People analytics has been around for decades, but HR has yet to fully tap into its bounty. In this month’s cover story, Beau Jackson finds out what’s holding them back.
This is part two of a two-part article investigating the progress of people analytics in HR. Check out part one here.
A big ship luxury
In examples of companies successfully applying people analytics, it is often large organisations that are seen to be doing it well.
Shell, for example, has a dedicated People Insights Centre of Expertise for connecting people data with behavioural science and statistics, so it can be used to inform strategic decisions.
David Doe, Shell’s VP for talent strategy and excellence, says: “We are fortunate in that at Shell, we have a large database of personnel data as well as a strong annual people survey with high-response rates and, more importantly, the ability to connect people data with operational and financial data.”
Yet it would be remiss to assume that people analytics is the forum of only large corporates.
With more agility than the large, cruise-ship like organisations, smaller businesses could actually have the upper hand with people information.
“Smaller businesses are usually able to go through that process of a successful people analytic strategy on a shorter cycle, because they’re not trying to shift, sometimes quite embedded, deep-rooted cultural issues,” argues Paris.
Considering that small- and medium-sized enterprises (SMEs) make up more than 99% of all businesses in the UK, this could be where the real opportunity lies with people analytics.
But there is a skills and guidance barrier that may need to be addressed first.
A 2018 global survey conducted by the CIPD and Workday found that HR lacked confidence in people data skills.
Just 21% of UK HR professionals said they were confident or very confident with the more advanced techniques that could drive deeper insight.
As SMEs are likely to have relatively small HR functions, Price wonders how the profession will be able increase capability there. He argues that there is a lack of practical evidence to support the uptake of people analytics in smaller businesses.
In smaller businesses, it can be especially hard to achieve buy-in, according to Price. “A lot of businesses will store a lot of data in terms of analytics, but they don’t analyse it,” he says.
“The challenge is trying to explain to small business owners how people analytics can help you improve your business. But it’s really hard to give them practical examples.”
Without a toolkit, techniques or guidance on people analytics, he argues that it is impractical as a practice, so it may need further development as a specialist field before HR takes full ownership of it.
“When you think about the CIPD profession map, the profession doesn’t really call out people analytics as a specialism in the way it does for example in learning and development, or recruitment, and talent management,” he says.
“We need to start to develop HR professionals’ reporting and statistical skill, because they rely on people software to provide a lot of the people analytics.
“But that data is only as good as the input and it only really gives you a problem, and a little bit of insight, but you’ve got to know how to understand the data.”
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Data and evidence is a key part of the CIPD’s strategy for developing the HR profession.
In addition to its practitioner’s guide on getting started with people analytics, published in June, the body is developing an accredited programme for people analytics, which it plans to launch in September this year.
The people analytics programme will be the first CIPD product of its kind. Practitioners of any level can access it as an add-on to their existing qualifications, but the idea is that they are already working in an organisation and can put what they learn immediately into practice.
CIPD digital learning portfolio manager, HR and projects, Steve George, says: “They’re based around practical application of knowledge. Everything in them is about how you can have a rapid impact using what you’ve learned in your workplace.”
The CIPD is also developing an essential insights programme on people analytics for professionals who do not work in HR, but want to build their knowledge of the field so they can achieve better insights when, for example, working with an analytics expert.
Even with an interest and investment in their skills, though, Price argues that HR practitioners are going against the grain of many businesses:
“I think sometimes with human capital analytics, organisations think it’s a bit like the world’s flat – you can’t tell me anything more than what I can see in front of me. It’s definitely an area that can be improved upon. But we need leadership, we need the professional body behind it.“
Privateers approach
Due to its analytical nature, some practitioners have seen the responsibility for people analytics falling to finance instead of HR. Certainly, in SMEs, Price says that analytics is often viewed as a niche role for finance.
He says: “The HR profession lacks credibility, so is it something that you deal with the finance team? Because do we lack the statistical credibility or insights to be able to test and validate?”
Kelly has seen this attitude in other organisations too. She believes it would be a mistake to align people analytics solely with finance as it would run the risk of decisions being handled without HR’s people focus.
“Many people don’t know a lot about analytics, so they stick it with finance because they know how to interpret data. But there’s a really big challenge if you’re missing the knowledge of the HR application,” she says.
“People have the view that data is data, and I kind of agree to a certain extent, but when you’re looking at HR data it’s incredibly different. And you do need to understand what’s important about the data and what that means in practice.”
“People data, if we call it that, is your biggest asset in business, and no one’s really analysing that”
In Price’s view, people analytics could develop more as a collaborative practice. “It’s not HR on an island, producing data and trying to solve business problems – we’re enabling the business to solve the problem and that’s where HR can be most powerful,” he says. “Regardless of what the problem is, from sales through to service and even to finance, HR has got a role.”
All aboard
Over all the obstacles and potential pitfalls, the one thing HR has to make sure on their people analytics journey is that it brings the rest of its people along with them.
Organisational buy-in can be one of the most difficult challenges. A global study by Tata Consultancy Services in 2017 found that just 5% of big-data investments went to HR.
“It’s often hard to get approval for investments in HR systems,” explains Morrison, group human resources director at Severn Trent. A new customer relationship management system, for example, is typically easier to get buy-in for as there are clear links to the bottom line, he says. “It’s harder to make that business case about people data and so lots of organisations are sitting with people systems that mean they’re driving with one eye closed,” he argues.
“We have to break that cycle in some way to say how insight helps you make better decisions, either in increased performance or reduced cost.”
Breaking the cycle will require practitioners to be good storytellers.
“Our ability to explain the value in what we do is critical to being able to persuade boards and executive teams to back us,” Morrison adds, “And good storytelling has good evidence and good data behind it.”
At the ONS, Bonay explains: “The way to go about that is have a really strong narrative around people analytics and what it means for the organisation.
“There’s people management information (MI) that’s presented in executive committees and every month we will provide the narrative around it, otherwise it’s just a figure on a page which can be meaningless.”
HR has to combine analytics with other sources to bring it to life and keep people at the heart of it. Andresen says: “Data always is only a small part of any story and having other inputs is really important.”
From her research at Sage, she adds that she found quantitative and qualitative data always has equal importance, so conversations with employees should never be underestimated. “Organisations can really get into trouble when they forget the qualitative is important too,” she adds.
Although it can be hard to win investment for HR, if leaders can get it right with analytics, Andresen says she can see it bringing other financial gains to business. “Being able to bring data to the table I think can really help build the credibility they need to be more consultative,” she says.
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Price also sees a future in which HR takes on more of a change consultant role, in a similar way that employment law has been assimilated as part of its role over the past few decades. “When any consultant comes in to evaluate change in your business, the main thing they look at is people processes – that’s all part of the HR function,” he says.
“People data, if we call it that, is your biggest asset in business, and no one’s really analysing that.
“Pure analytics, if understood by the HR professional, can really boost them to the stratosphere in terms of their input on the business, a really broad data set of workforce analytics can make HR an enabler, they can support sales and service or production, they can support finance.
“But they’ve got to be able to demonstrate an aptitude for it.”
Striking gold
Navigating people analytics can seem overwhelming, but when taken in steps, it doesn’t have to be complicated.
Although getting good quality data may be time-consuming at first, it will pay off when it comes to the outcome.
With data running through a business, practitioners already have the basis they need to get started. Having a clear goal in mind will help HR avoid drowning in the data, and use its expertise to know when analysis has gone far enough. Although risk-averse by nature, experimentation to prove, or improve on, a gut feel is where people analytics can really show its value.
Training and guidance are out there to help where confidence is lacking, and even pooling internal expertise with other departments could help sharpen the case for value-added people insights.
Buy-in will be an issue for HR as long as it is fighting for its own value in strategic leadership but really, people data is there to back the profession. Used wisely, it could also be the key to getting that final door unlocked.
Questions to consider when trying to win management buy-in for people analytics
- What ‘language’ do they speak? (Are they energised by tangible plans or the bigger picture?)
- What are their aspirations?
- Are they: champions, supporters, neutrals, blockers or critics?
- How would you describe their biggest challenges? (What do you frequently hear them saying?)
- What decisions do they need to make for the company?
- How might you help with those decisions?
This is part two of a two-part article investigating the progress of people analytics in HR. Check out part one here.
This article appears in the July/August 2021 print issue. Subscribe today to have all our latest articles delivered right to your desk.
