By Freya Purnell
HR organisations have been slow in developing capabilities to take advantage of the potential of analytics, according to a new report from Deloitte, ‘Global Human Capital Trends 2015: Leading in the new world of work’, and should now make serious investments to leverage data.
According to the report, analytics is on the agenda of almost every HR team, with three in four respondents rating it as “important” or “very important”. However despite this interest, Deloitte’s research has only showed a small improvement in analytics capabilities over the last year.
Though 75 per cent of survey companies believe that using people analytics is “important”, just 8 per cent believe their organisation is “strong” in this area, almost exactly the same percentage as in 2014.
While this suggests that new vendor tools are making an impact on the market, HR teams need further context to succeed.
“We see people analytics as part of an accelerating trend – part of a new set of critical skills for HR, business and leadership. Companies that take the time and make the investment to build people analytics capabilities will likely outperform their competitors significantly in the coming years,” the report said.
Looking at specific areas of HR analytics, respondents rated their capabilities:
- On utilising HR and talent operational reporting and scorecards, 53 per cent of respondents said they were weak, 36 per cent adequate, and 9 per cent excellent;
- On conducting multi-year workforce planning, 59 per cent said they were weak, 33 per cent adequate, and 5 per cent excellent;
- On correlating HR data to business performance, 61 per cent said they were weak, 33 per cent adequate, and 5 per cent excellent; and
- On using HR data to predict workforce performance and improvement, 69 per cent said they were weak, 25 per cent adequate, and 4 per cent excellent.
There is clearly room for improvement in this area, but organisations face a range of challenges in achieving this.
“Organisations are still new to this discipline, and many suffer from poor data quality, lack of skills, and a weak business case for change. While people analytics programs can deliver a high ROI, HR leaders have difficulty building an integrated plan. More than 80 per cent of HR professionals score themselves low in their ability to analyse – a troubling fact in an increasingly data-driven field,” the report said.
It also takes time – with companies with leading capabilities in HR and people analytics having worked towards this for three years or more.
The report recommended some key areas where people analytics may be able to offer greatest value in talent management: understanding and predicting retention, boosting employee engagement, expanding sources of talent, improving the quality of hires, and profiling high performers in sales and customer service.
5 tips for getting started
For companies looking to begin building people analytics, Deloitte recommends:
- Build the right analytics team, and show the return on investment to the organisation.
- Start with the software and analytics tools you have.
- Partner with IT to tackle data quality issues.
- Focus on immediate business needs – beginning with a well-known problem can help to ‘sell’ the program to business leaders.
- Leverage embedded analytics by upgrading technology platforms – “because reducing turnover, improving sales productivity, and increasing the quality of hires all have a tremendously high ROI, analytics often represents a strong business case to justify modernising the HR infrastructure”, the report said.
Deloitte’s report, ‘Global Human Capital Trends 2015: Leading in the new world of work’, can be accessed at http://www2.deloitte.com/us/en/pages/human-capital/articles/introduction-human-capital-trends.html.