Posts tagged ‘Analytics’

5 reasons HR Analytics should not be located in HR

Simple organizational structure

If you were to build an HR analytics department where would you put it in your organization? The obvious answer may at first be to put it in HR. But at second glance this may not be the right place. Maybe even the wrong place.

I believe there are five good reasons why HR Analytics (or Workforce Analytics or HR Data or whatever it may be called) should indeed not be placed within the HR department.

  1. It will lose its strategic potential. It is common knowledge that HR Analytics has far greater potential if it is directed towards strategic issues rather than operational and tactical ones.  To put HR analytics in HR will create two problems. The first is that I often see HR Analytics focus on improving HR processes only. Nothing wrong with showing the link between engagement and employee turnover rates, it is just not very strategic. Nothing wrong with improving the training programs with analytics – it is just not very strategic. Tactical at best but most often operational. The strategic mindset is often not present. The second reason is that HR is mainly strategic when it is working outside of HR’s own silo and instead fronting the business and the front line. Some even argue that it is not HR’s role to be stategic. Putting HR Analytics deep inside some (often random) HR function makes the decision making process far removed from the business – and hence strategic – side of matters.
  2. HR does not have the capabilities – and will not be able to attract the right ones. I have argued that to succeed with any kind of analytics you will need to attract a number of different capabilities to take charge of your analytics effort. These capabilities, competencies and skills include i) being excellent  at statistics and numbers, ii) strong data management skills, iii)) captivating storytelling skills, iv) visualization skills, v) strong psychological skills to understand terms such as bias and heuristics, and vi) the ability to truly understand the business. Very few in HR master these and fewer yet have a strong team which complement each other enough to be able to build the right team. Likely they will fall short on data management skills, visualization skills, statistics and understanding the business. And worse, those people are not looking at HR job ads. Trust me.
  3. HR does not have ownership of all the relevant data. Many of the data which HR has ownership of (recruitment data, performance data, engagement data etc.) needs to be combined with data which reside in other parts of the organization such as finance (payroll), IT, legal and most importantly all the customer related data. These may also just be basic things such as master data. Many times HR Analytics people do want to work on strategic matters but need data which they are not allowed access to for internal reasons. In my experience these are often customer and profit data. If HR Analytics resides in a function outside of HR these data may be more available.
  4. Efficiency gains. Purely from an economic and efficiency point of view, it does not make sense to have several small teams scattered around the organization trying essentially to do the same thing; namely to do analytics. Instead pull the people together, let them build on each other’s experience and competencies, save money and efficiency by having one big analytics department instead of one in HR, marketing, IT, business units and where else they may be.
  5. Credibility issues. If HR has not been using data well in the past but instead has created and submitted poor business plans made more by gut feel than by use of good data, and if HR has produced endless of meaningless data reports on absenteeism, employees turnover, sick-days and percentage of women in workforce with questionable data quality, and if HR generally argues by what feels right rather than what is right, then the quality of the analytics work will be called into question just simply because it comes from HR.  HR does not have the credibility to work and argue with data. It may require someone from finance or business intelligence to produce and conclude the HR analytics for it to be taken serious.

If you take this perspective where should you then place the HR Analytics people? One approach would be to create a central business intelligence unit where all the company’s analytics will take place. Another approach is to create one or more center of excellence so much of the BI capability can be decentralized to the business units. And there are many other ways.

But maybe HR Analytics should not be placed in HR.

11/11/2014 at 09:23 11 comments

Wrong assumptions lead to bad decisions

Human Capital is the ‘hard’ side of Human Resources. It is about making strategic decisions, measuring the impact and basing decisions upon ‘objective’ and measureable data. One of the most important things for a Human Capital Manager is therefore to get quality data. Without that you cannot make good decisions.

Daryl Morey writes on HBR’s blog that ‘Success Comes From Better Data, Not Better Analysis’. He argues that the right data is more important that hiring good analysts, who can interpret this data. He writes “Raw numbers, not the people and programs that attempt to make sense of them. Many organizations have spent the last few years hiring top analysts based on the belief that they create differentiation….But…real advantage comes from unique data that no one else has”.

I only partly agree with Daryl. It is definitely true that most HR managers are basing their decisions on poor and questionable data and even more questionable reasons for using that data. Poorly formulated satisfaction surveys are often the only data upon which expensive programs are initiated. Most HR departments, which I speak with, will benefit greatly from having better data.

On the other hand I believe that some of the underlying assumptions on which many HR managers base their decisions are also poor.  That many mistake correlations with causality and therefore don’t understand what drives what. The connection between Job Satisfaction and Productivity is a case in point. Better data will not help you with that. You will just have better data to make the same mistakes. The shift to Human Capital Management should also be about questioning some of the underlying assumptions in Human Resource Management.

Human Capital Management is about making better HR based upon strategic and measurable initiatives. This requires much more data of significant higher quality AND to challenge existing underlying assumptions behind how they should be interpreted.

11/08/2011 at 18:59 Leave a comment


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