Why Being Data-Driven Isn’t Enough
Over the last two decades, we’ve seen almost all corporate functions infuse analytics into their businesses. Even the most qualitative departments, such as Marketing, moved from “art” to “science” through the use of data.
Indeed, the “art” of modern business is that everything can be quantified and measured, and data is now the single most important type of capital that an enterprise can own. Business operations run everything on data and it seems like there isn’t a single corporate function that isn’t data-driven–except for HR.
This is because HR has a core set of obstacles that other business functions don’t have. Somehow, HR has been left behind when other functions like marketing, which was once seen as “pure art,” is now a data and insights powerhouse.
Today, organizations have to redefine what it means to be “data-driven” as technology and analytics capability continue to change and aggressively mature. To accomplish this, HR must reposition the meaning of “data-driven” to “answer-driven.”
The data hurdles HR faces
First, let’s talk about some of the hurdles that stand between HR and the use of data. HR is not naturally quantitative. HR professionals understand the art of people. They’re wonderful strategists and storytellers, but they’re often not data gurus. This is a problem when there is an enterprise-wide effort for everyone to become more quantitative.
“Today, organizations have to redefine what it means to be “data-driven” as technology and analytics capability continue to change and aggressively mature. “
Still, on most HR strategic initiative lists, this capability seems to make an inevitable appearance. In fact, 71 percent of companies see people analytics as a high priority in their organizations.
Despite this continuous effort to be more data-savvy, organizations seem to come up short of expectations time and time again. Our understanding of the term “data-driven” is at the core of this issue.
The problem with “data-driven” HR
The problem with anything data-driven is that this concept presumes that data comes first.
In the past, HR created operational reporting by doing data dictionary projects, data management projects, data cleansing projects, data integration and consolidation projects, and data visualization projects. These exercises allowed HR to measure themselves, but not to deploy the data to change the business. Only after HR completed the projects could they move on to the actual data analysis needed for strategic answers.
The issue? HR was (and often still is) woefully understaffed–and underskilled–for these tasks. The complexity of getting these projects done correctly is a burden to most organizations and therefore, HR has struggled to obtain and deploy meaningful insights for the business.
This forces HR to outsource the work, usually to the IT department. However, the distance this creates between HR and data is where the disconnect begins. That’s because the way that HR and IT view the value of this data is different. IT doesn’t understand the nuances of human dynamics like HR does so the data they end up delivering isn’t quite what HR wants. They also deliver data too slowly and with too much complexity for HR to do anything with it.
“The problem with anything data-driven is that this concept presumes that data comes first.”
For example, when an organization has a dashboard with many data sources, there’s a steep learning curve for users to understand and use the information correctly. This hinders an organization’s ability to make advancements towards strong, evidence-based decision-making.
To make matters worse, many HR technologies don’t help HR in the realm of analytics. Even the three largest cloud HCM vendors are failing their customers: they’re packaging 25-year-old data warehouse technology or offering heavy analytical engines that are too difficult to implement in HR. However, uncovering the answers to your organization’s problems doesn’t have to be complex. The key is in understanding how HR’s strengths and data can connect to answers that have business value.
Improve the HR supply chain
We know that HR excels at the beginning of the HR supply chain: creating policy and process and operationalizing them. Whether it’s talent or HR transactions, HR executes these things well. Every enterprise is now equally versed in recruiting, performance management, and job changes.
Employee level transactions are also executed with good awareness and with a level of precision. The middle of the supply chain–the HR data aspect–is where HR starts to have some trouble.
The end of the supply chain is where HRBPs are supposed to deliver information on the workforce, but when this piece of the puzzle is missing, HR struggles to deliver business value. However, with people analytics solutions, HR can discover real answers without being held captive by the data itself and thus, seamlessly convert the beginning of the supply chain transaction into end of the supply chain answers.
Keep focused on answers instead of data
Why does focusing on answers make all the difference? It requires a new understanding of people in the context of processes, events, and business. Creating a separation between data and the information surfaced from the data may seem counterintuitive, but the rapid evolution of technology allows this separation to happen today.
“Even the three largest cloud HCM vendors are failing their customers: they’re packaging 25-year-old data warehouse technology or offering heavy analytical engines that are too difficult to implement in HR.”
People analytics allow HR to go beyond data and give you the information your HR organization needs to pivot from reactive to proactive and from tactical to strategic. For example, bad hires, regrettable attrition, cost overruns, and poor productivity are challenges HR leaders face every day. Deciding how to tackle these issues is not easy: when it comes to human dynamics, things aren’t always what they seem.
Consider the following situations:
- The leaders of a not-for-profit healthcare organization think they have a recruiting crisis: they do not always have the right people, at the right place, and right time at the optimal cost.
- HR experts from a financial services organization notice that turnover is increasing at an alarming rate.
- The pressure is on to boost retention.
- HR analysts from a multinational pharmaceutical company are tasked with determining the ideal span of control for managers. According to many studies on the topic, the global benchmark is 8 to 10 reports per manager.
At first glance, each scenario presents the employer with limited options. But after drilling into their respective workforce data:
- The healthcare organization’s workforce planning and analytics team determined that the recruitment crisis was actually a turnover and staffing-to-patient-outcome problem. They then implemented several interventions to address the real issues, which led to hundreds of millions in savings for the healthcare provider.
- The HR team from the financial services organization discovered that the turnover was focused within four key sales roles on the retail banking side of the organization, specifically in one particular region. With these insights, the company developed more effective recruitment, hiring, promotion, and training strategies, which led to $2.5 million in annual revenue generated by the roles that were retained.
- The multinational pharmaceutical company’s HR analysts learned that its sales teams perform better when they have a smaller team size than the global benchmark. This insight enabled them to have productive discussions with leaders on the right solutions to implement.
Better business decisions like these become reality when organizations go beyond the data, and focus on the insights to find answers to their most pressing problems.
To make better decisions, you must gain a deeper understanding of the behavior behind all the data points you gather. This is what will lead you to the right answers for your organization. If you aren’t sure where to start with using insight to drive better decisions, here are five things to consider:
1. Worry less about data
100% accuracy isn’t the goal. In fact, it could prevent you from getting to correct insights that change your business. Remember: 1% inaccurate is also 99% accurate.
2. Implement a people analytics solution
The formula is simple: data + content + operating model = actionable insights.
3. Focus on enabling your HR analytics function
Insight analysts will become curators and syndication agents of insights. Gone are the days of data wranglers and report writers.
4. Empower your HRBPs
Let HRBPs focus on what they are good at, which is the application of business context, not mining data for clues.
5. Encourage people analytics adoption with your business users
Start small, and re-infuse trust in HR data.
Today, we have the power to collect more data than ever. However, the answers we can gather from that data are what create the most valuable business impact.
People analytics platforms like Visier bring your data together from all your systems and enable you to find the most valuable information in your mountains of data with a few clicks. This makes it easy for anyone to become an analytics expert and feel empowered to make better people decisions every day.
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