How Merck KGaA Uses People Analytics to Win in the New World of Work

Kai Beckmann is a member of the Executive Board and Chief Administration Officer of Merck KGaA/EMD Millipore, a Visier customer.

Big Data is one of the buzzwords of digitalization. The analysis of large quantities of revealing data from many areas of professional and private life is here to stay. Big Data plays just as crucial a role in online shopping as it does in the financial sector, or in using a navigation device to find the fastest route. In the industrial sector, people, machines, systems, logistics, and products are communicating and collaborating with one another – a revolution known as Industry 4.0. Everywhere, applications are accessing data from a wide array of sources such as social media, credit cards, customer loyalty cards, smart metering systems, and personal aid devices, all for the purposes of data analysis.

Merck has also launched multiple digitalization initiatives, such as the Connected Labs project within our Life Science business sector, which takes a holistic approach to intelligently networking laboratories. In manufacturing, where the interplay of man and machine is setting new standards, digital sensor technology is being increasingly utilized to better analyze process and quality data, thereby improving service intervals and other aspects of production.

People Analytics: The Next Big Thing?

Yet digitalization is taking root in places other than laboratories and factory floors. It’s steadily gaining prevalence in the human resources sector as well, where it’s helping drive the transformation of the world of work. Digital HR and people analytics are key terms in this transition. Numerous companies are currently investing in programs aimed at using data to glean insights into all aspects of HR work, which can then be applied to tasks such as workforce planning, talent management and even the gradual optimization of day-to-day operations.

Formerly a technical discipline pursued within small departments, people analytics is now a business discipline that has gained significant momentum. Some people are already talking about the next major upheaval. That’s because – whether developed in-house or sourced from external service providers – these new systems allow companies to analyze all business processes and employee data in real time, thereby developing the corresponding measures on the spot.

The “Global Human Capital Trends Report” published by consulting firm Deloitte illustrates how this is more than a mere trend. In a survey of more than 10,000 HR leaders from 140 countries, more than 70% of respondents rated people analytics as being highly important to their companies. In terms of data analysis, they considered the topic of recruiting to be a top priority, followed by performance assessment, salary structures, workforce planning, and employee retention. However, a wide gap still exists between aspirations and reality. For instance, only 8% of respondents reported that they had usable data at their disposal.

Merck: A Pioneer in the Digitalization of HR

Merck too is tackling the digital transformation within Human Resources and, in doing so, has taken on a pioneering role – a fact confirmed by sources outside the company. This requires validated, standardized data from HR information systems that is on par with the data available for the finance and quality management sectors. We now have a globally uniform standard which allows us to meaningfully assess and use our data through people analytics. The objective is to identify trends promptly and render interactions transparently, making it easier for our leadership to reach decisions. Actions based solely on gut instincts are a thing of the past.

For instance, Merck now has a mobile people analytics app that is enabling some 3,000 managers and HR employees to compile real-time data for their units. They can access info on employee headcount, diversity, staff turnover, performance assessment, and compensation, and then compare the data with the company as a whole. Coupled with the individual experience and insider knowledge of our managers, the results provide firm footing for making decisions on a wide variety of issues. For instance, we can track how staff turnover is impacted by targeted feedback from our performance assessment process. We can also use the data on the number of subordinates, managerial hierarchies or distribution of employees by career path and talent status to optimize the organizational structure within our own areas of responsibility.

Moreover, the use of people analytics has transformed our HR business partners from mere information providers and report generators into data-driven consultants who advise managers. Our focus has therefore shifted from administration to strategy. In recognition of this evolution in our business model, we recently received the 2016 HR Excellence Award from Human Resources Manager.

Close Partnership is Essential

Introducing and applying HR analytics systems like these obviously has to comply with all data privacy requirements. And the appropriate bodies and committees need to be involved in advance. Close collaboration with our Works Council, for instance, has been crucial. As discussed in previous blog posts, social partnership is going strong in our industry in particular.

Once the framework is in place and big data meaningfully deployed in HR work, nothing will stop people analytics from breaking into the new world of work. It will develop into its own business discipline and become so much more significant than a mere HR application. We at Merck are pressing boldly ahead in pursuit of this trend.

This article first appeared on LinkedIn in May 2017.