The arrival of big data
Over two quintillion bytes of data are created every day and around 90% of that now in existence was created in the past two years. ‘Big data’ has arrived.
While the word ‘big’ often refers to volume when used in this context, it is also used to describe the variety of data, the speed with which it changes and the value it can bring.
Big data can help you identify trends to inform and drive business change through enhanced reporting, predictive analysis and workforce management.
But a recent study, by research and advisory firm Bersin by Deloitte, found that 4% of companies are now able to perform predictive analytics about their manpower. Meanwhile, professional services giant KPMG suggests that only 15% of business leaders believe HR is providing insightful analytics.
The ability to provide these metrics helps you make decisions about your organisation’s future. So what role does HR have to play in harnessing big data and how can you use it to drive strategy?
Big data as a concept
Although big data is not a new concept, Anthony Bruce – a partner at PwC – says he has observed an increase in the appetite for insight and sources of data, as well as a dramatic evolution in how it is displayed.
“Historical trend data can help predict the flight risk of high performers and the key points at which they might leave,” he says. “So you can approach these highly valued employees and manage that risk more effectively.”
Bruce has observed a desire among HR professionals to combine structured data – for example, from ERP and payroll – and unstructured data such as social media, Software as a Service and surveys.
A need for greater insight
The results of research by the CIPD suggest that ‘big picture challenges’ are high on HR leaders’ agendas, with 55% naming it as a priority to demonstrate their contribution to the business.
However, chief executive Peter Cheese points out that there are concerns over HR’s lack of analytical capability and the ability of systems to provide data that is consistent and non-fragmented. He argues that these complications make it difficult to provide confident and timely insights.
“We know many HR professionals are working towards becoming more evidence based and data-driven, but there’s still some way to go,” says Cheese.
Reluctance of HR?
Laurence Collins, director of HR transformation and analytics at Deloitte, believes that a ‘severe shortage’ of understanding, strategic thinking and investment from HR prevents it delivering on its ambition around big data.
“How can you accelerate your analytic capability to really influence [results] in the areas of talent, performance and engagement?” he asks, adding that HR needs to move its thinking beyond reporting and metrics. For him, this is the ‘level of comfort zone’ that many HR functions still operate in, often resulting in ‘meaningless reports’ which add little value.
The problem, says Collins, is that rear-view metrics seldom excite the C-suite, who want answers to profound talent questions and workforce challenges impacting business performance and overall success.
A mindset shift
Collins believes that HR needs to change its mindset, yet points out that the only way to do this is by experimenting with more advanced and insightful analytics.
Linking your talent question to a commercial outcome is critical. “The only way to secure support for accelerating analytics into a more sustainable and scalable capability is to show executives the money associated with workforce analytic insight and position HR as a trusted partner in strategic dialogue,” he adds.
Bruce agrees. “We no longer need to apply a ‘one size fits all’ HR solution. Organisations can pinpoint direct interventions to address real business challenges, but this takes a new way of thinking, acting and courage.”
Big data will be a market-changer in the HR space over the next five years, he believes, adding that we are in a ‘hype curve’ – with more speculation than action. “The cleansing, analytics and reporting skills required are not commonly found among traditional HR professionals, so companies will have to find and develop people with these capabilities,” he comments.
Start building talent pools
Cheese argues there’s also a need for HR to work with other functions. “Finance, IT and marketing can help to provide deeper skills that will complement your understanding and judgement of the real people issues,” he says.
“The most forward-thinking organisations are building talent pools within HR or shared with other functions, often initially from one analytical lead, which helps to share generalist analyst skills in the rest of the HR team,” adds Cheese.
Instead of seeing data and analytics as challenging and threatening, Cheese suggests embracing it as ‘an enabler for significant change’.
THE BIG IDEA
The problem: The amount of data and the way we can access it has grown exponentially in recent years. HR is tasked with delivering solid metrics to justify return on investment when it comes to people, but a typical issue is capability.
Making it happen: HR has reached a tipping point with its ability to boost value from data and workforce planning. But HR must link people data with people-related cost. This allows HR and finance to partner in driving consistency throughout the organisation.
Leading change: HR needs to put forward convincing arguments for change, based on analysis of the business and people, using data to generate insight and predictions. By doing so, you will be seen as a partner in driving commercial success.
Developing metrics
And change is happening. Of the organisations surveyed in Towers Watson’s 2013 HR Service Delivery and Technology Survey, a quarter said they have built or invested in an HR analytics function in the past 18 months.
According to the company’s HR service delivery and technology practice leader Tim Richard, you must “get your HR data house in order” before thinking about how to use analytics to help you become more strategic.
“Understand the current state of your HR data and what needs to be done to set it up for the future. Understand where you can get data outside of HR to help answer business questions,” he advises.
Richard believes that you must follow this by identifying your organisation’s HR data needs and search for technology that can deliver. “Leaders are now demanding 24-hour access to data on mobile devices. The ability to access, transform and combine complex data to answer a simple question is critical to the success of analytics,” he explains.
“You must also be able to provide targeted analytics to the business on a frequent basis,” he adds. “Ensure this is in a digestible format and focused on enabling them to execute on their talent and workforce imperatives.”
Bringing data to the fore
Looking ahead, Cheese expects the HR dashboard to become a central part of the boardroom debate. “The challenges of business culture, people risk and capability development are high on the business agenda and will remain so. Get to grips with your people data and communicate it in the language of the rest of the business,” he suggests.
Cheese also highlights a need for more consistency in the definition of terms (such as headcount) and in the core people or human capital metrics that he believes we should all be developing.
To address this, the CIPD is working with CIMA, CMI, UKCES and others on a programme called Valuing your Talent. The aim is to share these practices and build a common framework and exemplars of good people and organisational metrics.
Looking ahead
For Collins, developing analytic capability in your HR team means you will steal a competitive march on others. You’ll get ahead in terms of integration with HR operating models and overall business performance, and in developing the inherent skills, confidence and trust with the rest of the business.
In turn, Collins believes this will allow you to develop even more sophisticated areas of insight application. At the other end of the scale, hesitant organisations will have to make a bigger investment to catch up, he says.
“The capabilities to perform in an advanced HR analytic environment must be acquired or bought in if you are to make headway in this rapidly moving area of HR,” adds Collins. The question is: are you ready?
Anthony Bruce
partner, PwC
Anthony leads Saratoga, PwCs measurement, benchmarking and analytics business.
Peter Cheese
chief executive, CIPD
In 30 years at Accenture, Peter became global managing director, leading talent and organisation performance consulting.
Laurence Collins
director – HR advisory, Deloitte
In a career spanning consulting, outsourcing and technology roles, Laurence has focused on serving the transformation requirements of HR.
Tim Richard
head – HR service delivery & technology EMEA, Towers Watson
Tim has 25 years’ experience in global HR systems integration and project management.