What constitutes best practice in people analytics?

I’m often asked what constitutes best practice in people analytics and what is the secret sauce that enables some companies to be more successful than others in this field.

With a recent study by SHRM finding that 79% of organisations with 10,000 employees or more already having data analysis roles in HR, interest in people analytics continues to rise.

Adoption levels have not risen at the same trajectory, although venerable industry analysts such as Josh Bersin have predicted that 2017 may well be the year that people analytics goes into orbit.

“In 2017 we will see analytics move from a niche group in HR to an important operational business function”

Josh Bersin, Predictions for 2017, Bersin by Deloitte

Many organisations I speak to though are still struggling to get their people analytics program off the ground - hence being asked the aforementioned questions. I am privileged to speak on a regular basis with companies and practitioners who have had contrasting fortunes with people analytics to date. I have identified a number of common characteristics – or ingredients to the secret sauce – that those who have been successful share. Whilst undoubtedly not an exhaustive list, sixteen best practices are illustrated in Figure 1 below and described thereafter:

#1 THEY FOCUS ON THE BUSINESS

First and foremost, successful people analytics teams focus on projects that actually matter to the business. Don’t waste time developing a model to predict attrition if it isn’t a problem for your company. Learn the business, find out what matters to your CEO and senior leaders. If you focus your efforts on where your firm makes money then people analytics projects will quickly pay for themselves and your star within the organisation will rise.

#2 THEY HAVE A CHRO WHO IS FULLY INVOLVED

Without CHRO and senior executive involvement your people analytics adventure is probably doomed from the start. Successful organisations not only have a CHRO who sponsors the people analytics program but possess one who is also heavily involved in the work and who thrives on the insights and business outcomes it enables. The CHRO should have a unique understanding of the key challenges facing the business, the seniority to enable access to the right business leaders and crucially the influence to ensure that the insights (which are invariably counterintuitive and therefore contentious) are implemented. Luk Smeyers has written that people analytics simply has to report to the CHRO and act as their right-hand intelligence officer. I have to concur.

#3 THEY HAVE AN INSPIRATIONAL LEADER

Given the relative immaturity of people analytics in most organisations and common misconceptions amongst many CHROs as to what the discipline actually entails, the role of the Head of People Analytics is of paramount importance. It is likely that s/he will possess a number of the skills and capabilities required to do the work (see #4). Ideally they will have business as well as HR experience, be able to develop a winning strategy, build organisational capability, manage stakeholders across the business and have the political astuteness required to drive actionable insights into business outcomes. I have yet to come across an organisation that has successfully implemented people analytics that doesn’t have an inspirational leader. Coupled with a fully involved CHRO they can together create an unstoppable force.

#4 THEY POSSESS A BALANCED SET OF SKILLS AND CAPABILITIES

One reason many organisations have found it difficult to successfully adopt people analytics is the disparate skills and capabilities required to do the work (see more here). Many of these skills have not traditionally resided in HR and some organisations have made the mistake of asking their HR MIS and Reporting employees to take on analytics too, which as one people analytics leader described to me as like asking a nurse to do the job of a doctor. Figure 2 below, which is based on a model created by Morten Kamp Andersen (see article here), provides an illustration of the skills and capabilities required and what is likely to happen if just one of those skills is missing. In this adaptation I’ve added Change Management skills (to enable insights to be implemented successfully into outcomes) and would also couple consulting together under business acumen. The leading people analytics teams are able to act as consultants to properly define business problems, develop hypotheses, problem solve and project manage. This not only ensures that the team works on the ‘right’ projects but also that these projects are properly defined.  

Figure 2: The seven competencies of a world-class People Analytics team (adapted and based on a model created by Morten Kamp Andersen)

#5 THEY LEVERAGE RESOURCES FROM OUTSIDE HR (AND THE COMPANY, IF NEEDS BE)

One way to accelerate progress is to leverage (beg, borrow or steal if necessary!) resources from outside HR. Other analytics teams in the organisation will likely be more established so i) will have the skills to help plug some of the gaps in your team, ii) experience in navigating the business to turn insights into outcomes, and; iii) possess the business data you will need to gain insights into the business problems you are trying to solve. Leading organisations know that analytics is a team sport (thanks to Alec Levenson for that gem - see here) and embrace the opportunity to work seamlessly with colleagues across the company to help solve the most pressing problems for the business. Likewise, be open to partnering with an external provider to accelerate progress – a great example here is the partnership between ABN AMRO and iNostix by Deloitte (see this interview with Patrick Coolen, Head of HR Analytics at ABN AMRO for more)

#6 THEY HAVE A CLEARLY DEFINED STRATEGY AND VISION

All the successful people analytics teams I’ve encountered not only focus on the challenges relevant to their business (see #1), but also develop a clearly defined strategy closely aligned to the business and people strategies. It is also important to set a vision as this not only creates an identity for the team but also communicates the aims and objectives of the function to the business. Some examples here include:

• “To support Chevron’s business strategies with better, faster workforce decisions informed by data” (Chevron),
• “Better faster business decisions enabled by credible data and insight for our business leaders” (Intuit),
• “All people decisions at Google are based on data and analytics” (Google), and simply;
• “#datadrivenHR” (Microsoft)

#7 THEY GET THE BASICS RIGHT

As Olly Britnell, Global Head of Workforce Analytics at Experian, advises (see here) whilst your data does not need to be perfect to do people analytics, it does need to be credible. If that means investing six months to clean and define data as well as implementing governance procedures to ensure future data cleanliness, then so be it. Other ‘basics’ to get right include: defining policies around privacy and data security across the jurisdictions your company operates and also (closely related to #6) have a prioritisation mechanism to ensure that the team works on the right projects. Figure 3 below show two examples from Chevron (left) and IBM (right). People analytics teams that don’t employ such an approach are at risk of working on the wrong projects and therefore reducing their impact.  

Figure 3: (L to R) Chevron's four-box grid for prioritising people analytics projects (Source: Chevron / Bersin by Deloitte); Analytics Project Categorisation Framework (Source: IBM Smarter Workforce Institute)

#8 THEY HAVE A METHODOLOGY FOCUSED ON PRODUCING ACTIONABLE INSIGHTS

Creating and honing a clear and repeatable methodology focused on producing actionable insights is a clear differentiator between those that are successful and those that struggle with people analytics. There is currently no standard methodology for people analytics. In their book ‘The Power of People’ (to be published in May 2017 - pre-order here), Jonathan Ferrar, Nigel Guenole and Sheri Feinzig interviewed 60 of the world’s leading practitioners, academics, consultants and analysts in the people analytics field. From this, they developed the eight-step methodology in Figure 4 below, which is the best I’ve come across to date and should provide the perfect basis for organisations looking to create and/or refine their own methodologies.

Figure 4: An eight-step model for purposeful analytics (Source: The Power of People - Sheri Feinzig, Nigel Guenole, Jonathan Ferrar, Pearson FT Press, to be published in May 2017 (Pre-order here)  

#9 THEY USE STORIES AND VISUALISATION TO COMPEL ACTION

You can create the best insights in the world, but if you don’t tell the story in a compelling way that resonates with your audience then it is highly likely that no action will be taken. That means all your hard work in collecting, cleaning and analysing data will be a waste of time. How utterly demoralising. Successful people analytics teams are adept at understanding what their audience needs to know, how they want them to feel and what they want them to do. Read more on storytelling here and watch the videos below from i) Prasad Setty, Vice-President of People Analytics and Compensation at Google and ii) Piyush Mathur and Doug Shagam of Nielsen’s People Analytics team on a project they undertook to identify the main causes of attrition at the firm, the actions that were taken and the subsequent outcomes.

“Workforce analytics is nothing without the revelation of insights and the effective communication of those insights to inspire action”

Jonathan Ferrar, “ The Role of Storytelling in Workforce Analytics”

#10 THEY KNOW ANALYTICS IS A LONG-TERM INVESTMENT

The potential benefits and ROI of people analytics can be huge. IBM (see Figure 5 below) estimates that its Proactive Retention program (which identifies patterns of attrition to highlight proactively which populations to invest in to mitigate attrition risk) has saved the company hundreds of millions of dollars since its inception. In a recent article (see here), Lorenzo Canlas, Head of Talent Analytics at LinkedIn, explained how the impact of the projects initiated by his team on operating margin is projected to be ten times the cost of his team in 2017. However, don’t expect to achieve these sorts of numbers in three to six months. People analytics initiatives require investment, time and the best practices described in this article. Don’t be afraid to start small providing the project will have enough business impact to show value and consequently gain momentum to grow and start a movement.

Figure 5: IBM People Analytics Case Study - Proactive Retention Program

#11 THEY PUT THE EMPLOYEE AT THE CENTRE

Employee trust (as articulated superbly by Andrew Marritt here) is one of the most important aspects of doing great people analytics. If your employees don’t trust what you will do with their data they won’t give it to you, or won’t provide relevant, truthful data. Not only does it affect the quality of data available, it also makes people analytics initiatives unsustainable in the long run. The best people analytics teams are fully aware of their legal and moral obligations in this area. Microsoft even has a lawyer as part of their people analytics team (see interview with Dawn Klinghoffer of Microsoft here) and ABN AMRO (see rule #5 here) do not initiate or share the results from a project without getting the go-ahead from legal and compliance. As people analytics continues to evolve (see #15) expect those organisations who put the employee at the centre of what they do to flourish. 

#12 THEY MAKE ANALYTICS PART OF THE DNA

Creating a successful people analytics practice is a challenge but if you are going to build something that is sustainable then you need to scale it across HR – enabling, enthusing and equipping HR business partners – and effectively make analytics a core component of HR. I have seen examples of leaders and companies who have achieved this such as Bart Voorn at Ahold Delhaize, Anthony Walter at Gap (see here), Patrick Coolen at ABN AMRO (see rule #7 here) and RJ Milnor at Chevron (see detailed Bersin by Deloitte Case Study here). In the last example, Chevron built organisational capability mainly through: i) launching a Community of Practice, which as of September 2016 comprised 300 members spread across 22 business units and 18 countries, and; ii) building a three-stage in-house analytics curriculum that serves to create a structured learning and development program in analytics. This multi-pronged approach has helped create a vast and virtual people analytics team and effectively changed the way HR and the business thinks.

#13 THEY COMMUNICATE THEIR SUCCESSES

People analytics is new (to most organisations) and everyone who works in or who aspires to work in the space has a mutual interest in the widespread adoption of the practice by business and HR. Communicating successes both internally (e.g. via internal communication platforms) and externally (e.g. via blogs and speaking at conferences) is a major element in increasing awareness and excitement levels about the potential benefits people analytics can bring. Networking externally provides the additional benefit of hearing and seeing at first hand the types of research peers and academia are doing. Where relevant to one’s own business this can help inspire future project ideas. The people analytics community is collaborative and shared learning is certainly one of the drivers pushing the practice forward.

#14 THEY SEEK TO CONTINUALLY LEARN AND ARE NOT AFRAID TO FAIL

The best people analytics practitioners I’ve met are highly intelligent, naturally curious and have an insatiable appetite to learn and broaden their horizons. They are not afraid to fail (occasionally!) and understand that not every research project will produce insights and not every insight will be actioned. They learn from their failures, refine their approach where necessary, remain resilient and continue to be focused on delivering actionable insights on issues that are the most important to the business. 

#15 THEY KEEP AN EYE ON THE FUTURE

The people analytics space is evolving rapidly in line with the fast-changing business and technology environments. Successful people analytics teams and leaders keep abreast of the opportunities these offer and adapt so that they can i) harness emerging data sources, ii) capitalise on technology that enables quicker and better data integration, analysis and visualisation, and; iii) underpin initiatives such as the consumerisation of HR, personalising the employee experience and democratising data. They are also cognisant of and actively participating in the debate that such trends have on areas like ethics, trust and privacy (see also #11). Look out for a future (pardon the pun) blog that will examine some of these emerging trends in more detail.

#16 THEY DON'T FORGET THE 'H' IN HR

At the end of the day we mustn’t forget that people analytics is about people and that the insights it offers enables the business to make more informed decisions and derive better outcomes for the business – and employees. Practitioners such as Patrick Coolen (see here) and Placid Jover (see here) remind us not to forget the human touch, and I concur that Data + Judgement = Problem-Solving. 

FINAL THOUGHTS

Don’t be put off thinking that all of these ingredients need to be in place to get started with people analytics – they don’t. However, if you look to incorporate as many of the best practices above as you grow, I’m confident that you will create a successful, and sustainable practice – and provide significant benefit to your business and employees to boot.

REFERENCES

Books:

• Sheri Feinzig, Nigel Guenole and Jonathan Ferrar – The Power of People (2017), Pearson FT Press
• Analytics in HR – The basic principles of People Analytics (2016)
• Alec Levenson – Strategic Analytics (2015)

White papers and articles:

IBM Smarter Workforce Institute - Starting the Workforce Analytics Journey (2015), Decoding Workforce Analytics (2016); Bersin by Deloitte – Predictions for 2017: Everything is becoming digital (2016); SHRM – Jobs of the Future, Data Analysis Skills (2016), Use of Workforce Analytics for Competitive Advantage (2016), Using Workforce Analytics for Competitive Advantage - Conference Write-up (2016); New Talent Management Network - Still Under Construction: The State of HR Analytics 2016 (2016); Tracey Smith - 13 People Analytics Ideas to get you Started (2016); Luk Smeyers – HR Analytics – You report to the CHRO (HRN Blog, 2015); Starting The People Analytics Journey With A Needs Analysis. Don’t Do It! (2015); Morten Kamp Andersen – Six must-have competencies in a world-class analytics team (2016); Olly Britnell – It’s time for HR Analytics to be bold with analytics (CIPD People Management blog, 2016); Madhura Chakrabarti, RJ Milnor - Scaling People Analytics Globally: Chevron Takes a Multipronged Approach to Build Organizationwide Analytics Capabilities (Part I) (2016, Bersin by Deloitte case study); Lorenzo Canlas – The ROI of Talent Analytics (2016); Anthony Walter - Guide: Identify and define your metrics (2016, re:Work with Google); Patrick Coolen – The 10 Golden Rules of HR Analytics – Crowd version (2016); The Human Factor in HR Analytics (2016); Paul McNamara and Placid Jover – HR Analytics, Fact, fad or the future (2016); Al Adamsen - The 10 Essentials of Generating Workforce Insight (2016); Evan Sinar & Rich Wellins - Gaps in Both Will and Skill Explain HR’s Struggles with Analytics (2016); Jonathan Ferrar - The role of storytelling in Workforce Analytics (2016); Greta Roberts - The beginner's guide to predictive workforce analytics (2016); Alec Levenson - Strategic Analytics is a Team Sport (2015); Dave Ulrich & Thomas Rasmussen - Learning from practice: how HR analytics avoids being a management fad (2015)

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ABOUT THE AUTHOR

David is a respected influencer, writer and speaker on people analytics and the future of work. He was recognised as Best Writer at the 2015 HR Tech Writers’ Awards, and was awarded one of ten LinkedIn Power Profiles for HR in January 2016. David’s role as Global Director, People Analytics Solutions at IBM enables him to help clients apply an analytical, insight led and business outcome focused approach to their talent strategies and people decisions. 

David is chairing, speaking and/or attending the following conferences in the first part of 2017. If you are going to one of these conferences and would like to meet up with David, please feel free to contact him via LinkedIn:

• HR Analytics, Metrics & Measurement for Strategic Decision Making(London, 24-26 January 2017) - Chair
• People Analytics & The Future of Work (San Francisco, February 2-3 2017) - Co-Chair
• HR Norge - HR Tech 2017 (Oslo, February 8 2017) - Speaker
• Personal & Chef (Stockholm, February 23 2017) - Speaker
• HR Tech World Spring (London, March 21-22 2017)
• Wharton People Analytics Conference (Philadelphia, March 30-31 2017)
• People Analytics World (London, 25-26 April 2017) - Co-Chair

Connect with David on LinkedIn, follow him on Twitter and read his blogs here on LinkedIn and also on HR Tech World and ERE.

Keywords: HR, Human Resources, HR Analytics, People Analytics, Talent, Recruiting, Hiring, Talent Acquisition, Talent Management, HR Metrics, Cost Per Hire, Workforce Analytics, Talent Analytics, Data Driven HR, Employee Engagement, Performance Management, Future of Work, Quality of Hire, Evidence based HR, HR Open Source, #HROS, Cognitive HR, Cognitive Computing, IBM, HR Technology, Flight Risk, Predictive Analytics,