people analytics or die
I find myself sounding the alarm bells again… HR has stalled in another critical area.
According to Bersin, a whopping 71% of organizations rated people analytics as a high priority in their organization. Yet, in 2016 only 14% of organizations had people analytics at all, and the other 86% of organizations were solely focused on reporting. And in 2017, Bersin reported that the number of organizations with people analytics barely changed from last year.
Without people analytics, an organization is operating in the dark. There have been so many trends over the last 20+ years that have fundamentally changed the way we work—the skills shortage, the gig economy, the shift to the knowledge economy, artificial intelligence, and changing workforce demographics, to name a few—and we know there are many more to come. Getting ahead of these constantly changing trends is key to an organization’s sustainability.
And here’s the thing: if online retailers can analyze my buying habits and recommend products I didn’t know I needed until I saw them, then HR departments should be able to make progress on getting ahead of key shifts and trends in the human capital space.
This lack of progress has huge consequences. I believe in today’s knowledge economy, a lack of actionable people analytics can be an existential threat to an organization. So, what can be done to move this important function forward?
embrace uncertainty
So, let me start with some basics. What are analytics? Why are they important?
Analytics is finding patterns and trends in data sets to make predictions about the future. These patterns and trends help organizations get ahead of coming changes in business and people dynamics. Analytics uses statistics, predictive modeling, and innovative technology like machine learning, but you can still do some basic stuff with what you have and really start to make a difference in your organization’s performance.
But given the lack of progress, it’s clear that this is much easier said than done. One of the reasons why I think analytics is so hard for HR to embrace is that even though we’re using data, there is still quite a bit of uncertainty when it comes to predicting trends. And most of us struggle with uncertainty.
There’s no question that this is REALLY hard stuff…it’s a bit like weather forecasting. You can’t be 100% sure that the trends will materialize, just like you can rarely be 100% sure that it will rain. Yet, when we see a chance of rain in the forecast, we do our best to prepare. We pack an umbrella and wear clothing that’s designed for rainy weather. That’s what analytics is all about—helping you prepare for future trends based on past events. And as hard as this is, we have to embrace it and accept the uncertainty of forecasting.
something is better than nothing
One challenge I consistently see with organizations trying to adopt analytics is that they’re trying to have a perfect set of data before they start analyzing it. I think it’s great to pursue a full set of clean data, but this can’t be your sole focus. You have to figure out ways to start identifying trends with the data you have. How do you do that?
First, start with that big burning question that is top of mind for your leaders. Make sure it’s a business question, not an HR one. Remember, the power of analytics is to show how human capital drives business performance and outcomes.
Next, identify possible data sources that can help you answer the question. I would encourage you to look both within and outside of HR. This can include financial metrics, customer data, employee data, operational KPIs, and the organization’s strategic goals. You should also consider external data sources like BLS statistics and GDP growth.
Now here’s where we have to embrace the uncertainty I mentioned earlier. Many organizations I speak to about this get very concerned when we start down this path and start to push back because these data sets are not complete. For example, maybe you only have data on 25% of your customers because the other 75% come from distributors. But in reality, 25% of data is 25% better than nothing. Other groups accept that they will never have a full data set and do what they can; marketing can’t wait to make a decision on what to invest in by asking 100% of customers what they think. They have to extrapolate based on what they have.
I have yet to see an organization that has a perfect set of clean data that’s always maintained and a 100% accurate reflection of their workforce. But regardless of the data you have, you can start with something. You can also partner with other groups like finance, marketing, IT, and strategy to see what they have. Together, you probably have a lot more data than you think.
show and tell
Once you’ve identified the data, the next step is to look for patterns and trends in the data sets that help you create stories to answer that big business question that you’re trying to answer.
This is the hard part. It’s like detective work. You have to keep digging and connecting the dots to get a sense of the patterns.
Here’s an example: once my team was trying to dig into why an organization’s revenue growth stagnated. First, we looked at where revenue was stagnant and found that it was the East Coast business unit that was causing the bulk of the problem. Then, we dug into the East Coast sales team and found it had several job openings. When we delved further into why there were so many job openings, we realized that the organization filled 20 roles for 10 permanent positions over the past year. This indicated the organization was not able to retain sales team members, which was likely a key reason why revenue was not growing. We could then present this to the leadership team and take the appropriate steps to hire the right people and ensure we were retaining them.
While this is a simple example, we really were able to tell a powerful story and present possible solutions to a significant business problem to the leadership. And we also demonstrated that we could tie human capital data to business outcomes—all very important steps to driving the analytics function forward in an organization.
light in the darkness
While it’s ideal to have a full set of clean data and sophisticated technology to identify patterns of data, we all know it takes time and money to get this right. The good news is that I truly believe you can start identifying some patterns that will help you take action and get ahead of trends, no matter the size of your organization. In today’s economy, it’s strategically imperative that you shine some light on human capital trends and how they impact your business, or you risk your organization’s sustainability.
If you would like to learn more about how you can create actionable analytics, I encourage you to check out my webinar Using Actionable HR Analytics to Drive Business Performance.
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