Data analytics has become an integral part of every HR professional’s role – HRD Singapore speaks to one expert about how HR can leverage data to influence business decisions on human capital.
The report, The Analytics Era, also found that 85% of senior leaders have failed to leverage HR analytics to make or influence business decisions throughout the past year.
“The role of data analytics in HR is incredibly important,” Aaron McEwan, CEB’s director told HC. “But the topic has been hijacked by people blindly jumping on the big data band wagon.”
Although big data seems like a new technology that may require a lot of investment, McEwan argued that this is generally not the case.
“The vast majority of organisations already have an appropriate level of sophistication in their data,” he explained. “There are a lot of HR analytics companies that are making large amounts of money around HR’s fear of big data and being left behind, when the bulk of organisations have the data systems they need in place, with little investment required.”
“The issue is in HR’s application of data – it’s not a sophistication issue.”
“What we found was that the biggest way and most effective way HR can improve analytics was by improving its credibility,” McEwan told HC. “Of all the data available to executive boards, HR data was the least trusted.”
Increasing HR data’s impact
McEwan had the following tips for HR professionals looking to improve the impact of their data:
- Criticality – “Focus on what’s most important to the business in terms of driving performance,” McEwan said. “This allows you to carefully equip business leaders with the most appropriate talent data.”
- Capability – “Not many people start a career in HR because they love mathematics, so generally we have to upskill HR teams on understanding and applying the numbers,” said McEwan. “HR needs to build these capabilities to provide insights to leaders through data, translating what they’ve analysed and what that means for business.”
- Credibility – According to CEB’s research, just 18% of executives trust HR data. “Even when HR professionals are presenting data, it’s often being treated with a fairly high level of scepticism,” McEwan explained. “HR needs to be able to maximise buy-in by engaging leaders in the process, and one of the most effective ways to do this is to move much more towards dashboards.”
‘Dashboard’ systems graphically present information in a simplified way that shapes decisions; traditionally, HR tends to provide data as a “big bunch of information”, McEwan said.
According to McEwan, the problem is not a lack of data, but that organisations are misinterpreting or misapplying it.
“Present the data that’s relevant to the executive team; the information that they want to understand and will help them make business decisions,” he advised. “Board members and CEOs now see talent management and human capital as the number one barrier to their growth strategy – what they’re looking for is information to help them make decisions about that talent, and if HR presents this data in the right way, it will be recognised as that.”
For example, if turnover rates are restricting an organisation’s ability to grow and be profitable, then HR needs to understand why that problem exists and access the data that can help; boards are not looking for the data itself, but what that information means and what changes need to be made.
Is HR data-phobic?
McEwan said that the most common reactions within HR teams to data are usually a “knee jerk reaction”, with HR professionals thinking they don’t have systems that they need to leverage it.
“Not everyone goes into HR because they want to deal with data and information,” he added. “Often our training hasn’t prepared us for that aspect of the role – but it’s now an expectation. Maybe a fear amongst some HR professionals is that they’re not as savvy when it comes to data as their colleagues in other functions across the business.”
No ‘magic metric’
McEwan told HRD that HR professionals must remember that there is no one solution to data analytics.
“There are no magic metrics,” he advised. “One of the clearest things we saw in our research was that there’s no single set of metrics that is relevant across the industry or to all organisations.”
“What HR needs to do is to understand the metrics and data that your business needs,” he said. “So you really need to consult with business to find that information out.”