Seeking out the evidence

Written by
Changeboard Team

10 Sep 2015

10 Sep 2015 • by Changeboard Team

HR professionals have an unprecedented opportunity to drive significant business value, and be seen to do so by the wider organisation. This is made possible by readily available technology, which can access and analyse data from many sources and really support decision-making that can drive business goals.

So why aren’t we there yet? The dilemma for HR is that we want to justify our seat at the table, to be seen to be value driving – and as more than a back-office function. But the way we have sought to engage with top-table discussions is often to unleash initiatives that have very little evidence behind them.

If we are to get to really understand where the competitive advantage is, then
we need to bring some evidence. But too few HR professionals bring it, and so
depend on what others are doing – benchmarks and best practice. But the truly
value-driving HR function is the one that you wouldn’t want to copy because
it’s uniquely configured.

Lack of confidence in HR?

Although more than half of our survey respondents (55%) remain sceptical about the potential of evidence-based HR to make a real difference to the HR function, the overwhelming majority of these sceptical executives (82%) plan to increase their use of big data and advanced analytics in the short term.

HR is currently suffering from a perception problem. Less than half of non-HR executives (49%) believe that HR leaders are able to demonstrate tangible correlations between people management initiatives and business outcomes.

However, there is hope that this can be overcome, as more broadly 85% of all respondents do agree that the HR function contributes strongly to enterprise goals.

When asked to identify the biggest obstacle to the use of evidence in people
management within their organisation, respondents pinpointed a number of issues, including corporate culture (32%), lack of skills/resources (30%) and inappropriate HR operating models (29%).

Framing great questions

Many organisations produce dashboards with KPIs. Indeed, some 73% of respondents in our survey agreed that their HR strategy is influenced by a variety of data sources across the organisation. However, they do not link root cause and effect in order to provide business leaders with actionable insights that can influence decisions supported by data. Evidence-based HR is about seeking to understand where you can drive value for your organisation.

No one in HR needs to be concerned about analytics. We are not seeking the HR profession to be statisticians. The most important skill for HR is to frame great questions.

Analytics is fundamentally built around hypotheses – once you have framed the hypothesis, you can go and get the data.

If HR is to contribute to a new way of delivery, it must address three critical success factors:

1. Get comfortable with data and analysis. This means going beyond tracking KPIs about HR activity and accessing different data sources (some of which will come from business operations) that, when analysed, can deliver predictive insight about the role of people in your business. To do this well, data scientists will be required to work within HR.

2. Develop greater knowledge of your industry and organisation. Apply an HR perspective to your own industry and to the specific needs of the company, its value chain and strategic direction. This means HR will need to know how
to frame the right questions (the hypotheses) that will direct and focus the analytics effort.

3. Reconfigure your HR function so HR and management work together within an operating model that promotes evidence-based people management. As much
thought should go into designing the components of the operating model that will allow for the use and consumption of the evidence as is given to the generation of the latter. These components include:

Information flows: who sees what, when and where?

Visualisation: how best to portray data, information and insights in an engaging way that leads to decisions?

Decision making: where, how frequently, and under what governance are things decided collaboratively? This will include decisions that are required or implied by predictive insights rather than the “rear-view mirror” as well as KPIs that describe what has happened.

Responsibilities and critical people management roles: who is accountable for what between managers, HR and senior leaders? What is the role of the HR business partner?

Capabilities: what skills are needed in HR and the business to enable and implement evidence-based decision making? How can you evaluate the best research from your organisation, combine with external management and social-science thinking and determine which research is pointing to something really important?

We’ve never had such a rich variety of data to help make decisions; with this approach, decisions can be made using robust evidence rather than intuition and best practice.

Spotlight on KPMG using evidence to change our people culture

Colm Coffey, people director, KPMG in the UK

To achieve our ambitions, KPMG requires the right people and they need to be engaged and motivated. Over 12 weeks last year, we analysed five years of people data, sought the views of 1,500 colleagues and did external research to understand how existing and potential colleagues viewed us. Several themes emerged – when KPMG was at its best, people felt inspired to do their best. Values and purpose were at the heart of everything and leaders were role models.

We were losing good people and had a costly performance management process that relied on forced distribution and ratings. It created an emotional disconnect between our people and the organisation we wanted to be. Feedback was used to bid for a rating rather than feed meaningful development. Pay, performance management and talent processes were time-consuming. People found it easier to move externally than within the firm.

So last September, we launched ‘Our Deal’ for KPMG staff – a strategy to create a rewarding colleague experience. We removed performance ratings and ensured honest conversations are at the heart of the way we manage/coach. We committed that all colleagues’ career aims are discussed twice a year. A career transition team was created to enable a smoother switch to industry if this is right for people.

Phase two introduced ‘people leaders’ to help us be more consistent in how we lead. We’ll use data and analytics to track a dashboard of people leader KPIs. The third phase saw the launch of The Academy in January, which offers experiences, communities and learning to new starters at KPMG.

These elements are the foundation of ‘Our Deal’ and underpin changes to our employee offer. As well as a benefits package, recognising when colleagues work hard and ensuring they’re rewarded for that has been key. We’ve introduced a ‘Leisure Bank’, where extra hours are ‘banked’ for additional time off, and everyone gets a day off on their birthday.