Today’s rising inflation, health crises, political instability, and social upheaval challenge CEOs today like never before. They also understand that their employees are their most important competitive advantage.
As a result, most large companies and many others are dedicating resources to understanding how to sustain and grow their workforce, and many have created teams specifically focused on people analytics. While there has been progress, most companies have yet to unlock its value.
As recently as 2021, only 3% of 6,000 executive respondents in Deloitte’s Global Human Capital Trends survey said they “had the information they need to make sound people decisions.”
Why people analytics is critical to business survival and growth
People Analytics is the discovery, interpretation, and communication of patterns in workforce-related data to inform decision-making and improve performance.
Its primary role is to provide the organization with insights that allow them to make better business decisions, improving business performance while improving the employee experience and well-being. It has developed from tracking basic HR metrics to using data to understand how people impact business value and operations and vice versa.
Top executives and boards of directors are counting on their chief human resources officers (CHROs) to provide insights to enable them to make the right decisions about people.
A firm suffers when managers and decision-makers don’t have insights that lead to sound talent decisions. For example, to operate in a new, competitive job market, you need more than recruiting skills in HR. Your business leaders need labor market intelligence to make the right decisions, as in this example:
“… it isn’t enough to have data on talent supply. You must understand talent demand and competition to make decisions about the sustainability of a location.”
— Gartner report, “Analytics-Driven Talent Strategy.”
While some companies have tried to make data available through reports or data marts, managers aren’t data analysts. Delivering data that isn’t immediately useful won't help them make better decisions on the go.
People analytics practitioners now focus on providing insights to solve specific business problems. Only then will HR create real value for the organization.
Eric Van Vulpen, Founder and Dean of AIHR, says, “It makes perfect business sense—organizations that use data in HR earn an average of 82% higher profit than their peers.”
The Opportunity is Now
Data literacy starts with the right mindset: your people’s data is a unique, precious resource that requires care, a valuable tool in every person’s work life, and an ongoing process you must manage.
Whether building a cottage or a stadium, you start with the foundation. In analytics, the foundation is data, and a strong data foundation begins with data governance.
Many others have traveled this road. At this point, all you need is a vision of well-governed data and the willingness to put it to work.
If you don’t have a Data Governance Council or a Chief Data Officer, you can get guidance from the Data Governance Council. Individual and team memberships are very affordable and give you access to a full catalog of training courses.
Clear direction and leadership from the CHRO are required to build a data-driven culture in HR. By investing in essential skills and focusing on delivering financial value from people analytics activities, CHROs can provide insights that enable their organizations to make the right decisions about people.
To deliver business value, HR is transforming from a service function to “a driver of strategic talent and business outcomes,” driven by three principles:
1. It’s about the business. Business imperatives and workforce insights guide how HR operates
2. Nimble is key. HR, demonstrating agility, flexibility, and coordination, unlocks business performance.
3. Beyond the organization. Industry and social networks, customers, and the external market are integrated into how HR operates.
— Source: Deloitte, High Impact HR Operating Model
This is the first in a series of articles to help your team become data-driven professionals, the most critical HR skill of the present and future. There’s no better place to get started than where you are and no time like now.
What’s in this series:
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Pixentia is a full-service technology company dedicated to helping clients solve business problems, improve the capability of their people, and achieve better results.