Solution Spotlight A GUIDE TO HR ANALYTICS

Transcription

1 Solution Spotlight A GUIDE TO HR ANALYTICS

2 M uch like big data has revolutionized marketing and finance, industry experts say that HR analytics -- workforce metrics that can help companies glean information about their talent pool -- will transform human resources. But are HR professionals ready to assume a more data-oriented role? Readers will learn how HR analytics can benefit their organization, and what to measure when it comes to implementing a program. PAGE 2 OF 15

3 READY OR NOT, HERE COMES HR ANALYTICS Emma Snider, Associate Site and News Editor Much like big data has revolutionized marketing and finance, industry experts say that HR analytics -- workforce metrics that can help companies glean information about their talent pool -- will transform human resources. But are HR professionals ready to assume a more data-oriented role? Not without better analytical skills, says Josh Bersin, president and CEO of Oakland, Calif.-based consultancy Bersin and Associates. HR teams are not very analytical in their thinking yet, Bersin said, despite broader adoption of talent management software. That is holding them back from doing more data-driven decision making. Ron Thomas, director of talent and human resources solutions at New York City-based Buck Consultants, has a similar opinion. Thomas said it can be difficult for HR managers to get away from gut-feeling decision making. However, as an increasing number of companies venture into HR analytics by adopting talent management software, it is becoming costly to lag behind. In situations where HR employees are unprepared to serve as statisticians, PAGE 3 OF 15

4 experts say companies often hire specialty staff while the HR department plays catch up. And catching up is not impossible if HR professionals make a conscientious effort to bring themselves up to speed, say these experts. There are so many articles and white papers being written. It s kind of like going back to school, so to speak, Thomas said. BENEFITS OF HR ANALYTICS HR professionals have long been data collectors, amassing and keeping track of employees personal information, salary rates and the annual number of retirements. But to grasp the potential of HR analytics, HR managers need to become data interpreters, according to Thomas. When you think in terms of all the information HR collects in a year, there s enough right there if it s used properly. But the key to analytics is interpretation, he said. You can have all the data in the world and still not know how to use it. Thomas used the example of turnover to illustrate the benefits of HR analytics. What if there was a way to figure out why you were having high turnover besides exit interviews? If 6% of the people are leaving in one year, you know PAGE 4 OF 15

5 there s something wrong culture-wise because they re eager to get in, but once they re in, they want to get out. Thomas explained that an HR manager who has good data interpretation skills is more able to spot trends. After trends are identified, he or she can then come up with a course of action based on the data. That s a way of looking at turnover as a number and digging down by what the data is showing. Bersin named several other benefits of HR analytics. When there s a retention problem, you can look at the characteristics of the team or manager that s causing people to leave -- or it could be the compensation, or the way the work is organized. You can look at skills gaps, and where people are untrained. Bersin said talent management software is making predictive analytics possible, which can help HR professionals make wiser choices based on historical data. If you can collect a lot of data about the workforce and look at it holistically, you can predict who the right people to hire are, and who are most likely to be successful as leaders, Bersin said. If out of the last 20 people we hired in this job, the four people with this background failed, we re not going to hire people with that background again. PAGE 5 OF 15

6 Howard McMinn, lead partner for workforce analytics at Deloitte UK, said that once the predictive layer is in place, HR can begin to do what-if scenario planning. This can help place HR on the same level as more data-driven divisions of a company, such as finance and marketing. HR managers need that interpretive skill, he said. It s the ability to speak as the rest of the business does. SELF-EDUCATION IS KEY FOR BUILDING ANALYTICAL SKILLS HR academic programs are evolving to include courses on statistics, so the HR professionals of tomorrow will enter the field with the necessary analytical skills. But for today s HR managers, analysts say self-education is critical to staying on top of the changing field. Thomas recommended that HR professionals read as much as they can about analytics and network with their peers. People are going to have to educate themselves. They will need to attend some conferences and come out with some type of game plan about how they re going to bring their department with them, he said. Bersin said HR managers need to gain a solid understanding of the business goals if they don t already have one. This context will give them a clearer PAGE 6 OF 15

7 idea of how HR analytics can serve the organization. Before they collect a bunch of data they need to know what the company is trying to do -- most know, but some don t. If they know the goals, their job is to assemble the information that will help the company make decisions. As for business leaders who are anxious to reap the rewards of HR analytics, Thomas said many companies are taking a two-pronged approach by hiring specialty staff to work alongside the HR department. However, eventually the role of the HR director will change to incorporate analytics, he said. The future of the HR director is going from the generalist role to the strategist -- the people strategist, Thomas said. And these experts cautioned that those who do not take steps to transition to the role of the strategist risk being left behind. As Bersin put it, This will become a core part of the way HR works, and it ll never go back. TOP VENDORS FOR HR ANALYTICS While most talent management suites have HR analytics built in, Bersin said some vendors offer better functionality than others. The real leaders in analytics are Oracle and SAP. They have the most sophisticated and integrated analytics solutions, he said. In terms of smaller PAGE 7 OF 15

8 vendors, he named SumTotal Systems and PeopleFluent as frontrunners. He also pointed out that there are several niche HR analytics vendors whose products can be integrated with talent management systems for companies that would like to significantly ramp up their analytics capabilities. Vendors aside, McMinn underscored the importance of venturing into HR analytics. Businesses that aren t thinking about analytics risk being outcompeted, he said. PAGE 8 OF 15

9 HR ANALYTICS EARLY ADOPTERS SAY MEANINGFUL METRICS, NARRATIVES ARE KEY Emma Snider, Associate Site and News Editor Day two of the Human Capital Institute 2013 Workforce Planning and Analytics Conference in Atlanta featured testimony from three companies about their use of HR analytics. But Lisa Sullivan, vice president of workforce planning and analytics at publishing giant Pearson, was quick to remind the audience that in general, HR analytics initiatives are still in their infancy. When we were asked to speak at this event, I didn t think we had enough to talk about, because we weren t [done] with our journey, Sullivan said. She then asked for a show of hands from audience members who felt their workforce analytics campaigns were finished. When not a single hand was raised, she laughed and said, I was hoping to get one hand up so I could hang out with you and get all the answers. Although none of the presenters claimed to be experts in the field just yet, some recurring themes and lessons learned emerged throughout the day. PAGE 9 OF 15

10 GETTING STARTED WITH HR ANALYTICS: WHAT TO MEASURE? Since analytics is a relatively new arena for HR, compared to analytics in other business functions, one challenge that HR managers face is not knowing where to begin. In the sea of metrics that HR can keep track of, how can leaders identify which ones count? David Eberhardt, director of HR strategy and systems at Devon Energy, quashed the notion that meaningful HR metrics are universal. What we re doing isn t for everyone, he said. Go talk to [your] executive committee and see what s important to them and what the company strategy is, and then figure out what [you] should measure. The same advice surfaced in a presentation by two HR leaders from Pearson on creating a global workforce planning and analytics movement. Liz Almeida, workforce planning and analytics manager, said Sullivan used Pearson s internal collaboration network to ask the organization s multiple HR executives which metrics they were interested in, allowing them to respond on their own time. Robert Gibby pointed out, however, that even after metrics have been defined, it s critical to sync up the approach to measuring them. Gibby, global leader of the HR research and analytics practice at Procter & Gamble, said his PAGE 10 OF 15

11 organization created an HR data dictionary to homogenize practices. Now there s a SharePoint site where we have a spreadsheet that lists all of our measures, our metrics, our dimensions and demographics in terms of how we can slice and dice the organization, and [it] tells you who the owner is in the company, he said. That was important for our foundation. But despite standardizing metrics internally, Procter & Gamble, which uses SuccessFactors cloud-based HR and talent management software, has not yet aligned its metrics to industry standards, Gibby said. We ve customized so many things, and that s really hurting our ability to leverage the benefit of going to Software as a Service in terms of benchmarking, he said. Especially across geographies, we want to [see] how we re doing relative to others, and we can t do that yet [ ] so that s something to look out for. TO COMMUNICATE HR ANALYTICS, TELL A STORY Presenters also stressed that to communicate HR analytics data to other business functions, HR leaders need to put it into context with a narrative. Data tells a story, so it needs to be presented like one, Devon Energy s Eberhardt said. He showed a sample of the HR analytics report that is distributed quarterly to Devon s executive team, and explained that each data point is PAGE 11 OF 15

12 presented alongside the historical number for that metric, as well as the target. Pearson s Almeida expressed a similar opinion. Data is abundant [but] if you don t give it context, it s just a bunch of numbers. She said the reports her team provides to Pearson s HR leaders include internal benchmarks to compare their business units to others in the organization. Responding to an audience question about how to win executive buy-in for HR analytics initiatives, Eberhardt said that support comes after results are delivered, not before. It really comes back to how credible you are, he said. You get buy-in when you show up repeatedly with accurate numbers and you can relate the story to how the company s performing. BUILDING A STRONG HR ANALYTICS CAMPAIGN REQUIRES TIME AND RESOURCES Another common thread among the speakers was the significant time and labor commitment required to get an HR analytics initiative off the ground. Procter & Gamble s workforce analytics project started two years ago, Gibby said, and he called it a huge initiative, partly because other HR processes were redesigned as well. In addition to a core project team of five HR people, employees from the operations and IT functions were involved in the effort, as well as senior executives, he said. The organization also enlisted the help of Accenture, PAGE 12 OF 15

13 a consulting firm, for system implementation and integration. Pearson s Sullivan said that although her manager asked her to start providing workforce metrics in 2002, it wasn t until 2010 that the data was truly in demand. All of a sudden everyone wanted metrics, and that s when we realized we needed a bigger team, she said. With a dedicated team in place, the effort began in earnest just last year was [the] year to establish ourselves -- we started communicating to our HR business partners what we can do for them, extracting global data and redesigning reports, Sullivan said. She added that in general, steps along the path have taken much longer than anticipated. BENEFITS OF HR ANALYTICS MAKE MISSTEPS WORTH THE PAIN With years of experience to reflect on, the speakers shared some lessons learned during their HR analytics projects. Sullivan said she should have focused her training efforts more tightly. We did a bunch of training on our metrics site, she said. We trained everybody down to the lowest-level assistant, and they never used [it]. We should ve just selected the people we thought would really benefit from the reporting and the insights. PAGE 13 OF 15

14 Integrating data from disparate systems and functions was a common pain point reported by the speakers. Procter & Gamble s Gibby said that when he built automated reports, he enlisted members from other parts of the company to help align the data. We actually pulled one person from finance into HR because of the linkage to all of the financial data, and that was a smart move in retrospect, he said. But hurdles aside, the speakers said HR analytics projects have several important benefits, such as connecting HR more closely with the rest of the business and helping to make workforce decisions more strategic. It supports decision making -- that s the reason to do HR analytics, Gibby said. I don t think reporting s going to get you to predictive results, but it provides you a stable base to do that work. Sullivan said she envisions HR analytics data gaining importance in coming years. In 2014, we re hoping that workforce planning becomes embedded in the strategic planning processes, so it s not just a discussion about finances but also people, she said. PAGE 14 OF 15

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