Starting Small with HR Analytics in a Big Data World
by Dr. Salvatore Falletta
Few topics in recent years have garnered as much attention as the topic of HR analytics. Several notable thought–leaders (e.g.,John Boudreau, Tom Davenport, Jack Fitz-enz) are calling for the HR profession to adopt a predictive analytics approach to understanding and managing people in the workplace, and a number of Fortune 100 firms have been leading the way such as Google, IBM, and Intel to name a few.
All of these high-performing companies, however, have a dedicated function with a cadre of highly skilled HR researchers, analysts, data scientists, and Ph.D. educated psychologists on staff. Most companies, particularly small-to-mid market firms, do not have the time or resources to establish robust HR analytics capabilities—whether descriptive, predictive, or prescriptive. So, business executives and HR leaders at small-to-midsize companies often ask me for some practical advice on how to get started.
In a recent People and Strategy article, I introduced the HR Intelligence Cycle to help organizations begin their HR analytics journey. The following seven steps are presented with small-to-midsize companies in mind.
Step 1: Determine Stakeholder Requirements
Regardless of the size and complexity of your company, we all know that partnering with key stakeholders is vital to the overall success of any HR initiative. This is about establishing and cultivating a partnership and becoming a legitimate player by adding value to the business. In terms of HR analytics, an ongoing partnership with key stakeholders is essential to obtain an accurate picture of the most pressing business problems and to identify their general data requirements.
Step 2: Define HR Research & Analytics Agenda
Once stakeholder requirements are obtained, it’s time to define the short-term and long-term HR research and analytics agenda. Short-term and long-term requirements can be both strategic and tactical in nature. For example, a short-term project can yield strategic results (e.g., market adjustments to employee salaries that could potentially have strategic and long-term implications).
Once a draft HR research and analytics agenda is developed, share it with your key stakeholders and go through an iterative process of refinement. However, do not let stakeholder’s hijack the entire HR research and analytics agenda. Our research suggests that approximately 60% of the agenda should be stakeholder driven and the HR function should determine the remaining 40%.
Step 3: Identifying Data Sources
Data sources may be either public or private. Public data resides in university libraries, knowledge repositories, and governmental databases (e.g., U.S. Department of Labor Statistics, SHRM Foundation). Examples of private data include the company's internal employee data that resides in yourHRIS, external benchmarking data from "best-in-class” companies, and research reports by credible membership-based consortia (e.g., Organizational Intelligence Institute, CEB, The Conference Board, and the i4CP) as well as academic think tanks (e.g., Cornell’s Center for Advanced Human Resource Studies, University of Southern California’s Center for Effective Organizations). All of which are excellent sources for private data and information.
Note for Small-to-Midsize Companies
Virtually all of the organizations mentioned above require an annual membership fee. So if you have limited fiscal resources, look for complimentary research reports Organizational Intelligence Institute and the SHRM Foundation) and credible sources of data in the public domain.
Step 4: Gather Data
This step of involves the actual collection of data through primary research, secondary research, or mining your HRIS. Primary research is new or original research and analytics activities (e.g., annual employee survey, 360-degree feedback for leadership development, employee exit survey). Secondary research is data and information available through existing sources, as described in Step 3 or mining and modeling employee data from your HRIS.
Our research indicates that leading companies are indeed performing a wide range of HR research and analytics practices that extend beyond simple HR metrics and indictors. However, as small-to-midsize companies, you may not have the time and resources needed to implement everything.
Note for Small-to-Midsize Companies
Consider implementing the following as a starting point:
- Track key HR metrics quarterly
- Segment and track your high performers and high-potential talent in your HRIS
- Conduct an employee/organizational survey (leading indicator)
- Conduct an employee exit survey (lagging indicator)
- Administer 360-degree feedback assessments for the purposes of developing your leaders and managers
- Conduct HR benchmarking with other small-to-midsize companies in your industry
Step 5: Transform Data (Meta-Analysis)
A meta-analysis is simply an analysis of an analysis and can be conducted across several data sources. For example, to what extent are the results from your individual 360-degree feedback assessments consistent with your employee survey data, exit survey data, or actual turnover? Are high-potential, emerging leaders leaving the company for the same reasons (e.g., little to no advancement and promotion opportunities, lack of decision rights, low base pay relative to the market) year after year? Performing a meta-analysis across several data sources enables you to glean critical insights for smarter workforce decisions.
Step 6: Communicate Intelligence Results
The sixth step of the HR intelligence cycle involves communicating intelligence results. This goes beyond traditional HR research and analytics reporting processes and presentations, which can be characterized as the “proverbial data dump,” as it involves strategic insights and interpretations by you—the HR professional. It’s important to place more effort and emphasis on telling a story about the data in relation to your organizational culture and business challenges.
Step 7: Enable Strategy & Decision-Making
The final step of the HR intelligence cycle is about enabling strategy and decision-making in your organization. HR analytics arms you with pertinent knowledge and insight to help make smarter workforce decisions.
The business case is clear for all companies to jump into the HR analytics game fast regardless of the size of your workforce and annual revenue. Start small, build on your successes, and develop robust HR analytics capabilities overtime.