People Analytics Is Going Mainstream But Why Is It Still Mostly Missing The Goal?

people analytics

The interest towards the opportunities of analyzing people data has exploded during the past years.

Studies like the recent Deloitte 2018 human capital trends survey highlight “people data” as the number one trend in the Nordic region and second most important trend globally. No longer does the discussion revolve around whether or not organizations need to focus on people analytics. Now we’re talking how and where to get started. In practice this means that organizations are increasingly getting serious about establishing plans for advancing in people analytics, and allocating investments for developing capabilities required to deliver results.

Organizations starting analytics journey today can use learnings from early adopters

To take some perspective, we can find several studies that highlight some of the differences that exist between the emerging and more advanced organizations in people analytics. One recent study revealed several interesting aspects:

Not surprisingly, more advanced organizations have on-demand workforce data (58% vs 35%) and they are a lot more likely to have predictive analytics capabilities to analyze the workforce (42% vs 12%). The advanced organizations seem to have gotten the foundational capabilities in place.

What is interesting in this study is looking at the aspects where there were no differences between the two groups. Both advanced and emerging groups reported the same main challenge with exact same weight:

“Reports or analytics provided by HR systems don’t connect to important business results, such as profit, customer satisfaction or revenue.”

Similarly concerning, both groups reported that the main value from People Analytics was “HR effectiveness” and only 19% of the group of ADVANCED organizations could report having achieved any business outcomes. In other words, these reports are showing that most organizations are still missing the target of people analytics to support business outcomes.

Why are the organizations missing the mark?

As always, problems are multifaceted and an obvious one being that people related matters tend to be very complex and seldom easily translatable into simple reliable metrics and linear models. But in practical terms, there are at two key aspects that are critical to the success of People Analytics in achieving business value.

Managing the business connection right

The often-quoted advice for any analytics project is to start by thinking about the business needs / problems / opportunities, rather than data or technology. I believe people in most organizations by now get this idea – but some might get the logic a bit backwards.

For decades, HR departments have struggled to prove their value to the business. Thus, too often the mindset for People Analytics initiatives was to collect some interesting HR data, e.g. engagement and trainings, and then hope to find some interesting correlations with business outcomes to see if something potentially useful pops up. Found correlation between your engagement survey results and customer satisfaction – so what and then what?

What is required instead, is to look at the chain the other way and establish a methodology that focuses on defining the business needs and opportunities, setting priorities for focus and ensuring alignment with overall strategy. Many business development opportunities for people analytics are likely to be found by partnering horizontally with other functions and looking areas such as customer service, customer value analytics, supply management, demand forecasting and seek developing horizontal solutions.

Thinking about the means to drive action

Again, the common knowledge says that analytics only produce value when they drive action. Effort is made on designing dashboards and developing complex analytical models, but not addressing enough the means to guide decision making and thinking about the business processes, enablers and possible changes required so that products, services and operations achieve the desired goals by benefitting from the analytics outputs.

To this challenge, there are many articles like this from MIT and this from McKinsey suggesting the need for “Analytics Translators” roles for organizations to help addressing these challenges. I personally find this a better suited recommendation than the “storytelling role” that circled in the earlier days of people analytics.

Another way to concretize analytics efforts into actionable solutions is to build the connection from business needs to data by asking questions through the simplified analytics process:

  1. What are the business goals / challenges / opportunities?
  2. What are the potential means that we can take action to deliver on those goals?
  3. What decisions need to be made to choose about right actions?
  4. What information / insight we wish we would have to inform those decisions?
  5. What types of analytics/analysis can help us inform about those decisions?
  6. What methods could we deploy and how do we scale those if proven valuable?
  7. What data and in what quality/detail would we need?
  8. What data we have that can we start working  with already now, what should we be collecting for the future?

Final words

People Analytics is finally becoming mainstream, and it looks like it’s here to stay. Winners will be those who are able to tackle all the complexities and challenges relating to it by building practical and focused value adding approaches, and incrementally raising their bar to achieve the full potential. As I wrote I while back, the question is no longer whether People Analytics is coming or not, but rather who is in charge of leading the practice and what is the role of HR in it.

Author: Pauli Dahlbom, Peoplegeeks, Founder & Director Analytics and Business Development


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