Successful human resource (HR) organizations use employee and job applicant data to help them make decisions and answer the questions that determine their success or failure, such as:
- Who will leave and when?
- How does our workforce stack up against those of our competitors?
- What capabilities and talents do we require to strengthen our business?
People analytics involves the exploration of this type of data to assist decision-makers with insights and answers and the demand for it has grown drastically in recent years. Now one of the most in-demand talents for HR professionals today, it rates as one of the essential human-capital trends for businesses. Top companies are now even bolstering their HR practices with Artificial Intelligence (AI) and relational analytics – the exploration of employee relationships and interactions with the organization.
Despite growing demand and adoption of these evolving practices, there are still many challenges to carry on a robust HR analytics function within most organizations; examining and addressing them is part of the path forward.
HR Transformation Hurdles
A human resource organization has purview over a massive amount of information about the people and processes of an enterprise. However, data is commonly fractured across many tools and pulling together high-level reports and dashboards from a fragmented data ecosystem to expose even a few key performance indicators (KPIs) is resource intensive. HR professionals typically have access to a few out-of-the-box reports from various systems, which in theory may help create a picture of where an organization stands and how it’s performing, but which in practice, quickly fall short, as their insights fail to align consistently across the various platforms. Exporting data from myriad systems and tying it together with Excel is another strategy organizations often pursue, but find they lack the capacity to devote to these cumbersome manual activities.
Grappling with other HR challenges can also impact the advancement of the people analytics function.
- Perhaps the most obvious difficulty is the “war for talent”, or the ongoing high demand for the best and brightest, which organizations can struggle to attract and keep their top employees as a result. Strong leaders are essential as well, but can also be hard to find inside and outside companies. Therefore, retaining future leaders is a crucial challenge.
- Employee engagement surveys and exit interviews often indicate discontent with compensation. This makes it critical for employers to develop creative ways to motivate and retain their best employees.
- Complex HR regulations and guidelines that often vary by country can quickly become compliance issues when people data is at risk of being exposed.
Further, regardless of how much data an organization has and how many systems it comes from, tools such as good ol’ Excel can only take an analyst so far. At best, organizations focus on the attributes of individuals rather than on their relationships with other employees. Attributes can translate into aggregate data simply enough to be manipulated manually. But this, too, will take an HR leader only so far – not to mention this manual Excel patchwork takes an organization farther away from any digital transformation strategy at the function or enterprise-wide levels. As digital transformation becomes necessary for enterprise survival, what HR leaders really need is relational analytics. Why? Well, for example, they can systematically and consistently predict whether an employee, a team, or a whole business will meet a performance target. Now we’re talking!
As top companies begin to employ relational analytics to supplement their decision criteria, they’re creating healthier, happier, and ultimately, more successful workplaces. It is important to note that relational analytics requires a strong consideration of data privacy, organizations must be transparent with their workforce on any passive data collection activities.
Struggling with Disparate Systems
Commonly, HR professionals are still working with disparate systems to serve their employees and future talent: Think of the payroll system not talking to the employee benefits system, and neither are connected to the company’s human resources information system (HRIS). In the ever-changing tech landscape of online tools, apps, and wholesale HR management platforms, a whole host of decisions can lead to a whole host of splintered systems. Ideally, one system would rule them all and contain everything you need. This may have been the promise pitched to your management or leaders on the same platform you use today, but it has fallen short of that great promise.
A great many factors drive an organization into splintered systems. HR operations change over time, as do the expectations from those served by the HR practitioners. Was your HRIS system ready for the sudden and prolonged demand for remote work brought on by a global pandemic? If not, perhaps you were left scrambling to spin up even more cloud-hosted applications. Now, you have data everywhere: in an enterprise database (an enterprise resource planning platform or ERP), in cloud-hosted tools meant to manage timekeeping or benefits, document storage, or evaluations, and so on. There may even be critical data tracked only in spreadsheets.
Here you are faced with reporting out of each of these systems. The data from each of these systems may come at you in an endless potpourri of formats. You could try bringing all these into Excel or, even better, a data visualization tool like Power BI or Tableau, but you have no idea what a JSON file is or how to make it work with your CSV files.
What if you could automate the data collection process? What if, once the data were collected, it could all be seamlessly related with confidence, regardless of format? One repository where all those various formats could live, side by side, but also interact with each other. Your employee lists from your ERP would be brought onto the same report as data from talent acquisition and employee reviews. You may have KPIs which require inputs from various sources. If it were collected in a common repository, the creation of your key metrics could be greatly simplified. What’s more, data quality issues could be flagged for notification to the proper individual to address the issue in the source system.
This is where a modern business intelligence solution can pay high dividends. Not only is the data collected and cleansed in one accessible location, but it is done so using some of the same cloud-based technology responsible for fragmenting that data. In fact, such a solution is a critical launching point to a comprehensive HR analytics practice.
Enter, Modern People Analytics
Utilizing Microsoft Azure services together with Microsoft’s industry-leading Power BI platform can ensure that your HR data are secure, streamlined, and universally available. From this one modern data warehouse, you’ll be able to find, monitor, and track critical measurements such as:
- Headcount and full-time equivalent (FTE) values
- Time to hire
- Recruiter performance
- Employee retention
- Evaluation scores
From that same source, you will also serve ad-hoc information requests by both internal and outside entities, like government oversight and union leadership. This can all be done through Azure resources without the need for significant capital expenditure.
One Source of the Truth: Exploring Benefits and Addressing Hazards
Here is a significant win for any HR organization: one source of truth. On the other hand, there can be significant risk in pulling data exports into Excel to build reports or expose personal data.
Think about it:
- Is the export query correct?
- Does it include the correct filters?
- Storing personally identifiable information (PII) in a local spreadsheet just to be used as the source for a report poses a considerable security risk.
- Multiple points of failure.
What transformative logic are you applying in your data preparation steps? Are those steps consistent with what others might be doing in their reports? These same risks exist even if data is being pulled from each source straight into a visualization tool like Power BI or Tableau.
So, here’s another thought: stop recreating the wheel! Building out an HR enterprise data warehouse (EDW) can take away the burden of all other data collection and cleaning activities. At 3Cloud, we have seen many HR departments who have built mountains of reports this way. We have helped untangle the web of reports and work directly with the HR team to build the trusted, one-stop-shop, single source of truth.
Much of the reporting that HR requires is in response to ad-hoc requests. It can be challenging to predict the content and format of these requests. A reporting system should be flexible enough to provide quick, high-level KPIs in a dashboard and secure export for responding to inquiries from governing authorities, union reconciliation, or legal defense, without involving the IT function. While the report delivery mechanism may differ for each of the two types of reporting needs, the source can be the same: your human resources data mart.
For example, suppose you choose Microsoft Power BI, which consumes data from the HR data mart. In that case, you may publish a series of analytical reports geared toward management and KPI tracking, which can drill through to the more detailed operational reports containing all the necessary rows and columns for sharing externally. The latter could be delivered by Power BI Online or another tool, like a paginated report hosted by Power BI Report Server (again, assuming that your business intelligence solution is Microsoft-based). The two types of reporting needs may have different security considerations. Your high-level KPI and summary reports will typically be used by decision-makers and not shared outside of the HR organization. However, your detailed report may contain PII and therefore must be handled with additional due diligence.
For the Win: Pairing Expert Partnerships & Teamwork
When considering embarking on any business intelligence project, you would be well-served to consider finding a trusted partner – bringing together a deep understanding of the human resources function with a deep understanding of the technology and delivery mechanisms. You may discover eager partners within your organization’s IT department, an independent business intelligence team, or outside data practitioners. HR organizations depend on their technology partners to implement and support modern business intelligence solutions with a solid modern data platform.
HR and IT organizations also rely on a strong partnership with compliance officers to ensure laws and regulations are conformed. There are legal requirements for data privacy (e.g., the General Data Protection Regulation (GDPR) in Europe and the Health Insurance Portability and Accountability Act (HIPAA) in the U.S.). Employees themselves are concerned with how their data is being consumed and exposed.
Clearly, HR can present many challenges to a business intelligence solution, as much as any horizontal function in an organization can. However, it is possible to create and implement a strict machine-learning environment with limited access and that uses sensitive data only when required, restricted to a specific group of authorized users. Today’s business intelligence and data platform technologies allow people data to be anonymized and systematically meet compliance requirements. While many BI tools on the market can assist in collecting and reporting disparate sources, there are still many benefits to warehousing all this data in a single, traditional star-schema repository. Like many other BI projects, inventorying the sources and forming a plan to bring all the pieces together into one common place can bring clarity and simplicity to an otherwise overwhelming project.
Gaining the support and input from leadership within the organization early on is critically important. HR professionals may not be used to a lot of cooperation from other business functions within the organization. There could be an unfair perception of HR as one of those “costs of doing business”; an attitude that HR is solely a function to “prevent the company from being sued” or “to ensure people get paid on time;” Perhaps the ways in which HR can indirectly contribute to the bottom line or central mission are being overlooked.
Additionally, most people go into HR because they relate better to humans than to technology. They are “people-people,” and we need them more than many of us realize. Nevertheless, adopting an AI strategy could be tricky if technology is not viewed as central to how they conduct business and interact with the people they serve.
Support HR Adoption
Having a partner embedded inside the HR function can help bridge the human-technology-ROI divide. Ideally, this person, be they an internal FTE or an outside consultant, reports directly to a managing role within the HR function or an IT business partner dedicated to supporting HR. They have technical expertise but, more importantly, experience in data warehouse and business intelligence. Being embedded in the HR function, they will also have (or will gain) a deep understanding of the unique and sensitive data owned therein.
Develop Feedback Funnel
Regardless of what roles or people you have involved in the development process, building a consistent feedback cycle early on is critical to success. Together, you will build a flexible data framework and enable decision-makers to understand the past, react to the ever-changing business landscape, and lay the groundwork for predictive analytics and AI. This will further bolster the speed and accuracy of everything from hiring the right people at the right locations, at the right time, to making sure those people have the proper tools to succeed and thrive in their role, thereby driving the bottom line of your organization’s mission.
Thriving Through Digital HR Insights
For many out there, people analytics is still a new tool to improve organizations by making evidence-based decisions. Those in the know – organizations embracing the current landscape of digital transformation – are harnessing the value of people data intelligence. These organizations are often thriving; not just keeping up with advances in cloud and artificial intelligence, but also learning to attract and retain the talent to grow operational success.
If other parts of the enterprise embrace and benefit from digital transformation and business intelligence, why shouldn’t HR, as well? Existing modern business intelligence tools, such as Power BI, are now cost-effective and easy to implement. Their success was made possible when their IT and HR organizations and the business partnered to understand how AI can strengthen the entire organization.
Finally, AI isn’t — and shouldn’t be — a substitute for human judgment in HR decision-making. Accuracy and fairness in recruiting, employee evaluation, and other HR decision-making require human participation, and there is no other way around it. Despite concerns from some critics that it would turn people into numbers, using statistical insights from data to guide talent management decisions is no longer a contentious concept, especially at top-performing companies.
If you’re excited to get started developing your own modern business intelligence strategy, reach out to the HR professionals at 3Cloud today! 3Cloud offers a variety of resources to help you learn how you can leverage Modern Data Analytics.