There are three important ways in which HR can transform its contribution from operational support to that of value-added business partners by leveraging people analytics, according to an expert in the area.
The first of these steps is to create meaningful management reporting that informs and enables improved workforce management and bottom-line performance.
HR can utilise integrated analytics to inform and enable executives and line managers to continuously improve workforce management and business contribution on an ongoing/daily basis, said Stephen Moore, general manager education & capability – people analytics for RITEQ.
While analytics are typically based upon fundamental areas such as leave liability, personal leave or headcount, Moore said these analytics can be substantially expanded to focus on more meaningful metrics in areas including:
- What is the nexus between headcount and current revenue or income?
- Are labour costs consistent with profit or income results?
- Are people scheduled and utilised in alignment with prevailing trading patterns?
- How well trained are employees, how much is spent and is this in the right place(s)?
- How satisfied and engaged are employees?
The second most important step for HR to effectively leverage people analytics is to create meaningful workforce planning and resourcing reporting that informs and enables effective labour demand and supply planning – linked to business plans and objectives.
“How can you effectively plan out your resourcing pipelines without first determining the type of roles, number of positions and timing of placements?”
In most HR departments, Moore observed that utilising people analytics at this level is almost always focused upon workforce resourcing and recruiting for a period, usually between six and 12 months in the future.
“This, however, inevitably leads to a case of putting ‘the cart before the horse,’” he said.
“How can you effectively plan out your resourcing pipelines without first determining the type of roles, number of positions and timing of placements – let alone changes in roles, skills or competencies required?”
An important starting point in this is through introducing a systematic labour demand forecasting program which informs future labour supply requirements.
“It’s all about looking at factors external to your organisation – ones that you don’t directly control – that will affect your demand for people, and then looking at factors internally in the organisation that you do control, that will affect demand for people, and finally your attrition rates which will also affect demand for replacement,” he explained.
When considering external factors Moore said changes to consider include changes in population size, changes in population demographics; changes in community attitudes or expectations; changes in market share caused by new entrants (or closures of existing ones) changes in economic forecasts, and changes in climate.
“There is no existentially right or wrong answer, just those factors that most impact on your particular organisation,” he said.
“There are so many challenges marching quietly towards all organisations that no one is taking the time to properly consider”
In terms of internal factors, considerations include key plans and objectives outlined in future business plans that will affect demand for people.
“This could include things like the introduction of a new product range, expansion into a new region or locations, investment in technology that will automate a part of your operations, or a call centre redesign,” said Moore.
In terms of replacement factors, it is important to consider historical and forecast levels of workforce turnover, retirement, leave of absence and absenteeism that will necessitate a demand for replacement.
“Once your labour demand forecast has been finalised you have built the foundations upon which to understand your future labour supply forecasts, identify critical risk resourcing challenges and build effective intervention strategies, like talent pipelines, graduate programs or even apprenticeships and technical trades development,” Moore explained.
The third important step for HR to consider in getting the most out of people analytics is to create meaningful workforce sustainability reporting that informs and enables proactive action in relation to long-term changes in workforce composition and demographics.
This is about creating metrics that enable the organisation to look and plan five to ten years out into the future.
“It’s looking at sustainability stuff, changing demographics and workforce composition,” said Moore.
“Wow, half our workforce is now over 50 years of age and productivity has reduced by 25 per cent”
“This level of people analytics measures and informs things like projected changes in workforce ageing, length of service versus knowledge management and transfer of knowledge, bench strength and depth of identified critical roles, generational change, change in ethnicity and diversity, level of reliance on immigration.
“So where is our organisation potentially at risk? There are so many challenges marching quietly towards all organisations that no one is taking the time to properly consider.”
Senior executives aren’t really incentivised to look this far ahead, according to Moore, who said HR is often so focused on delivering on operational priorities that it is not looking forward sufficiently either.
“Then one day the penny drops; people suddenly realise ‘Wow, half our workforce is now over 50 years of age and productivity has reduced by 25 per cent. ‘What are we going to do?’”
Common people analytics challenges for HR leaders
People analytics is not a naturally occurring skill for HR folk, according to Moore, who said this is not helped by the fact that it is not being taught in the majority of HR courses provided in the tertiary sector.
To be successful in this space, he said HR professionals must dedicate the necessary time and effort to develop their professional acumen in the following core areas:
1. Become efficient at data capture, cleansing and reporting.
2. Become competent at data analysis and interpretation through the effective use storytelling.
“Producing and distributing the most spectacular or stunning reports in isolation of anything else is unlikely to create major momentum for ongoing usage,” said Moore.
“Reporting is important but must be complemented by HR professionals competent in explaining the results in a manner that is meaningful to the target audience.”
3. Become capable of leveraging the reporting being presented/analysed in order gain support for an identified HR intervention or solution (such as ROI modelling or opportunity cost matrices).
“While people analytics is not in the natural DNA of HR folks, it is in their destiny,” said Moore.
“They must come to understand not only the value it brings to an organisation, but to them as HR professionals as well as to their career opportunities, promotion, recognition and business integration.”
“While people analytics is not in the natural DNA of HR folks, it is in their destiny”
How HR can improve people analytics skills
To work successfully at higher levels in their organisations, Moore said HR practitioners need to continuously develop their professional acumen, as well as their core competencies.
To this end, HR needs to create a structured development matrix that provides a clear process by which team members acquire new skills and capabilities.
“For example, how can we talk about providing strategic HR services if we don’t possess an in-depth knowledge of what strategic workforce planning is and how it works?
“Or transformational HR services when we don’t know what workforce empowerment or optimisation mean?
“How can we expect to successfully interact with CEOs, exec teams or even board members if we cannot effectively utilise the financial language of the organisation?
“Or develop a compelling business case? Or successfully deal with and overcome resistance?”
Finally, Moore also said HR needs to develop and utilise an integrated suite of practical and objective HR department effectiveness metrics that demonstrate the true value and contribution of the function to the organisations bottom line results.
“How can we talk about providing strategic HR services if we don’t possess an in-depth knowledge of what strategic workforce planning is and how it works”
Moore was optimistic about HR’s ability to get up to speed with people analytics, and during a recent trip to London he witnessed a major debate about the future of people analytics as a separate discipline requiring its own (global) professional institute to ensure effective governance and support as it grows and develops around the planet.
“While there was much debate about the background and skills set required (ranging from PhD capable data scientists to senior HR professionals with formal people analytics certification) there was no doubt the people analytics/insights function will become a necessary addition within astute HR departments seeking to broaden their impact and business contribution in the coming decade,” he said.
Australia & New Zealand: #2 in people analytics
Moore also observed that Australia and New Zealand fare relatively well against other countries when it comes to people analytics, and said the local region is “most likely ranked in second place”.
“Both the UK and Europe are well advanced in their understanding and application of people analytics. They get it,” he said.
“Their focus is now on working out how best to capture and use the available data.
“In the Nordic countries, in particular, they have long held a view about investment in systems and technology including human resources.”
Organisations in these regions don’t need to be convinced of the importance of people analytics, according to Moore, who said they are at the stage where they are investigating how to apply the necessary processes as effectively as they can.
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