Using People Analytics to Improve Management, Business and HR Decisions

Oct 3, 2016
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Anthony Walter, Director, Workforce Analytics, Gap Inc.

Anthony WalterAnthony Walter leads Gap Inc.'s Workforce Analytics (WFA) team, which provides operational reporting, predictive and advanced analytics, and capability building opportunities for a broad range of customers across Gap Inc.'s 140,000+ employee population worldwide. The WFA team strives to build workforce intelligence and advises business partners on data collection and analytics methodologies to make data-informed people decisions. Prior to joining Gap Inc. in 2013, Anthony was a senior consultant at the global consultancy firm Booz Allen Hamilton.

Anyone who has been paying attention to HR literature over the past several years has seen growing interest in "people analytics" (also known as workforce analytics or HR/talent analytics). People analytics reflects the use of people-related data to improve and inform all types of management, business and HR decisions throughout the company.[i]

Despite the allure and buzz of "Big Data" in HR, very little has been done to make HR more data-driven and evidence-based. Deloitte's 2015 Global Human Capital Trends report contended that HR's drive for analytics was "stuck in neutral." In fact, 75% of companies surveyed for the report believed that using people analytics was important, but just 8% believed their organization was strong in this area.[ii] A 2015 SHRM study of its members found that only 32% use Big Data in HR.[iii]

Challenges

The challenges involved in implementing people analytics are not insurmountable – HR is in good company. These same challenges were confronted at one time by other business functions that today have more mature analytics capabilities (e.g., Finance, Marketing, Strategy). Based on my experience, the top three challenges for successfully building a people analytics capability include data management, lack of analytics expertise in HR and lack of data sources.

Data management 

Data management continues to be a barrier for executing people analytics, with the most cited issues being disaggregated data sources, lack of accurate data, inconsistencies in data governance and outdated information.[iv] Historically, HR systems were not designed with analytics in mind; they're clunky, disjointed and compliance-oriented. Luckily, there's been exponential growth in the HR technology space with companies that are focused on solving this challenge.[v]

Lack of analytics expertise in HR

One of the biggest challenges cited in recent surveys of HR professionals[vi] is the lack of analytics expertise needed to successfully implement people analytics. In business, analytics expertise isn't just the ability to perform statistically sound analysis, it's also the ability to ask the right questions, prioritize ever-competing demands with often tight budgets, and tell a clear and cohesive story with the data that drive action. At the end of the day, you can have the best data scientist, but if he or she can't communicate findings in a compelling way, you're simply doing analytics for analytics' sake. 

Lack of data sources

The last challenge frequently cited is a lack of data sources to make meaningful decisions or conduct thorough analyses. Often times, if analytics is not top of mind during a new technology implementation, historical data will not be archived and data are captured starting with the implementation of the new technology. This limits your ability to conduct trend analysis and could substantially inhibit any forecasting or demand planning using historical data. In addition, there are always silos of data that HR may not even be aware of—whether it is because system owners are protective of their data or because a proper technology/data environmental scan hasn't been executed.

Actions

With the top challenges in mind, many companies jump right to tackling data management issues. This often involves the "Hail Mary" approach of investing significant time and money into a technology solution—a solution heralded by the vendor as an answer to all your data management problems. In my experience, this is putting the cart before the horse.

Understand the questions you want to answer before you do anything

Without knowing what questions you're trying to answer, how can you begin to close your technology, process or skills gaps? Where do you focus your time? If you're continuing to build credibility with the business and have a tight budget, you need to be laser-focused in your investments. Do your leaders want to know the characteristics of a good hire? Do they want to know who's at risk of leaving the organization? Or who their potential successors are for critical roles?

At Gap Inc., we went through a prioritization exercise with our business partners, in which they identified their top 15 human capital questions that, if answered, would drive their business strategy.[vii] The results were a guiding light for our technology and people analytics strategy (often intertwined), as they allowed us to target key milestones in service of answering our businesses' most pressing questions about their people. This exercise also built credibility with our business partners because we were providing data directly aligned with their business strategy and not doing our analysis in a vacuum.

Find your analytics evangelists and build capability from the ground up

Once we had made the initial investments in cleaning up our data, we began to see the demand for people analytics grow significantly. At this point, there are generally two potential approaches organizations take: continue to build out a centralized people analytics center of expertise (COE) or decentralize capabilities and push out self-service options for your analytics customers. We decided to do a bit of a hybrid approach. While we maintained our people analytics COE, we also decentralized our analytics capabilities to build a foundation of knowledge across the HR community. 

This involved identifying "power users" of our analytics tool and working with them to build an internal people analytics learning curriculum that focused on the importance of data-driven HR practices, gave an overview of how to use our analytics platform and set the stage for a self-service model in which HR business partners could build their own reports to answer their most pressing questions. 

Several years ago we had eight to 10 users of our analytics tool; today, we have almost 300 users across our HR community and other business units. Granted, we don't have an army of data scientists, but we have built a baseline people analytics capability across our five brands and multiple business units that support a sustainable ecosystem of data-driven HR decisions.    

The Future

Work with the business to broaden your data sources

Once you've built a self-service people analytics capability in HR, you'll have more time to work on strategic projects—projects aimed at answering questions like "Do people practices drive customer experience or productivity?" Typically, the only way to get data around customer experience or productivity is to work with Finance or Strategy to marry their data with your people data.

At Gap Inc., we've worked with Finance and Strategy to identify people factors, such as management ratios, internal vs. external hiring practices and company tenure, that affect customer and financial outcomes. This strategic work continues, despite the fact that we have imperfect people data. The moral of this story: don't let perfect be the enemy of good. Working with non-HR teams to broaden your data sources can allow you to do more advanced analytics while building your foundational HR data.

Those organizations that don't overcome the challenges of building an analytics capability in HR will be at a significant disadvantage. HR as a function that relies on "gut feeling" is no longer sustainable to compete in a marketplace where data is more available, in real-time, across a variety of sources. When people are such a pivotal element of any business, reducing their attrition and increasing employee engagement are critical.[viii] 

Although HR has a history of focusing on people relationships first and data second, I'm hopeful that we're in a unique position to blend these two areas and create a capability that uses data to humanize the employee experience while driving business forward.

Endnotes 

[i] Deloitte University Press (2016). Global Human Capital Trends 2016. Retrieved from http://d27n205l7rookf.cloudfront.net/wp-content/uploads/2016/02/DUP_GlobalHumanCapitalTrends_2016_3.pdf

[ii] Ibid.

[iii] SHRM. (2015). Unpublished data.

[iv] PwC (2015). Trends in People Analytics. Retrieved from https://www.pwc.com/us/en/hr-management/publications/assets/pwc-trends-in-the-workforce-2015.pdf; Bersin, J. (2016). People Analytics Takes Off: Ten Things We've Learned. Retrieved from https://www.linkedin.com/pulse/people-analytics-takes-off-ten-things-weve-learned-josh-bersin

[v] Bersin, J. (2014, Nov 4). The People Analytics Market Heats Up With New Cloud Offerings. Forbes. Retrieved from http://www.forbes.com/sites/joshbersin/2014/11/04/the-talent-analytics-market-heats-up-with-new-cloud-offerings/#6f0d55878d03

[vi] SHRM. (2015). Unpublished data.

[vii] CEB Corporate Leadership Council. (2014). Gap Inc. Analytics Prioritization Principles.

[viii] Fecheyr-Lippens, B., Schaninger, B., & Tanner. K. (2015). Power to the New People Analytics. McKinsey Quarterly. Retrieved from http://www.mckinsey.com/business-functions/organization/our-insights/power-to-the-new-people-analytics

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