Why People Analytics is a Game Changer
HR may benefit from next-generation people analytics solutions to boost data gathering, correlation, and analysis.
Human resource directors have faced major obstacles in leveraging analytics to make better people decisions for years. To examine metrics on employee engagement, cost per hire, attrition rates in important jobs, and gender pay equity, they've occasionally been compelled to piece together data from separate spreadsheets or attempt to extract information from sophisticated systems.
While such technology impediments still persist in many businesses, they're rapidly becoming a thing of the past as increasingly sophisticated, cloud-based analytics tools allow HR to leverage employee data in more timely and effective ways to help organizational decision-making.
Experts say that an increasing focus on people analytics in HR reflects changes in how the C-suite sees the workforce. "There's been a move away from seeing people as a commodity and the thought that 'we're okay as long as we have enough persons to fill roles and it's not too costly,'" says Ian Cook, vice president of people solutions at Visier, a Vancouver, British Columbia-based analytics business. "More often than not, CEOs want to know that they have the right people in the right positions to carry out their strategy and achieve their goals. Talent quality, rather than merely talent costs, is becoming more crucial."
The number of solutions for people analytics is expanding.
HR professionals now have access to next-generation analytics solutions, which may be acquired independently from analytics providers or included as part of a technology package from a vendor.
Experts argue that as these technologies have improved and spread, the industry has gotten more competitive. "Most HR departments now expect to have some cloud-based people analytics capabilities," says Helen Poitevin, a vice president and analyst specializing in HR technology at Gartner. "The question is whether they deploy analytics as part of a suite, separate solutions, or even in-house analytics." "The problem has become, in many circumstances, how much they're willing to pay for these technologies."
HR departments that obtain the maximum advantage from their analytics programs, according to Kathi Enderes, vice president of talent and workforce research at Deloitte Consulting in San Francisco, utilize a combination of software solutions. Deloitte found that the most mature businesses—those farthest advanced in their analytics journeys—used an average of seven analytics solutions, compared to four items in the lowest-maturity organizations, in a recent survey of the workday people analytics software market.
The majority of businesses (91 percent ) use spreadsheets for basic data analysis on a regular basis, with 48 percent using embedded analytics in their HR or talent systems, 38 percent using data visualization tools, 35 percent using data warehouses, 31 percent using analytics embedded in an ERP system, and only 6 percent using cognitive tools, according to the study.
Despite technical developments, many HR departments still struggle to gain trustworthy and timely insights from their people data, according to Enderes. She goes on to emphasize that data entering systems must be correct and up-to-date, and the staff assessing it must have a wide set of analytical abilities. Those who make judgements based on HR data require real-time access to the information.
"The most challenging component of my experience has been developing a data-driven culture," Enderes says. "According to our analysis, barely 5 percent of low-maturity organizations employ the office of people analytics, compared to 55 percent of high-maturity, high-performing businesses."
HR Metrics That Aren't Standard
As HR analytics software has gotten more sophisticated, customizable, and user-friendly, the metrics that progressive HR executives examine and report on have moved beyond basic assessments like staff headcount and attrition figures.
While Visier's clients continue to focus on using analytics to measure employee retention and turnover rates—in many cases to gauge the dollar savings from keeping employees in revenue-producing roles—Cook says there's growing interest in using Visier's tools to track diversity and inclusion initiatives as well as worker overtime trends.
Cook believes that HR departments still struggle with analytics when they just give people data as a "prettier form" of reporting, replete with visually upgraded dashboards, charts, and graphs. "Rather than seeking to solve the most pressing business challenges with that data, firms still too often regard the provision of people data as success in and of itself," he says.
Issues with Employee Data Security and Access
Data security is one of HR executives' top issues when it comes to people analytics tools. Traditional techniques to solving people analytics questions, according to Pete Schlampp, senior vice president of analytics at Workday in Pleasanton, Calif., usually entail taking sensitive employee data out of HR systems and putting it into spreadsheets or data-visualization tools for analysis. However, he adds, this strategy can expose data to security concerns, especially if it's disseminated around the firm in an unprotected format.
Instead of taking data out and exposing it to security dangers, firms like Workday deploy platforms that allow HR customers to integrate their external data into the vendor's system and use it as a data hub for HR reporting and analytics. The data is encrypted and only individuals and teams with authorization to access it have access to it.
Data-privacy regulations like the EU's General Data Protection Regulation (GDPR), according to Kim Lessley, director of solution management for SAP SuccessFactors in South San Francisco, Calif., has also raised HR's antennae about threats linked with people analytics data.
"Today, corporations must be more careful about who is authorized to generate, access, and publish reports incorporating people data," says Lessley.
SAP SuccessFactors analytics solutions have capabilities including an authorization method that enables users to regulate the display and amend permission of employee data "down to the field level," according to Lessley, to assist decrease the risk of data exposure. "Data cleanse capability also allows organizations to define which people's data should be destroyed when which is one of the GDPR's essential requirements."
Diversity, Equity and Inclusion Analytics
One area where HR executives have requested more precise data is in assessing the performance of diversity and inclusion (D&I) initiatives. While HR has depended on proper people data in the past to comply with government authorities like the Equal Employment Opportunity Commission, the relationship between diversity and workplace performance, as well as statutory compliance, is strengthening the demand for high-quality data.
According to a recent poll by Mercer and Salt Lake City-based RedThread Research, many of the 121 vendors operating in the D&I sector are focused on people analytics metrics, second only to those delivering solutions tied to talent acquisition difficulties.
According to Stacia Garr, co-founder and principal analyst at RedThread Research, the rapid growth in the vendor market reflects HR leaders' increased focus on issues like pay equity, removing unconscious bias in hiring and promotion decisions, and ensuring that members of underrepresented groups feel included in the organization.
Many manufacturers' D&I analytics systems have grown more intricate and user-friendly in recent years, according to Garr, leading in improved HR. Some pay-equity software systems can now more readily measure tenure, geographic location, work experience, and skillsets when comparing the incomes of men and women in similar jobs.
HR professionals that have advanced farther in their analytics journeys are evaluating difficult-to-measure inclusion rates within their organizations using novel approaches like organizational network analysis (ONA), she adds. Internal collaboration network membership, e-mail communication patterns, and calendaring software data are all utilised by ONA to study how various populations are being involved in dialogues and decision-making, as well as being recognized as high-potentials.
Because some vendors in the fast-growing D&I analytics industry lack competency in the human resources business, Garr recommends HR leaders to undertake rigorous due diligence on them.
"Not all of them come in with a great awareness of the ethical and security challenges that come with handling and analyzing personal data," Garr adds.
While next-generation predictive people analytics solutions may help HR better capture, correlate, and analyze crucial data, experts like Poitevin caution that success in exploiting people's data is still focused on people, not technology.
"You need a combination of the right technology, governance, and analytical skills to obtain a phenomenal return on investment from analytics projects," Poitevin says. "Despite the fact that there are several significant areas, if I had to select one that is the most important, it would be the skill set of human resources professionals. Ultimately, it boils down to understanding what questions to ask corporate executives and other stakeholders, as well as having the capability of responding to those questions with statistical insights that assist convey appealing tales about the themes raised by those inquiries."