“People analytics should be used to build insight rather than simply removing the human aspect from building strategy. After all, you can make data alone prove any fact!”
My 2018 wish for you is that you become more of a troublemaker in your business. Yes, you read right.
With the increasing demands coming in from CEOs who are trying to tackle big issues such as market change, talent and demands of the workforce, it is more important than ever for Human Resources teams to realize that people analytics should be used to build insight rather than simply removing the human aspect from building business strategy.
What sort of insights can we derive from people analytics?
People analytics is now a well-known discipline and a must-have domain within HR and IT across most larger organizations given that the origins of this market go back to the birth of industrial psychology.
According to a recent piece by Josh Bersin, companies have begun to build predictive models to help them understand the drivers of turnover team performance and leadership effectiveness.
However, the market is still slower than other company functions given that most company HR Systems are a bit of a mess.
The unsolved area within people analytics today includes fully linking this data with business performance. Many people still consider HR to be a ‘fluffy’ function and sometimes these thoughts come from within the company itself.
My question is why? HR no longer is ‘fluffy’ and stated in a previous article I wrote, talent management, workplace learning and people is no longer the remit of HR.
“In fact, it’s not the remit of any one function anymore. It’s HR, it’s operations, it’s IT, it’s at the core business sustainability. In the age of the consumer, where objective views from others matter more than brand voice, knowledge sharing, mentoring and training have been lifted out of HR and into the wider organization.”
People are a company’s biggest and most expensive asset – if we are at a stage where we do have data about this, why are we not able to answer business and people-related questions such as the following?
- What makes top salespeople effective?
- Who do we need to hire to get more of them?
- Why is a company’s turnover rate higher this year than last?
These are all HR – or “people” – problems that top HR leaders ask me today. The big question is: How can we use data to understand, analyze and predict these business questions? How can we use data to help companies thrive in today’s fast pace of change?
One interesting comment that Josh Bersin made in his HR Technology Disruptions for 2018 report is, “the markets for analytics and AI are very close cousins.” Over the years SaaS and cloud-based vendors will become intelligence providers, not just analytics providers.
However in the meantime, how can an organization use people analytics to build insights for business strategy?
Before getting into the insights, we first should validate and review the data we’re collecting:
What is the data that you’re collecting? How often is this data updated? How many data points are we talking about – is it statistically enough to extract insights?
What data points can we start thinking about to correlate to business outcomes?
For the purpose of this article, I will use the example of data points collected by Talking Circles, a peer-to-peer knowledge sharing platform based in London.
1. Predicting retention
When we speak about business impact, retaining employees is today’s top concerns for any organisation. As per Jack Altman, CEO of Lattice, the full cost to replace a hire, including lost revenue and poor employee engagement is normally 100-200% of that employee’s annual salary
Business question: Which employees are likely to stay or leave the organization based on the correlation between engagement and knowledge gaps identified?
Data points collected to predict future outcomes and behaviour:
- Engagement and interaction with peers – what kind of knowledge is being shared?
- Willingness to share knowledge to increase collaboration efforts across the organisation
- Willingness to develop skills and progression enthusiasm to the next role up
The recruitment software market is the most dynamic and exciting space in HR tech today says Josh Bersin. However, how are organisations today identifying skills and capability gaps in teams to know what roles to hire for?
We’ve seen plenty of vendors analyzing team dynamics to hire candidates who are fit for the team and role – however what about roles itself?
Business question: What makes certain teams with certain capabilities more or less successful? What are the gaps in low performing teams, what is common with high performing teams?
Data points collected to understand and identify skills gaps:
- Gaps and expertise in skills and knowledge in high performing and low performing teams. How does the data differ across business units within the same organisation
- Knowledge interest and skills growth across high performing teams
- Identifying the ‘givers’ and ‘takers’ in the organisation
3. Revenue Generation
Google’s business success and rapid adoption of data-based people management to drive business results resulted in Google producing amazing workforce productivity results. On average, each employee at Google generates nearly $1 million in revenue and $200,000 in profit each year.
Business question: How can knowledge sharing and capability development impact sales and customer retention?
Data points collected to increase revenues:
- Product knowledge transfer across high performing and low performing teams, stores and business units. How does this product knowledge correlate with increased sales?
- Time saved and increased efficiency in reducing the time taken to find the right information at the right time
- Identifying the organisation’s ‘Givers’ and ‘Disagreeable Givers.’ According to Organisational psychologist and Wharton professor, Adam Grant, the best leaders have one single goal in common and that goal is linked to helping others.
“Disagreeable givers are the most undervalued people in our organisations, because they’re the ones who give the critical feedback that no one wants to hear but everyone needs to hear.” – Adam Grant
This data is often not recorded, and when it is, it often involves subjective judgements from middle management. Using technology to determine these data points and use them to give us business insights is important.
Correlating a historical view of retention with business metrics like P&L financial statements will only give us information looking backwards.
What about future trends and predictions? This is where machine learning and predictive algorithms, trained on past data but generalizable to future data come into play.
Bumps in the road
Despite the evident commitment from senior C-suite leaders demonstrated in ‘Evidence-based HR – the bridge between your people and delivering business strategy by KPMG, skepticism within executive ranks still lingers.
Instead of commenting on long-term bumps, I decided to share with you a few short term bumps that can be ‘easily’ addressed.
- Mind the gap between HR and the rest of the business. This is the first step towards improving corporate culture and reducing cultural resistance. Find the stakeholders in HR and the business who really care about this problem and create common objectives and goals
- Embrace storytelling to communicate the data. Finance will come to the board table with hard facts and costs which will completely wash away all your efforts. Sit at the table and tell a story based on the people analytics you have put together
- Lack of technology resources. Embrace the incredible number of vendors who’re in this space and use their SaaS cloud-based technologies to acquire the technology, skills and resources you need to communicate that story to the executive ranks
Conclusion: The unstoppable force
Today, practical and cultural obstacles might stand in your way of data storytelling and evidence-based HR but it is inevitable that it will eventually hold sway. In my experience, the key factor that will force progress is to close the gap between HR and the rest of the business.
Nevertheless, the immediate future still looks bright. What will this unstoppable force give your organization?
- Driving a new generation of HR strategies that embrace new working styles and talent management acquisition strategies;
- Creating a digital experience that enables employees to go faster, be more agile, and nimble;
- Business decisions that will empower your workforce whilst increasing productivity and efficiency.