There is a widely held belief that data is the Achilles heel of an HR department. Pick up any industry publication, and you will likely find at least one snide remark about the HR function’s ability – or lack thereof – to utilise data effectively for evidence-based decision making.
This stems from the days when that very much was the case. If we look back at the personnel departments of the 1960s and 70s, people-related data was difficult to gather and almost impossible to effectively analyse. Organisations with true HRISs were the exception, not the rule, and you were more likely to find an Excel spreadsheet holding the details of your employees than you were to have a customised software solution which would produce data analysis within seconds.
Technology has changed all of this. Now, more than ever, HR teams have the opportunity to really grab the topic of people-led data with both hands. Our data sets are more streamlined and interlinked than they ever were before. And yet we’re still not a truly data-led function. So why is this?
A gargantuan task
The first thing we need to consider is that we likely dealing with a legacy situation. Even if we now have an all-singing, all-dancing HRIS in place, the chances are that we have historically held data outside of this, which may or may not have been successfully incorporated. One of the biggest barriers to HR professionals being able to draw on data in their decision making is that that data has typically been held in a number of different locations. We might have our central HR system which holds our personnel data; our payroll system holding payroll data; our learning and development tool where all training records are kept; a separate online benefits system… the list goes on.
What this means is that, before we can even start to analyse the data, we must bring it together into one place, cleansing it as we do so to ensure accuracy and consistency. This in itself can be a gargantuan task, and is perhaps the biggest barrier to HR teams starting to use this data effectively. The time required to produce one streamlined set of data can be so off-putting as to be avoided altogether. However, it is time well worth investing, because once you have your data set, it will form the basis for all of your future decision making.
A new breed of HR professional
Another issue that we have is with the types of people who have typically taken an HR career path. Stereotypically, their strengths are more likely to lie in people management and development skills than they are to be in data analytics. This is starting to change. Much has been written on the new ‘breed’ of HR professional rising through the ranks. These individuals have either a natural aptitude for, or a background in, data analytics. They see data as the basis from which everything else needs to follow.
If you don’t already have one of these people in your team, and you’re not comfortable with data yourself, then you need to hire one, and quickly. Gone are the days when the Board room would tolerate HR being the only function in there which wasn’t data-led. With the mine of people data which organisations have available, it is HR’s responsibility to surface key trends and analytics, and use these to drive the strategic direction of the business.
HR is in many ways uniquely placed to provide a breadth and depth of data right across the organisation. One common mistake made by those who are new to analytics is to take the ‘scattergun’ approach, providing the Board with a dashboard showing all and any data which has been able to be surfaced. By doing so, you risk both your contribution being discounted and important trends being missed. The key is to focus in on maybe no more than a couple of metrics to start with, looking at what they tell you about your organisation and how they might be used to guide decision making.
Understand your pain points
Your logical starting point should be to understand what is most important to the business. This in part will depend on the nature of your organisation and where the pain points are. An organisation tight on cash will be interested to understand the cost of leavers, and recommendations on how this can be reduced. One where the key strategic focus is on an improved employee experience will be looking for opportunities where this can be measured. There is rarely a one-size-fits-all approach to data analytics, so don’t make the mistake of getting caught up in days of number crunching without first being confident that your output will add value.
If you are unsure where to start, one of the most useful pieces of data to analyse can be your employee turnover, or attrition rate. In simple terms, this is a percentage figure, which is calculated by the total number of leavers in the preceding twelve months divided by the average number of all employees in the preceding twelve months.
When calculated by department, and split between voluntary/non- voluntary leavers, this very quickly gives you a fascinating picture of trends across the business during that period. You can obtain the average turnover levels in your industry using figures available online, and are then able to benchmark against these. Much higher turnover levels than the average should ring alarm bells, although if your turnover levels are excessively low, this will also be something to investigate, as there is a risk of employees and therefore delivery output stagnating.
Broken down on a department level, you are able to see where in the business turnover levels are particularly high. This may well then signpost further analysis and investigation off the back of this For example, what are absence levels like in that same team? Have there been any significant events, such as a change in management or a compulsory redundancy programme? Gradually, by assessing the data in this manner, we are able to pinpoint areas for focused action to be taken.
A return on investment
A common mistake made by HR teams is to introduce new initiatives without the data to support them. For example, let’s suppose that you decide to overhaul your recruitment process. The first question you are likely to be asked is “Why?” If you are able to provide the data which evidences a consistently poor candidate experience, leading to a high level of drop outs throughout the recruitment process, or an unduly lengthy series of interviews, leading to candidates taking roles elsewhere before you can make an offer to them, you are far more likely to get both Board buy in and the resources you need to deliver the best possible results.
Mirroring this, it is then important that those self-same data sets are used to evidence the impact of such initiatives. If your revised recruitment process has cut recruitment spend in half whilst bringing in candidates who are able to fulfil 10% more of a role’s competencies than was previously the case, this is the return on investment that you need to be demonstrating. And what happens to those same metrics six, twelve, or twenty-four months down the line? An HR department using data effectively will have identified their key data measures and will track these over a sustained period in order to chart progress.
Sitting front and centre
I have met HR professionals who see the increased demand for accurate and insightful people analytics as a threat. To me, it is one of the biggest opportunities as a function that we have ever had. Historically, HR has very much been the poor relation to Finance, Sales and Marketing when it comes to data, despite sitting on one of the largest data sets within the business. Now, the tide is turning. HR leaders are starting to grab this data with both hands and understand what it can truly do for both them and the business.
No longer will we need to indulge that tired old question as to whether HR should have a seat in the Board room. With the level of insight HR departments are now in a position to be able to provide, HR will not only be sat front and centre at the Board room table, but leading a new data-led charge forwards which will deliver truly outstanding results.