In recent decades, technology has improved at exponential rates and a new field of analytics has emerged called data science. Data science allows for the expansion of analysis on messy, complicated datasets that were previously useless to businesses. Companies able to harness these new analytic capabilities increase insights into business processes and drive greater growth and competitiveness.
However, one department in particular is struggling to fully apply these new techniques: Human Resources.
This may be surprising since many companies rate human capital as one of the most important components to a competitive company. However, according to the global leadership survey by the Harvard Business Review, only 11% of business leaders say they trust HR leaders to use data to approach people management strategically.
Human resource departments need to learn these emerging techniques and how they can apply them to people management so that they can move from a reactive business unit to a strategic business partner. Not only will this strengthen the department, but it will drive growth and competitiveness in the company overall.
Where is HR Currently?
There are two main reasons HR departments are lagging: a skills gap and a technology gap.
The HBR global leadership survey also shows that HR leaders were 57% less likely to report that they felt “very effective” in meeting digital demands compared to other business unit leaders. So, while HR leaders may be increasing their analytical prowess overall, they are still far behind the progress made in other departments.
However, the larger issue for most HR departments is the technology gap. Rosslyn Data Technologies surveyed HR departments for their greatest challenges when attempting to increase analytics. Only 20% of respondents said they lacked analytical skills while 60% reported data related problems.
While many new programs and applications are being released, HR departments are stuck in the past with 98% of surveyed departments still reporting Excel as their main analytical tool. Excel has its uses, but there are also many limitations and concerns including dispersed data, lower data quality, and weaker visualization and statistical capabilities.
Data is also often kept in silos across different HR data systems making it more difficult and time consuming to retrieve and analyze relevant data for insights. 77% of HR departments stated that dispersed data was a main challenge, compared to poor data quality which only 31% listed as one of their biggest obstacles.
Where is HR Going?
So how can you close these two gaps and become an analytical front-runner?
With the introduction of analytical tools, HR departments move from simply managing people to a strategic business partner, such as marketing or finance.
Data science allows HR leaders to:
- Test the impact and effectiveness of projects and trainings
- Transform data into business insights
- Gather better quality and more usable data
- Quantify objectives and outcomes to allow analysis
However, this isn’t possible with the current state of HR functions. Normal activities such as training and development, recruitment, retention, and performance measurement will have to adapt to new approaches and techniques.
But these widespread changes are effective at promoting growth and competitiveness as HR departments that are early adopters of an analytic mindset have already shown. The HBR survey reported that analytical frontrunners outperform lagging HR departments by over 50% and Bright Horizons showed that 81% of developed HR analytical programs had at least one effective data-based project.
This trend of higher performance from HR departments adopting an analytical approach is not unique to HR. All departments that embrace higher-level analytics and data science outperform department that are slow to adopt these new practices.
Where Do You Start?
HR analytics needs to catch up, but how exactly should you start to build these skills and improve your technology?
The most important step an HR leader can take to begin shifting to an analytical approach is to increase the training of HR personnel regarding data analytics, management, and visualization. While HR is known for providing great training for other departments, they seem to struggle in their own training and development programs.
Another way to start improving the analytical capabilities of HR departments would be by forming cross-functional partnerships with other departments. You should especially reach out to departments already engaged in your company’s analytics. For example, create a relationship with IT for database management, Marketing for Search Engine Optimization techniques, or Finance for data analytics and forecasting.
With a goal of becoming a strategic business partner, you also must think about how to connect the analytics in HR to larger business decisions and outcomes. You can help promote these insights by creating visualizations which will help you to communicate these with greater impact. Additionally, the creation of leadership planning models which will help forecast human capital needs.
How Can You Apply Analytics?
If you aren’t convinced yet of the power HR analytics can play in an organization, think of these questions and how, or if, you could approach them:
- Who is most likely to leave your company in the next year? The next five years?
- Which new hire will be the highest performer in a year?
- Who will be the most engaged new hire of a candidate pool?
All these questions can be best answered by taking advantage of predictive analytics, a growing field in data science. This tool comes alongside machine learning, which can be used in recruitment and resume processing, to form the basis of HR analytics.
On top of answering these questions, data science and analytics can also help increase the efficiency of applicant tracking, potential for task automation, and more effective survey analysis.
Further Readings and Additional Resources
Here are some further analytical tools to look into: