Businesses are increasingly recognising the importance of data across all departments, but most don’t believe that they are using it to the best of their abilities just yet. The reason for this is that a great deal of existing data is currently not being used for decision-making, and many organisations only have access to rudimentary analytical technology. However, recent global research from Deloitte found that a massive 96% of executives at large corporations believe that analytics will become more important to their organisations in the next three years.
Those who are already embracing the data available to them are reaping the rewards. Laurence Collins, HR Transformation & Analytics Director at Deloitte, explains that, “top performing organisations are three times more likely to be sophisticated users of analytics and are twice as likely to say that their analytics use is a competitive differentiator.”
That said, many HR Directors will already have discovered that getting access to relevant data isn’t always straightforward. “You have to make the business case,” continues Collins. “You have to be thoughtful about whether more data is likely to yield valuable insights. Research suggests that three quarters of corporate executives in large companies aren’t getting value from half the data they already own. That hasn’t stopped many of them moving ahead with attempts to mine large social media databases and other unstructured content, though.
“If the Pareto principle applies – where 80 percent of the value comes from 20 percent of the data – then there’s a whole lot of waste going on. Of course, it is important to take advantage of whatever data you already have, regardless of whether it’s small, big, structured or unstructured. And before you start spending to acquire even more data, you should know exactly what you’re going to do with it.”
Billy Hamilton-Stent, Managing Director at Loudhouse Consultancy, believes that many HR departments are held back by a lack of influence within their businesses. “HR is very influencial but not always at board level,” he says. “There’s still a lot of work to do in that area for HROs. HE is often seen as a business division that runs on “soft” skills, which can make it difficult to get c-suite approval for data-driven projects. But data can help you to become a more strategic function. Prove a connection between engagement and productivity, and show that investment in data will allow you to measure this and therefore improve it, and you’ll have a good business case.”
Collins agrees: “HR is traditionally driven by intuition and gut feel, but data can help directors prioritise and make smarter decisions. The key is to demonstrate the links between your HR initiatives and how they benefit your workforce.”
Deloitte identify four levels of business data analysis. There is a steep drop-off in the number of businesses using data at each level, as they become more in-depth and complicated. At the most basic level is Operational Reporting, which focuses on efficiency and compliance measures. It is reactive and involves looking back and comparing actual outcomes against what was originally desired.
“This can still be quite valuable,” explains Collins, “because you may be able to identify where movement in leading indicators, whether positive or negative, could lead to a consequential outcome further down the line.”
The next level of data analysis is Advanced Reporting, real-time monitoring which is more proactive and designed to assist with benchmarking and decision-making. This would be relevant, for example, when looking at the impact of a change programme as you roll it out across the organisation, and monitoring its impact from a corporate or behavioural perspective. Here, multi-dimensional analysis and dashboards are used to provide a more in-depth view.
At the third level are Advanced Analytics, which Collins refers to as “matching or profiling analytics”. He uses the example of recruitment to illustrate this, explaining that you can use this kind of data analysis to identify what makes a really good hire, based on the characteristics of those who have gone on to be successful employees in the past. You can then match the requirements of the role to the attributes of those employees in a way that allows you to make a better selection decision.
Finally there are Predictive Analytics, the pinnacle of data analysis and the focus of much discussion around the topic. Development of predictive analytics models will help an HR to “see round corners”, explains Collins, helping to mitigate risks and plan for future scenarios. For example, predictive analysis can help identify which top performing employees may leave the business within the next twelve months, or what levels of safety risk might be within a particular department.
Hamilton-Stent also advocates proactive data analytics, and suggests that HRs should work backwards from what they want to know to identify the data set they need access to. “Work out what questions you need answering, and go from there,” he advises. “Once you have identified these, you can start to think about how you ask those questions and who you ask them of.”
With all this in mind, it is also important to work with data in a way that suits your business. Cath Possamai, Managing Director at Capita says: “There are some very advanced analytic solutions offered by HRO providers. However, if a business is not ready or mature enough to adopt these solutions, it should not be forced upon them as a matter of course. First of all, a proper assessment needs to be made of a business’s maturity level so that any tools and analytics can be tailored to extract useful and usable information.
“Part of the role of the HRO provider is to counsel the client on what analytic solutions are most suitable for them. Quite often the technology advances at a pace too fast for the average business. The smart use of data is an essential part of HRO providers and their clients becoming strategic partners, but what is more fundamental is true collaboration. This must be at the heart of the relationship through which the maturity and impact of resourcing activity can be developed. Once this is in place HRO providers and their clients can align their talent acquisition strategies directly with strategic business goals.”
Data collection and analysis need not be difficult, though. Hamilton-Stent says: “One solution is to run a monthly staff satisfaction survey. It doesn’t need to be complicated; one large business we work with simply asks its employees ‘Are you happy?’ on a monthly basis and tracks sentiment based on the yes or no answers. It doesn’t give you masses of data, and it won’t help you find all the answers, but it will give you a great starting point which will help you to prioritise.”
In conclusion then, data analytics is no passing trend, and the businesses which adopt it soonest will find that they are in the best competitive position. It may seem daunting, but there are many companies out there who are well placed to support HRs as they move into this new arena, so do your research and you’ll find the help you need to tailor your plans to your business.
This topic and others will be debated as part of the ‘Evidence Based HR’ track of this year’s HRO Today Forum Europe, which takes place in London from the 12th – 14th November. Deloitte’s Laurence Collins and Loudhouse Consultancy’s Billy Hamilton-Stent will be speaking on the subject on the morning of Wednesday 13th. For more information or to register your interest, please visit www.hrotodayforum.com/eu
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