Demystifying HR analytics – it’s not what you think

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In a three-part series, Jonathan Ferrar – Founder & Managing Director of Ochre Rock – explores the discipline of workforce analytics. The substance of the articles is derived from The Power of People: Learn How Successful Organizations Use Workforce Analytics To Improve Performance, co-authored by Nigel Guenole, Jonathan Ferrar and Sheri Feinzig (Pearson FT Press, May 2017). The series will offer insight to HR professionals on the skills needed in a workforce analytics leader, how to demystify analytics and data storytelling.​

Perhaps the biggest misdirection or mystery surrounding HR analytics is what it is, and what it is not.

HR analytics is not a discipline that is only focused on the functions, challenges and required solutions for HR itself. Also, it is not just complicated statistics and mathematics that nobody understands unless they have a PhD.

What it is, is a discipline made up of experts, technology and processes that drive a better understanding of the workforce. It informs decision making to help improve business performance through people.

Simply put, HR analytics is not about HR and it is not about analytics. It is about the business.

The name defined

Though perhaps more common in terminology today – in the sense that many people have heard of it – HR analytics still falls under that umbrella of ‘too complex’ or ‘too confusing’ for many people. Instead of really taking a look at what it is and what it can do, the concept therefore is simply passed over.

In the strictest sense, HR analytics is defined by techopedia as: “an area in the field of analytics that refers to applying analytic processes to the human resource department of an organization in the hope of improving employee performance and therefore getting a better return on investment.”

And sure, that sounds precisely confusing and complex. At its heart, however, HR analytics is powerful when applied to the problems of a business. In short, it could be the best business tool at your disposal.

Some may refer to it as people analytics. I prefer the term workforce analytics. Whatever it is called, analytics driven by the HR function can be immensely powerful to drive revenue growth, productivity improvements and individual engagement to the vision, mission and objectives of your business.

A hidden mainstream tool

Many of those who shy away from or profess to being baffled by the idea of analytics are already using the tool in their everyday lives; they just don’t know it.

Consider Netflix or platforms like Apple TV, which will make recommendations to users based on what they’ve watched previously and other shows that may be similar.

Or how about the smartphone app that picks up on your usual routine of heading to the gym after work that recommends a different route home because of construction taking place? How about the recommendation you are sent for places to stay in London or discounted flights because an app has tied into your schedule and recognised a planned upcoming trip to the city? These are all achieved through data and analytics.

While in life it may be about the journey, rather than the destination, when it comes to analytics, it is all about the destination.

The important thing to recognise is that the focus of the user in these scenarios is not on the analytics itself, but on the end result – the film being purchased, the route taken, the hotel you stay in.

From a consumer perspective it is about making the life of the consumer – you or I – easier.

No one is talking about the behind the scenes effort; the data and analytics, and incredibly powerful technology that makes this all happen. No one is talking about the mathematics or the algorithms that drive the recommendations that are providing the information.

No. All of the statistics, the experts, the processes and technology are all left in the background. The consumer experiences only the outcome and the presentation (the app) of the outcome.

And this should be true of HR analytics too. Focus on the employee. The worker. The business. Focus on the outcome to make employees and workers more engaged, more productive and better informed. Then help the business leaders and managers deliver value.

As Salvador Malo, Head of Global Workforce Analytics at Ericcson, explains in The Power of People, “Yes, it’s important to have good process, systems and data, but what’s important is what you do with these things to answer the business questions. Make sure people understand this. Always.”

This is the true value of analytics. While in life it may be about the journey, rather than the destination, when it comes to analytics, it is all about the destination.

Because without a destination, the analytics becomes confusing, complex, unnecessary and unimportant. And this is when people don’t understand it.

The value for business

Just as service providers and app developers have taken hold of the power of analytics to drive traffic to their websites and apps, so too can business owners use analytics to support their efforts.

Let’s say you want to enter new markets, are focused on growing revenue or increased customer share and a key need will be retaining staff with specific skillsets, or recruiting new people who have the talents you’ll need moving forward.

It is for these reasons that HR analytics has a reason to exist and will drive you to the destination you desire.

Or perhaps your focus is on reducing costs to make the business more competitive. Here, people analytics might focus more on productivity and cost management.

Or perhaps your focus is better win rates for sales, faster time to delivery, improved supply chain or improved innovation. Whatever else you may identify as a problem, a goal, that is the starting point, analytics provides the insights to help inform the future decision.

You determine the destination and analytics will help get you there, but you don’t need to be along for the ride.

The mind block

There are two factors that put up blockages when it comes to HR analytics. The first is the fear of the unknown, of what we don’t understand.

Yes, analytics involves a bit of research, some technology, and, yes, mathematics and statistics. But there are experts in the field who are skilled in and specialise in handling this.

The business executive or HR manager doesn’t need to understand the complex variables, they need only understand that they have a problem and want to find a solution that looks beyond what they have tried, and possibly failed with, in the past.

Don’t fear the mathematics or the technology; don’t worry that the results will be too complex.
 

The other blockage can result from the analytics experts themselves.

These are the professionals who feel the need to share the details of how they have derived their answers; the details of the process.

This is not in any way necessary or required for all audiences in the business. Often, all that is required is the insight and recommendation that helps answer the original business question.

And this is true of HR analytics too. For example, the business executive, HR business partner, or manager wants to know whether to hire or not hire a person. They want to know whether to place a retention package to save a person who resigns. Or better still, reduce the risk of the person resigning in the first place.

They don’t need to know the statistics behind the recommendation – they just want the recommendation.

Finally, the creative side

It is important, for business owners and HR professionals, as well as people analytics experts, to understand the creative potential of data. Beyond the numbers, analytics offers an opportunity to tell a story visually, to share infographics and pictographs that represent a concise narrative of both a problem and a solution.

The old saying goes that a picture is worth a thousand words.

Just as analytics is about solving problems through the use of a creative process and tool, so too can the presentation of the results offer a creative way to help others understand the results and the vision moving forward in a way that is concise and right there in front of you.

The Eight Step Model for Purposeful Analytics

In the book I recently co-authored with Nigel Guenole and Sheri Feinzig (The Power of People), we outline the Eight Step Model for Purposeful Analytics (see figure below).

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This model helps analytics and business/HR professionals alike bring clarity from analytics. I recommend that the non-analytical person should focus on Steps 1, 2, 7 & 8.

  • Step 1 – Frame Business Questions: Understand the ‘why’ behind the analytics

  • Step 2 – Build Hypotheses: Focus on the ‘beliefs’ behind the ‘why’

  • Step 7 – Get Your Point Across: Tell the story of the analytics in simple plain language with strong captivating visual aids

  • Step 8 – Implement & Evaluate: Make the business actually do something based on the analytics

Leave steps 3-6 to the analysts. These are the deep, hard, complex and highly skilled steps that they will focus on. But if HR professionals – and their stakeholders – don’t focus on the first two and last two steps, HR analytics will always remain confusing and complex.

Focus on understanding the business first and foremost. Don’t fear the mathematics or the technology; don’t worry that the results will be too complex.

HR Analytics, if done correctly, is a discipline that simplifies and informs decision making to improve your business performance.

Additional Note

Several elements of this article were reproduced from The Power of People: Learn How Successful Organizations Use Workforce Analytics to Improve Performance. Guenole, Nigel; Ferrar, Jonathan and Feinzig, Sheri. Pearson FT Press, May 2017.

About Jonathan Ferrar

Jonathan Ferrar

Jonathan Ferrar is a respected consultant, speaker, author and business advisor in Human Resources, strategy and analytics. He advises clients on how to establish strategies and plans that will improve business performance through the power of people. 

He has considerable global experience in Human Resources, People Analytics, Strategy & Transformation and Product Management.

Jonathan was listed as one of the global Top HR Analytics Influencers on LinkedIn in 2014, one of the People Analytics Experts to Follow in 2016 by Jibe, and one of the Top 20 Experts in People Analytics in 2017 by Sage People. Before he started his own consultancy business (Ochre Rock Limited), Jonathan worked for more than 25 years in corporate business in both the United Kingdom and the United States.

He holds degrees from the University of Cambridge and a postgraduate diploma from Kingston Business School. He is a Chartered Fellow of the Chartered Institute of Personnel and Development (Chartered FCIPD). 

He is the Co-Author of the book, The Power of People: Learn How Successful Organizations Use Workforce Analytics to Improve Business Performance (Pearson FT Press, May 2017)

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