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People analytics: A key resource for strategic business partners in a technology driven world

Sue Lam, Ph.D., HR Diagnostics Manager, Shell International

Sue Lam, Ph.D., HR Diagnostics Manager, Shell International

For decades, HR has lamented the fact that they are not viewed as a strategic partner to the business. Though HR’s ambition is to become a business partner rather than an administrative function, it’s desire has not become a reality in many companies. What can HR do to get a seat at the table?

Leverage people analytics to position HR as a strategic business partner

Given the volatile and ever-changing business environment, the business increasingly requires functions to provide them with data-based recommendations. For HR to become a strategic business partner, they will need to speak the language of the business and use data to understand people problems and make suggestions for change. At first, this could feel unnatural for HR as it has historically been a function focused on intuitive employee decisions. It is understandable because most people joined HR because of their passion for people rather than data and analysis. However, with the nature of our data driven economy, people analytics is becoming increasingly important for an HR professional to understand. HR is required to have a basic understanding of data analysis to effectively support the business on decision-making related to employees.

People analytics can help alleviate some of the issues that HR has faced. For example, HR has encountered difficulties making the business case for people-related change as well as showing the value of the work that it delivers. How much more value do top performing employees deliver over and above the average employee? Which employees are most likely to leave the company and what can be done to retain them? How do you quantify the return on investment of training? These are all questions that people analytics can help HR answer with more certainty than intuition. However, there are several requirements that need to be fulfilled before conducting and applying people analytics.

"People analytics can help alleviate some of the issues that HR has faced"

Understand the current business problems

How well does HR understand how the business makes money? The business is interested in building revenue and reducing costs. Employees are not only an organization’s biggest costs, but they are also a company’s greatest competitive advantage. Understanding the pain points of the business will help HR ask the right people questions that need to be answered.

Using the results from people analytics will help HR make better decisions that in turn will lead to better business outcomes. It is important to note that the information that comes from data analysis will not give HR “the one and only answer.” The results provide insights that HR can draw from to inform decision-making. In other words, HR can make a significant contribution by coupling their expertise on people problems and the business with the results from people analytics to provide the best recommendations on the way forward.

Collect the Right Data and Treat it with Caution

Prior to conducting data analysis, a key requirement is collecting the correct data. If you want to predict the likelihood of employees leaving the company, it is necessary to understand the factors related to attrition such as current salary, number of raises or promotions received, tenure, employee engagement scores, number of training hours received, amount of business travel, distance from one’s home to the workplace, and performance ratings. Much of this information can be derived from a company’s HRIS.

However, all people-related data must be treated with caution. Although your company may collect certain data about employees, it may not be ethical to use it in data analysis. Additionally, given the global nature of many businesses today, it may not be lawful to use personally sensitive data (e.g., race/ethnicity, sexual orientation, disability status), particularly if your company has European Union employees or customers. To minimize any potential issues, get the expertise of the legal department or an industrial-organizational psychologist who is trained on the ethics of people data analysis ahead of any key projects.

Communicate Effectively

The rise of people analytics does not mean the fall of effective soft skills for HR. For the business to gain the most value out of analytics, HR needs to tell a coherent story and answer some basic questions such as, “What does this data tell me?”“Why is this important?”“What are your recommendations to fix this problem?” Communication, collaboration, and emotional intelligence are still required to relay this information to the business. It can be argued that data analysis is the easiest part of people analytics; the difficult part is convincing people to do something with the results. Thus, analytics should not dramatically change the way HR interacts with the business—it should supplement the conversations and make HR a more effective business partner.