Driving Impact With People Analytics: Tips for Short- And Long-Term Goals
A key challenge for people analytics teams is finding the right balance between short-term financial goals and long-term people-related objectives. These tips will help you get started.
In today's data-driven world, organizations are increasingly turning to people analytics to help drive decision-making and understand the dynamics of their workforce. However, one of the key challenges in this field is finding the right balance between short-term financial goals and long-term people-related objectives.
I recently had the opportunity to speak with two experts in the field of people analytics, Mihael Šutalo, VP People Technology at Pandora and Kevin Metherell, Head of People Analytics at Experian, who shared their insights on this challenging balancing act. Setting clear objectives, starting the analytical investigation with the business problem, and developing a strong partnership between HR and Finance are all essential.
Start with the business problem to set people analytics goals
Driving value with people analytics starts with having a clear understanding of what you are trying to achieve and the organizational goals you need to support. Rather than focusing on people analytics for HR’s sake, highly effective HR organizations focus on business outcomes from the human resources of the business.
To get started, first determine the business problem you’re trying to solve and the type of goals that will get you there. Are you focused on short-term cost savings, such as reducing turnover and improving efficiency? Or are you aiming for long-term goals like building a diverse and inclusive workforce that drives innovation and business growth?
Aligning definitions of organizational success
For organizations looking to balance these short-term and long-term goals, it’s critical to align the definitions of success between the HR and finance teams. In particular, clarity around the concept of "business value" is crucial. Defining short-term and long-term business value and having a mutual understanding between HR and finance can help bridge the gap between the two functions.
Once HR and finance align on the mutual understanding of business value, people analytics teams have a clear set of goals, objectives, and milestones to measure against. A collaborative data-driven approach provides tangible metrics for success and enables iterative refinements, ensuring continuous alignment and progress toward the established common goals.
A data-driven approach is key for both short- and long-term goals
The key to achieving this balance lies in data. The standardization of definitions and vocabulary, data taxonomy, and operational effectiveness in HR are vital. Having a comprehensive understanding of these concepts can help HR build its case in terms of the business impact of various HR activities, whether they are short-term or long-term in nature. By demonstrating how specific actions benefit the business in a clear, data-driven way, HR can align more effectively with finance.
It’s important to define short- and long-term goals, and understand what success might look like for each. In our discussion, Kevin emphasized the need to recognize that certain aspects of people analytics may not show immediate, significant changes over short time horizons. For instance, increasing gender diversity in a workforce might only shift by a percentage point or two within a year. However, this doesn't mean long-term goals aren't achievable; it simply requires a more realistic perspective and a nuanced approach to tracking progress.
HR and Finance: A powerful partnership
HR and Finance are often thought to be opposites, but at the end of the day HR and Finance are both investment-based organizations. HR teams focus on investing in the organization's people; Finance teams focus on financial investments and assets. When you consider that, on average, up to 70% of an organization’s budget goes toward its people costs, it's clear the two organizations have shared interests and shared goals. HR and Finance need to be in lockstep across the employee lifecycle, especially about HR activities like headcount planning and skills development.
A strong partnership between HR and finance, along with a shared understanding of business value, can lead to the successful navigation of the balancing act between short-term and long-term impact. This partnership will allow organizations to make data-informed decisions that simultaneously benefit the bottom line and the well-being of their workforce.
As the field of people analytics continues to evolve, the ability to find this balance will become increasingly critical. By focusing on clarity, mutual understanding, and a data-driven approach, organizations can leverage the full potential of people analytics to drive business success and employee well-being simultaneously. The journey may be challenging, but the rewards are well worth the effort.
To learn how Experian and Pandora are using people analytics to drive business value and the lessons they’ve learned, watch the discussion here.
On the Outsmart blog, we write about workforce-related topics like what makes a good manager, how to reduce employee turnover, and reskilling employees. We also report on trending topics like ESG and EU CSRD requirements and preparing for a recession, and advise on HR best practices like how to create a strategic compensation strategy, metrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics.