviews with key stakeholders in the business and HR.
The best partnering starts with asking the right questions, finding the data needed to answer them, and only turning to analysis as the third step. It’s not the easiest path, but our combined decades of experience conducting HR analytics in a wide variety of organizations has proven that it has worked for us, and we know it will work for you.
Alec Levenson, Center for Effective Organizations, University of Southern California; firstname.lastname@example.org
Alexis Fink. Talent Intelligence and Analytics, Intel; email@example.com
This article is based in part on Levenson’s book, Strategic Analytics: Advancing Strategy Execution and Organizational Effectiveness (Berrett-Koehler, 2015).