People Analytics Value: Moving Beyond HR to Business Impact
For the past few years, HR leaders have been hammered with research and blog posts reminding them that if they aren’t using HR technology, they’re going to fall behind. Most of us are already well aware that HR technology like people analytics can help shape better business strategies. But are you able to effectively communicate that to your leadership team?
Despite 74% of organizations saying HR technology is important to them, only 26% of Deloitte’s 2019 Global Human Capital Trends respondents say that they feel they are effectively using technology and analytics to improve their teams.
Getting organizational buy-in for new technologies can be difficult. Traditionally, HR has had to sacrifice headcount in order to create room for new tools in an HR budget. People analytics is a net new capability, and it can feel difficult to place a value on a service HR has never experienced. But consider other software and business intelligence platforms: years ago, CRM solutions such as Salesforce were a “nice-to-have”, but now most executives wouldn’t even consider operating without it.
Getting buy-in for people analytics involves shifting the way we traditionally think about HR technology investments. Here’s a step-by-step guide to helping your leadership team see that value.
Align your HR stakeholders
Before you can begin to convince leadership to buy into people analytics, you need to ensure you have your HR team’s priorities clear. Understanding the questions you are going to solve using people analytics is a necessary step of any successful implementation. Without strategic questions, people analytics is just a means to no clear end.
Analytics can help your HR team solve day-to-day HR challenges and save time reporting. However, it’s crucial to consider what big-picture organizational challenges you’ll also be able to solve. Consider reframing some of your challenges from being HR-focused to being business-focused.
For example, let’s look at diversity. An administrative HR approach might consider the following challenge:
I need to hire 12 women this year to help balance out gender disparity at our office, and people analytics can help.
But how does that impact your business goals? Consider reframing the challenge.
I know we need to achieve gender parity. Last year, we regrettably lost 3 women, and this year we need to hire 12 more to balance our workforce. Retaining those 3 regrettable exits could have saved us $250,000 in wages, lost productivity, and recruitment fees. People analytics can help us understand why our best diverse employees are leaving us, and then help create a total rewards strategy that ensures there are no wage gaps.
Align your HR stakeholders and challenges—whether you’re a team of 2 or a team of 200. Be prepared to present the key challenges you hope to solve with people analytics, and know how they affect your organization’s bottom line before you attempt to finesse your leadership team.
Look at HR budgets differently
When HR technology first came on the scene, its mission was making administrative and transactional tasks faster and easier. HR leaders got buy-in from their executive teams by showing the TCO (total cost of ownership) of the software, then find a way to reduce their budget by a similar amount—usually by reducing headcount. As new technologies like people analytics arrive, the way organizations see HR budgets need to change, because the way people analytics impacts your organization is different.
The business impact of tools like people analytics stretches far beyond your HR department. Sure, analytics can also help make HR faster and more nimble—say goodbye to spending hours crunching numbers in Excel, or updating report templates from your HRIS! But the true impact of people analytics is seen in workforce outcomes—absenteeism, turnover, talent acquisition, and more—and thus the financial impact is felt across all departments. As such, to gain executive buy-in, your leadership team needs to understand people analytics as a business investment, rather than an HR investment.
Demonstrate a business-wide ROI
To demonstrate how people analytics impacts your whole organization, consider how you’ll be using analytics to contribute to organizational performance, whether it’s in the form of increased revenue, better employee retention, or enhanced customer satisfaction.
When communicating with executives, follow these guidelines:
- Look at your organization’s big-picture business goals. Make sure you can link people analytics to one or more meaningful, multi-year financial impacts.
- Don’t tie yourself to one simple measure, like improving turnover. Connect your investment with specific business goals. Highlight how you are losing money on turnover, and why analytics will reduce costs in the long run.
- Don’t shy away from demonstrating a long-term return, as investments that move the needle in a meaningful way might not yield a payback in the first year.
Always reinforce the very simple goal of investing in people analytics: to deliver insight. Getting people to change old behaviour and take new action will yield a meaningful outcome. People analytics saves HR time by putting the ability to understand workforce costs into the hands of leadership and management teams. People analytics demonstrates real value for your organization—not just HR.
Compete with outdated and inefficient tools
To gain buy-in for any new technology, you’re going to have to go up against the people who fear change. From a leadership perspective, HR has always been able to generate reports and get them the data they request. They might not want to alter how things have “always been done”. They might argue that only a decade ago they purchased you an HRIS and ATS—what more could you possibly want?
While the tools you’re already using hold a wealth of HR data, they don’t provide meaningful ways to analyze this data. They aren’t made to answer holistic business questions about your workforce. They can’t cross-reference each other. They can’t predict trends. They can’t give you insight into your workforce.
Similar to Business Intelligence (BI) tools, people analytics tools collate data from multiple HR recordkeeping systems to look at the big picture and deliver meaningful insight. If your organization is already using BI tools, your C-suite may push for you to develop your own dashboards within these existing investments.
However, these platforms are not designed with HR needs and requirements in mind. People analytics platforms come with pre-built content, questions, graphs, and charts that enable HR leaders and their stakeholders to gain insight in a matter of minutes. They provide insight based on real, live data and compare with your historical trends to drive strategy.
Understand that people analytics isn’t just for enterprises
People analytics is no longer just for large enterprises. Some organizations still believe that small to midsize organizations with a few hundred employees won’t have enough HR data to truly benefit from people analytics. This isn’t the case—if you have an HRIS in place, you’ll have enough data to gain actionable answers from an analytics tool.
The reports you’re able to generate with your HRIS, whether they’re downloadable Excel spreadsheets or in visual graphs and charts, display important HR data. However, it’s important to remember that reports are not the same as analytics.
An analytics tool will connect data from different sources and records, then transform it into answers and insights that help you drive change. Those changes can come from HR, or they can come from fellow managers, or your leadership team. People insights is a tool that can be used across departments and levels of seniority to improve business functions.
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