1. What Does the “Datafication of HR” Mean to You? More Important, What Should It Mean to HR Leaders Today?
Stacey Harris: HR Loves to Look Outside, But It Ought to Dig Deeper Inside
Simply put, the datafication of HR is investing in analytics that will help improve your organization’s policies, practices, and processes, and in turn help HR improve how it functions. But what does that really mean? And what data should HR look at to make those improvements?
HR needs to review both internal and external metrics, but often, one of these gets overlooked.
HR is historically prone to searching outside the organization for data before it examines what’s happening inside. In other words, HR is quick to put huge amounts of hours into comparing its organization against norms for its industry or its competitors. But does that data really apply to your organization?
Here’s a very basic example: The standard average for the number of HR professionals needed in an organization is one for every 150 employees. But does that take into consideration your organization’s approach to how HR is organized and how it functions?
- Do you have a distributed or a centralized HR organization?
- Do you have regional breakouts for HR functions?
- What about your business model and how that impacts the need for more — or fewer — HR professionals?
Here’s another example of external data that may not really tell you anything useful in and of itself: The common wisdom today is that to get a measurable impact from your talent management system you need to spend at least $10, and up to $52, per employee on your talent management technology.
Those are great benchmarks. But if they’re separated from internal metrics, HR is only seeing half the picture it needs to see when it considers the quantification of HR.
Steve Boese: HR at the Crossroads — We Have the What and Why of Big Data, but Not the How
HR is at a bit of a crossroads in terms of understanding and working with data. Five or six years ago, everyone was telling HR that to be more effective it had to understand business better and be closer to the operations side of the organization — and we sort of bought into that.
A couple of years later, HR really started asking how it’s going to do all of that, which morphed into the need for other kinds of data. Today, enterprise organizations have become data repositories, from metrics on the supply chain to metrics about call-center performance to individual employee behavior.
With all of this data about performance, compensation, and promotion — all of this HR stuff — the new question for HR became, “What do we do with it? How do we understand it, make sense of it, and apply it to make better sense of talent management?”
HR is being told to answer strategic business questions. But it’s not necessarily being taught how to understand data or use it answer those questions. And HR is being asked to do all of this with nothing else coming off of its plate. In fact, new stuff has been added: ACA compliance, the rise of the global workforce, and more.
The bottom line: HR faces two overarching challenges around using data to better be able to be an effective part of the quantified organization:
- HR needs to be more open to embracing data-driven practices as part of its ongoing functions. What’s required of HR leaders may need to change to meet this demand and to do HR differently.
- HR needs to figure out how to help the organization through the cultural transformation that’s going on in business today — the multigenerational workforce, globalization, and datafication.
The concept of data-driven decision-making isn’t new. But until recently, it’s been all about business data. Now organizations can dig deeper into people data. But that’s a more challenging proposition than amassing more quantifiable metrics like the kind finance or operations can create.
Robin Schooling: HR’s Relationship with Data — No Longer Looking Only in the Rearview Mirror
HR is changing its long-held belief that HR data merely equates to information or records. Datafication of HR means we stop merely storing information in data warehouses and begin using it.
HR has traditionally relied on historical point-in-time data as the primary source for planning.
“Our turnover for FY 2013 was 18.5 percent, and so for FY 2015 we shall do X, Y, and Z.” Notice the time lag; it took us quite a while to gather and finalize FY 2013 data, and so we only used it for FY 2015 planning!
With the ability to link HR data to organizational data, HR is able to not only store information, but use it proactively: to improve operational management, better align goals, be agile, and measure it in real time. Meanwhile, if HR sees that it’s measuring incorrectly, it can detect this in real time and ditch the measurement tools it’s using and adjust accordingly.
Think about how activity and performance are measured today. They can be tracked daily — or even hourly (think of a call center). HR suddenly has multiple variables and numerous data points that are all being tracked, measured, and analyzed on the aggregate level, as well as on the individual level.
Datafication of HR means we can do that across the organization as we move toward evidence-based management — relying less on “gut feel.” But to use data to make leading decisions (as opposed to lagging ones), we need to fully incorporate external data, as well as data from all parts of the business. It’s no longer just about what has been considered HR data (generally static and historical information: time-to-fill, number of employees trained, turnover, reporting of monthly/quarterly/annual numbers, etc.).
This is a shift in mindset for many HR leaders. But it doesn’t eliminate the need for HR practitioners to have solid skills in HRM; experience and judgment will always be critical competencies.
Making the Case for Resources to Support HR Data
If you think you’ll need to add resources to transform your HR data — add HR analytics specialists to your team, get dedicated support from your IT people, and check out studies like one the Massachusetts Institute of Technology and the University of Pennsylvania conducted in 2011. It found that companies with mature HR analytics functions produce 5 to 6 percent higher financial returns.
Paul Hebert: Does More Data Mean HR Will Help Employees Do Better Work or Make Better Decisions?
Maybe we’re talking about the wrong thing here. Maybe the trend shouldn’t be about more data for HR. Maybe the discussion should be more about how organizations can help HR help employees make better decisions.
Maybe when it comes to the quantification of organizations and the build-up of HR data, the question should be: Does the data HR is chasing accurately reflect human behavior and motivation?
Especially for the 99.7 percent of U.S. businesses that have fewer than 500 workers, the whole kerfuffle around big data and quantification is moot. It’s overkill, and most likely for most businesses, chasing big data is the tail of data wagging the HR dog.
So, for most businesses in America today, datafication in HR should start by asking two key questions:
- Can you get some true value out of it? It’s not a good idea to chase data because you’ve heard it’s great for enterprise businesses or it’s being talked about as the next big thing for HR.
- What, really, is the provable connection between the data you can gather and such “human” concepts as employee engagement? In other words, to borrow the title from a recent article, do you need to have ROI to humanize your workplace?
We are in the business today of automating and creating technology that makes HR’s job very efficient. But human beings are the least efficient beings in the world. Shouldn’t HR be looking at how to become more effective, rather than more efficient?
In fact, all of the discussion about needing to push technology in HR and piling up more data is the reason we have horrible engagement scores: We try to make employee interactions and our dealings with employees very efficient transactions. So, datafication becomes about removing the variability in HR, which is removing the humanity from HR.
It’s time to stop and ask this question: Is all of the datafication in HR actually the problem and not part of the solution?
Lance Haun: The Evolving State of Data’s Effect on Talent Management
What the datafication of HR represents is the potential to drive better-supported decisions and results, with impacts across the entire enterprise.
HR’s understanding of data as it relates to the business side of the organization is truly in a state of transition. It’s evolving. Which means everyone’s definition of what it means is also in transition.
Many organizations have just begun the multiyear process of liberating their workforce data from the clenches of closed enterprise systems. Others have already won that victory and are trying to figure out what decisions their newfound data can support. And the few at the front of the curve are applying that data to solve complex issues — truly applying big data and the quantified organization.
For HR leaders, the datafication of HR represents three things:
1. Decision support
One of the most widely searched terms in the HR universe is about ROI. The right data can get you that decision support — programs that HR leaders knew in their gut could work can actually be tested. Traditionally squishy areas of HR leadership that are hard to measure might actually be able to be proven.
The downside is that HR leaders will be under increased pressure and scrutiny about the types of programs and practices they advocate. Everything from hiring to benefits administration to performance reviews and workforce management can become accessible to the C-suite.
With better access to data and better interpretation of that data, HR has the ability to take on new leadership roles within the organization. The datafication of HR will require leaders who are ready to understand and implement what they see from the numbers; it could mean better executive positions for HR leaders who aren’t afraid to rely on that data.
The datafication of HR will certainly impact larger companies in greater numbers. But don’t overlook its benefits for the non-enterprise organization.
A 250-person company may not seem to need these sorts of analytics and information, but the consequences of poor hiring practices, poor learning management, or improper workforce planning could be even more drastic.
Very soon, smaller and midsize companies will have to fully embrace the datafication of HR. Sure, they may not need to correlate their data with currency rate fluctuations in China or an increase in demand in Europe, but they’ll still need sound decision-making tools that help them understand what happened yesterday and predict and prepare for the future.