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Billy Beane is living proof that using analytics can yield winning results. In 2002, the Oakland A’s coach changed the face of baseball by selecting players based on rigorous statistical assessments of their performance. Using that approach, he led his team to record one of the longest winning streaks in major league history.
As it turns out, HR has its own analytics all-stars: data analysts. These professionals, who can operate as independent vendors or as part of an in-house HR team, use the vast store of information and computing power within organizations to answer many of the most important questions about their workplaces and their workforces.
For example, what part of a $5 million training program drives business results? Which words appear on the resumes of a company’s most successful employees? Which factors predict turnover? How should managers track the skills available within the organization to choose the right people for assignments? What’s the single best source of hire for technical recruits who out-perform their colleagues?
“The rise of HR analytics has seen so much interest, and it’s so critical because companies need to see the correlation between investments in the workforce and real business outcomes,” says Christa Degnan Manning, founder of Eudemonia, a market research firm in Boston.
At the same time, analytics is such a new part of the human resources function that the supply of people trained in both data science and HR cannot yet meet the demand. In other words, there’s not always a ready pool of applicants available to satisfy every leader’s desire for someone with the game-changing quantitative chops like the kind Beane found in the analyst he hired.
But that may be slowly changing. Recent HR graduates often leave school with some training in data analysis, says Brian Kelly, president and CEO of Vestrics, a Durham, N.C.-based HR data analytics software and services provider. In addition, more MBAs are entering the HR field, bringing their number-crunching skills with them.
Meanwhile, the demand for HR analysts is growing. According to a report by Deloitte, Global Human Capital Trends 2015, 35 percent of the companies it surveyed were actively developing data analysis capabilities within HR. But less than 9 percent said their organizations already had a strong team in place.
While adoption of HR analytics has been somewhat slow, the amount of available data is growing exponentially, thanks to business process automation and faster computing power. “We always wanted to know what drives people’s choices,” says Scott DeRue, associate dean of executive education at the University of Michigan’s Ross School of Business. “Now we have the opportunity to collect massive amounts of data to analyze that. What used to take a week now takes a day.”
Ironically, sometimes the metrics reveal the limitations of the very technology that enables such robust analysis. At Google, for example, analytics experts found that soft skills, which might include judgment, empathy and the ability to collaborate, were key components of manager effectiveness—not technological prowess. As a result, the company’s recruiting and development teams now focus on candidates’ competencies in those areas.
Data analysis will be an even larger part of HR in the future. To tackle complicated business challenges, HR departments will continue to dig into data to help understand the dynamics of human capital in ways that weren’t previously possible, says Katrina Pugh, director of Columbia University’s Information and Knowledge Strategy master’s program.
Building a Team
While consultants can help with data analysis, companies still need people within HR who are familiar with their organization’s particular needs and schooled in how to interpret research.
Many companies will look to develop analysts from internal staff members who are comfortable with technology and who have certain soft skills such as curiosity, collaboration and communication, Manning says. Colleagues from other departments can also be valuable assets. For example, marketing departments often have data experts who can be trained in HR.
In addition, external experts—including industrial and organizational psychologists or Ph.D. students studying organizational behavior—can be a fertile source of data analytics recruits.
Still, finding HR analysts can be tough because people were not able “to grow up in” the role, says John Dooney, manager of workforce analytics for the Society for Human Resource Management. That puts current analysts in high demand. Cezary Kuziemski, a former senior workforce analyst at NBCUniversal, used to get about four calls a week from recruiters looking to lure him away. In December, he accepted a position with another media and technology company.
The good news for HR practitioners is that, even though data science is increasingly important, an HR background and knowledge of company culture are also key. For instance, while data can indicate that engagement plummeted at a manufacturing plant, Manning says, it takes someone who understands the work environment to realize that the timing coincided with the end of a longtime perk such as free coffee.
The future of data analytics will evolve from simply reporting data to predicting actions and prescribing solutions, according to data scientists. For example, when DeRue worked as a consultant to a multinational company with varying levels of turnover, he was able to pinpoint the factors that predicted whether an IT person would leave the company and to identify what would make the person stay. Working on projects that the employees found interesting turned out to be a big motivator, so the company applied that insight to retain the employees most likely to move on. “Companies able to develop the capability to collect, analyze and act on ‘big data’ will be in an advantageous position,” DeRue says.
Science and Art
Analytics has a huge potential to increase return on investment when the numbers are tied to business outcomes and when predictions point to a range of possibilities that companies can plan for.
“It’s not ‘Trust me, I’ve been here for a while.’ It’s ‘This is causing this, and the downstream capabilities are huge,’ ” Kelly says.
Many experts believe that the future of HR departments will depend on having more staff comfortable with data. That said, it’s also critical for HR to remain attuned to the passions of people within the organization.
Losing HR’s human focus would be a shame, Pugh says: “You’d be making decisions without understanding what makes humans … want to come to work every day.”
By combining the disciplines of HR and data science, HR analysts are hitting home runs for their organizations.
Tamara Lytle is a freelance writer in the Washington, D.C., area.