HR is not yet using people analytics to improve business outcomes, argues workforce analytics advisor Max Blumberg. How can we address this? With better education.
While people analytics use has increased dramatically over the past three years, its focus – for the most part – still lies in tactical operational activities such as employee retention and recruitment. If HR wishes to contribute more to the corporate strategic agenda, people analytics will need to up its game in the eyes of senior general management.
This article proposes a curriculum for HR and people analytics practitioners, as well as senior general managers, wishing to implement strategic people analytics practices.
It’s important to note that the content below is not something that can be simply learned in a one-week analytics course or by reading further up on the subject. To transform people analytics into a practice that generates true strategic value, HR professionals need to recognise their knowledge gap in this domain and invest in the appropriate training for their people.
The senior general management perspective
The most useful people analytics deliverables for senior general managers are those that help to maximise business outcomes by strategically guiding their human capital decisions.
In commercial organisations, these outcomes include, for example, total return to shareholders, profitability and revenue. In most industry sectors, business outcomes are driven by a set of key performance drivers (KPDs), such as productivity, innovation, quantity and customers.
Less than one third of Fortune 500 companies use people analytics to measure business outcomes.
Senior general managers (SGMs) achieve these outcomes by optimising investments across a range of competing resources including tangible assets (e.g. machinery and robotics), financial capital (e.g. cash and bonds), and intellectual capital (e.g. human capital and customer capital).
A number of reviews suggest that current people analytics practices fall well short of providing these deliverables. For example, Marler & Boudreau (2017) report that less than one third of Fortune 500 companies use people analytics to measure business outcomes.
That is, rather than delivering strategic investment insights into KPDs and business outcomes, most people analytics projects tend to focus on tactical improvements to workforce capability improvements (such as engagement and retention), and people processes (such as recruitment, learning management and succession planning) as illustrated in figure 1.
Figure 1: The role of analytics from an HR perspective
This is not to suggest that tactical workforce capabilities are unimportant. The problem, however, is that people analytics tends to focus on tactical workforce activities that exclude strategic investment advice required by SGMs.
How can people analytics better support SGMs?
To develop strategic people analytics practices, people analytics practitioners will need to learn more about SGM strategic investment activities, and SGMs will need to learn more about the special characteristics of investing in human capital.
The following curriculum, recently delivered to senior MBA students at Leeds University Business School, may be useful for both people analytics practitioners and SGMs.
This curriculum, broken down into four key parts below, is designed to supplement rather than replace existing people analytics educational programmes. It has been outlined here to give HR an idea of the key areas that are incorporated into training to evolve a business’s strategic people analytics offering.
Click here to continue reading Max Blumberg’s article.