5 reasons why HR Analytics must sit in HR

19/11/2014 at 11:51 10 comments

HR Analytics in HR

In my last blog post I gave five reasons why HR Analytics should not be located in HR.  The five reasons I gave were: 1) It will lose its strategic potential, 2) HR does not have the capabilities – and will not be able to attract the right ones, 3) HR does not have ownership of all the relevant data, 4) Efficiency gains from pooling all relevant capabilities together and 5) HR is not credible enough to work with analytics.

Fair to say that while some agreed others did not. However, that post was only the prosecutor’s arguments. Now it is the time to ask the defendant to rise and present his side of the argument.

In this blog, I want to present the case from the other side’s point of view: 5 reasons Why HR Analytics must sit in HR:

  1. Nobody else care about HR data. If a central BI or Analytics unit should do all analytics work in a company my guess is that HR issues would be prioritized pretty low. In fact, it is not that many people outside of HR that thinks that engagement data can be used for much more than a pie-chart report once a year. However, in HR we know that engagement can drive business results. We also know of many ways to use analytics on engagement data. It takes an HR mind to see this and to care for this kind of data. Therefore, the more positive re-wording of this point might be that HR data has a lot of potential value; HR people are the only ones who know this and can get the most out of HR data.
  2. It takes HR knowledge to interpret HR data. Data is fine but where it really has an impact is when it is converted to information and later to knowledge. Computers can to some degree make these conversions but at some point they must be converted and interpreted by a human being. This is not easy and interpreting HR data requires HR knowledge. Leadership profiles, performance data, engagement survey data and many other HR data can only be fully utilized if the HR department helps. While a steering group with HR capability may go some way to resolve this problem, I would argue that either the meetings with the steering group must be very frequent or HR Analytics will have to sit in HR to get the required frequent interpretations of data and findings.
  3. It may make HR more data driven and improve HR impact on business. With some exceptions, I think it is fair to say that many HR departments do not have the influence in the organization (I believe) it deserves. There are many reasons for this; lack of strategic focus, difficult to quantify HR’s impact on the business results, a lack of basic business acumen and finally I often hear that HR does not speak the language of business. While I have always disliked the last argument, I hear it a lot. I think it has to do with not being able to make proper business cases, identify the strategic link, provide some kind of evidence to support the suggestions and quantify the value of the initiatives. I also think it is fair to say that HR is not very evidence-based. Do we really use the best knowledge available to design our practices? HR Analytics can help to achieve this to some degree. If used properly this will without doubt in my mind help HR gain credibility and impact on the business.
  4. Data ownership sits naturally in HR. Much of the HR data needed to conduct HR Analytics sits firmly in HR.  It is always a problem if the analytics department does not have easy access to the data required. Many times the HR data is located on different IT platforms than the rest of the business’ and being located near the data makes access easy. HR will also understand the legal aspects of the data much better than anyone else (with the exception of the legal department of course) and this will help the HR Analytics team avoid running into serious legal issues.
  5. It will increase the likelihood of the analytics actually being used. HR Analytics is really about creating knowledge to make better HR decisions. HR decisions are many times made in HR by HR and therefore it makes sense to make the analytics department sit close to the people who are actually going to use it. It will make it more likely that it will be used and have the impact intended.

Did I forget any obvious good reasons to place HR Analytics within HR?

In this and my previous blog I have presented the two cases; 5 reasons for and 5 reasons against placing HR Analytics in HR. In my next blog post, I will discuss the two sides with Peter V.W. Hartmann who is the Lead on HR Analytics at Maersk Drilling and see if we can get to some kind of overall conclusion. So stay tuned…

Entry filed under: Analytics. Tags: , , .

5 reasons HR Analytics should not be located in HR New research: Companies with diverse leadership yield higher profits

10 Comments Add your own

  • 1. David Pethick (@davidpethick)  |  19/11/2014 at 12:28

    Hi Morten

    This is a very strong argument for the defence. I’d like to take a moment to comment on a few of the points you made.

    Throughout my career to date I have always appreciated the insights offered by HR partners, particularly when those insights are supported by data. My training as a physicist did however lead me to be skeptical of some of the claims that were made on very small or noisy data sets. In short, despite not being a HR professional I was very interested in what we could learn from HR data (such as engagement surveys) but I often found my HR colleagues lacking the skills necessary to make good use of the resources they had available.

    I think your third point is very well made. By making HR responsible and accountable for HR analytics, it raises expectations for data driven insights and evidence-based policies and outcomes. The alternative, to make HR analytics the responsibility of a BI or Analytics team, is very disempowering. As a sales manager, I would never have accepted an organisational structure that didn’t give me sufficient control of analytical resources to deliver insights into the success (or otherwise) of our sales and marketing initiatives.

    Perhaps the structure you are looking for is one in which HR professionals are supported by analytics professionals within the HR team. The best analogy I can provide is the relationship between traders and analysts in an investment bank – both have different skill sets, they work together to bring their particular strengths to the table, but it is ultimately the trader who needs to make a decision based on all the analysis, combined with his experience of the market. That is how I see the role of HR professionals changing over the next decade.

    Kind Regards.

    David Pethick
    Founder, http://leading.io

    Reply
    • 2. Morten Kamp Andersen  |  20/11/2014 at 08:33

      Hi David.

      I really appreciate your insights. Especially, I like your analogy to the trader and the analyst in an investment bank. I myself worked as an analyst at Deutsche Bank and Merrill Lynch for 11 years, so I understand that analogy well. And I agree, the places where I experience the best use of the analyst was where the interaction was the most frequent and the actual distance was the closest.

      I hope and think that HR Analytics will raise the game for HR and make it more data driven and evidence based in general. I would hope so.

      Thanks for your contribution
      Best
      Morten

      Reply
  • 3. MJ  |  19/11/2014 at 16:25

    These are a couple of great posts, Morten. I agree with both of them so it should not be a surprise that I think that it should sit with both areas.

    I am of the opinion that you need 3 things to be successful with workforce analytics 1) a HR department that strives for a successful workforce analytics function 2) an IT department that strives for a successful workforce analytics function and 3) at team of data analytical that know how to tell a story with data, but also know the nuances of HR.

    You need the first two to ensure that you have the resources – dollars, people and expertise – to do the job right. Even if one of HR or IT don’t see it as a top priority, then there won’t be the drive to do things well. You then, at best, end up with people trying hard but only having use of a second rate set up.

    You need that dedicated support from HR, because even if you have the best of systems, people won’t want to use the outcomes. You need the dedicated support from IT to ensure the systems are in place and working correctly all the time. If there is limited support, HR will always lose out to business functions who will trump corporate services if push comes to shove. This will lead to limited resources and limited priorities when it is needed most.

    The data analysts don’t need to be HR people, but they need to be able to pick it up to bring the story to life from a people perspective. They might be able to find great patterns in the data, and to deliver it in a meaningful manner, but knowledge of HR can add the extra nuance to make the story come to life. Also as you mentioned in the comments section of the previous post, HRBPs aren’t always data savvy. If the analysts are HR savvy, they can help translate the story that the data is telling.

    Once you have those 3 elements working well together, I don’t think that it matters where the analytics team sits. That will depend on the philosophy of the company. The important thing is that you have congruent and consistent support from both HR and IT and that there is great cross functional collaboration to really enable the analysts and to desire their positive outcomes.

    Reply
    • 4. Morten Kamp Andersen  |  20/11/2014 at 08:37

      Hi MJ,

      Great contribution – thanks.

      I could not agree more. Those three elements are very important and would make a strong case for HR Analytics to sit in both areas. In reality I have however never experienced all three to be present in one organization. In particular your second point is something I see only rarely. The IT departments I have come across have been interested in analytics but not really workforce analytics. Have you? I would be interested to know.

      Take care
      Morten

      Reply
  • […] In my last blog post I gave five reasons why HR Analytics should not be located in HR. The five reasons I gave were: 1) It will lose its strategic potential, 2) HR does not have the capabilities -…  […]

    Reply
  • 6. Ross Watkins  |  21/11/2014 at 10:11

    Definitely a conundrum!

    I absolutely agree that HR doesn’t have a great reputation in this area and will often struggle with the skillset required to improve this perception. This is a very strong argument for taking the data out of HR hands but for me this is not the way to go at least not initially. Having worked in analytics for a few too many years (largely HR but also elsewhere) it seems to me that it takes an HR head to fully understand what the data is telling us or even what we should be looking for. So to plunge HR analytics directly into BI as a whole without first establishing its place at the table would see it swamped and I think largely ignored.

    In my view where HR Analytics sits depends largely on the stage of analytic evolution that a business is at. Companies at the start of their HR analytic journey need the love, care and understanding that only an HR person can provide to HR data. Over time, with the support of the CHRO or similar senior advocate, as confidence grows in the quality of output then I would see HR analytics spreading its wings into the wider BI community, adding value as an equal partner.

    Ross Watkins
    Group MI Manager – TUI Travel

    Reply
  • 7. Krysta  |  21/11/2014 at 18:03

    Compelling arguments indeed. I would agree that the analytical skill set rarely sits within HR departments. At the recent CIPD analytics conference it was suggested that the current requirement for analytics skills in HR is somewhere between 10%-30% currently looking to grow to 60% over the next 5 years.
    HR is now going through a similar transformation that Marketing went through a decade ago.

    Reply
  • 8. Kouros Behzad  |  24/11/2014 at 09:21

    Hi Morten,

    Great posts!

    Running analytics tends to expose gaps and poor quality data. As a side benefit, we see that having HR analytics siting in HR also goes to help improve the quality of the HR data, given that data stewardship resides with HR. As Peter Howes puts it: “data quality is a hygiene factor, without it you have nothing – in itself it adds no value.“ What this brings is credibility and confidence to HR.

    Regards,

    Kouros

    Reply
  • […] In this blog, I want to present the case from the other side’s point of view: 5 reasons Why HR Analytics must sit in HR: Nobody else care about HR data. If a central BI or Analytics unit should do all analytics work in a company my guess is that HR issues would be prioritized pretty low. In fact, it is not that many people outside of HR that thinks that engagement data can be used for much more than a pie-chart report once a year. However, in HR we know that engagement can drive business results. We also know of many ways to use analytics on engagement data. It takes an HR mind to see this and to care for this kind of data. Therefore, the more positive re-wording of this point might be that HR data has a lot of potential value; HR people are the only ones who know this and can get the most out of HR data. It takes HR knowledge to interpret HR data.  […]

    Reply
  • […] reading this excellent duo of blogs from the distinguished consultant Morten Kamp Andersen: ‘5 reasons why HR Analytics must sit in HR’ and ‘5 reasons why HR Analytics should not be located in […]

    Reply

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