Human capital is arguably the defining factor of corporate success, but it is becoming increasingly difficult to come by. Competition for the best candidates is now fiercer than ever, and companies are having to fight to retain and optimize their current talent.
In order to do this, HR departments are increasingly turning to data analytics to find the best candidates and how to attract them, and identify current employees looking for new pastures and evaluate how they can persuade them to stay. However, the function is still a relative laggard in comparison to others. In a recent survey of 398 of its members by the US Society for Human Resources Management (SHRM), 71% said that while their organization has data analysis roles within the accounting and finance department, just 54% have such roles in HR.
We asked five experts from companies who have established best-in-class data-driven HR departments to find out why they thought HR was behind the curve relative to other departments, and what could be done about it.
Robert Lanning, People Analytics, Insights, and Research Lead at Tesoro Corporation
HR tends to be behind other departments, stereotypically. In organizations without a dedicated Analytics/Insights/Research function, you’ll typically find a resource or two with HRIS who helps with reporting (primarily compliance related or general interest – how many X employees do we have) or a good analytical expert within an HR sub-function (e.g., compensation, payroll, or org design). HR leaders, whether 'data savvy' or not, need to get a vision of what HR analytics/insights/research can accomplish within their organization and then staff the function appropriately, with someone who has the vision as well (and not just the best Excel jockey in HR).
David Gainsboro, People Data Analyst at Dropbox
Historically, there hasn't been as much data in HR, especially when compared against Web Analytics. Additionally, there hasn't been as much pressure on HR to support ideas with data and measure projects with ROI. Today, that there is an opportunity to have major business impacts, either decreasing costs or increasing efficiency, and increasing revenues.
Michael Gethers, Data Scientist at Salesforce
Though I want to be careful not to make blanket statements here, I think it’s no secret that HR is not the most traditionally data-driven department within most companies, and as a consequence, it can be quite difficult to get data initiatives to take proper flight. From ineffective data warehousing to an HR workforce that is ill-equipped to properly interpret results of data-driven projects, there are significant challenges in place that can make it difficult or even impossible for data innovators to operate as nimbly and effectively as they otherwise could. Unless these challenges are addressed, HR departments will lack the foundation that is required to construct robust analytical processes on even an ad hoc basis, much less to weave these processes into the fabric of the organization, which is very often the proclaimed objective.
These hurdles are not insurmountable, but they require significant investment and messaging from HR leaders to begin to shift the culture in a more data-driven or data-literate direction. It is not enough to simply bring on a skilled data scientist or analyst and expect that they are going to be able to immediately begin producing valuable insights on a regular cadence without first investing in proper data infrastructure. And when it comes to infrastructure, it is important for business leaders to understand that they often don’t know what they don’t know. If there is really a genuine commitment to data initiatives within the department, there should be open dialogue with the data scientists/engineers/analysts who have the knowledge surrounding how those initiatives could conceivably come into being. What data would we need to have for this initiative? And how much of it? In what format would it need to be? Where will it be stored? How should it be accessed? How will it be cleaned and manipulated? What kind of testing will we have to do? How much manual effort will this require, and how much of the process can be automated in the long run? These are questions that business leaders themselves are not always well-equipped to answer without consultation from those who would actually be producing the models or analyses, and data initiatives can easily stall if they are not fully thought out.
In addition to infrastructure, messaging is key. The entire department should be bought into a data-driven future. Data work is much more consultative than it’s often made out to be, and domain knowledge is absolutely essential to successful data projects. While those actually producing the data product should have some understanding of the domain that their work pertains to, the bulk of that domain expertise, at least in the beginning, is usually going to come from those who have been closest to that work in the past. This cooperation is very important, and can be facilitated by HR leaders through communication of the value of these new initiatives.
Faranak Raissi, Senior Director of Integrated Talent Management at Gap
Yes, I do feel HR is behind other departments when it comes to data. I think just as marketing became a data-centric function about 20-something years ago (by looking at market segmentation, customer scoring, looking at ROI on marketing spend, etc.), so is HR beginning to go down the same path. I think the case that HR leaders need to make is that the business spend of human capital (most companies spend at least half of their total revenues on payroll, give or take) mean there is a big opportunity for us to look at analyzing that spend to see if we can quantify things like productivity, whether or not we have the right people in the right jobs, are we paying them the right amount of money, etc. In other words, as HR professionals, I think we have an opportunity to make the case on how HR analytics can help us understand if we are optimizing our employee spending.
Stephen Chesley, Senior Workforce Planning Specialist at NASA
I think that in certain sectors HR has been at the forefront of data initiatives from a workforce planning perspective, managing workflow and service delivery including skill and competency modeling. Operational research techniques have been used for years for staffing, hiring and training in industry and military. More recently, however, I have seen a decline in resourcing and budgets devoted to HR analytics; instead, as a cost savings measure there has been a growing reliance on commercial solutions with more limited capabilities. HR leaders need to be more vocal about the importance of data initiatives and ROI for analytical work to build/rebuild their capability.