Data Analysis Helps You To Know Your Workforce
By Peter Crush
First published in Raconteur for The Times
Full article here
PEOPLE ANALYTICS Human resources chiefs are increasingly demonstrating the worth of people analytics as businesses reap the benefits of getting to know their staff better.
Aggninder Russell has one of those dinner party job titles that unlike “product replenishment manager” (aka shelf stacker) actually has a proper meaning and, she argues, is what all company directors should be inviting to their tables. She’s Virgin Media’s grandly titled head of people insight.
It’s a role that’s less than three years old, but in this short space of time it’s become one the business simply couldn’t do without.
“Thanks to a year-long process of moving our people data to an analytics platform called Qlearsite,” she explains, “we’re now able to run what we call Opportunity Finder projects – testing hypotheses by establishing hard causal relationships between datasets, which enables HR to devise much more targeted interventions.
“In just one of these, we found above-median sickness absence and, by creating sickness absence champions, we literally halved that rate of attrition – it was a cost-saving of £1 million.”
In the world of people analytics – the specialism that’s taking knowing the people in organisations to new levels –
'This type of return on investment (ROI) data has been seen as the Holy Grail when it comes to sign-off at the board level for more investment in this field.'
Yet, as Ms Russell admits, she has had something of an advantage over her traditional human resources peers. “For five years I was Virgin Media’s finance business partner, reporting to the finance director. It’s been a massive advantage being able to translate people data into how managers’ budgets are affected.”
According to Hazel Williams, HR lecturer at Nottingham Business School, the problem most HR professionals have when it comes to demonstrating the ROI of people analytics is that they simply focus on the wrong things.
“Too many HR directors are obsessed with gathering the data and costing this rather than actually asking questions of it. ROI is about knowing the output of a people issue, not what the technology cost is, but this is the bit that’s often left off,” she says.
Edward Houghton, research adviser at the Chartered Institute of Personnel and Development, adds: “Not only does the research question have to come first, tracked through analytics, but it’s the change of policy indicated that’s important. ROI comes from the impact of a policy change indicated by analytics, not just the analytics itself.”
Laurence Collins, partner in Deloitte’s human capital consulting practice, says: “Analytics needs couching to the board as just one component of a firm’s wider people policy. My experience is that when there’s a sense it creates a benefit, it gets the attention of decision-makers.
“So, what HR has to do is start from the data it already has – because all firms are able to run reports – and make causal rather than correlated links between them that could solve issues. But then they really do need to sell the fact that better technology will most likely produce better, even more targeted links.”
What doesn’t often go in analytics’ favour is the fact that the relationships they show often yield a “well, that’s obvious” response. “That results appear logical,” is a common response, says Maja Luckos, head of people analytics at Capgemini UK. “My response is always that there’s nothing like science to back this up.
“When we first started though, rather than produce boring business cases, we decided we needed to showcase this differently. So we got all the heads of the business in together to spend two days with us, seeing what we could do with real data. We basically wowed them and that’s when they ‘got’ the power of doing it. We’ve never had to prove the investment ever since.”
Since then analytics projects she’s headed have helped cut early attrition spotted in new joiners by 40 per cent. But by giving C-suite directors experience of analytics, she’s made them advocates for life.
So should other HR leaders do the same? Yes, but according to Prithvi Shergill, chief human resources officer at HCL Technologies, they need to realise that proving analytics is a marathon not a sprint, so the key trait HR needs is stamina.
“We’ve definitely been on a journey,” he recalls. “Analytics now comprises 10 per cent of our main HR spend, so it has to stand on its feet. We’ve simply had to keep promoting its potential – and then promote it some more.”
Mr Shergill’s tactic, however, has been specific: to turn insight into information by moving away from looking at past data and descriptive reporting to more predictive analysis.
“We’re really pushing the predictive part of analytics,” he says. “We’re now able to predict attrition from recruiting certain types of people. We can also predict, with 70 to 90 per cent accuracy, who will accept job offers by mapping data we have of previous candidates. As a result we can plan interventions to ensure we keep top talent. That’s the stuff that interests people, not necessarily dry statistical information.”
An even better way to prove ROI, of course, is to find relationships through data that are not expected at all. Virgin Media’s Ms Russell says she’s beginning to find just this, most recently how those who take overtime are more likely to stay.
“This is not a relationship we would have expected, so we’ll be looking at seeing why this is the case,” she says. As she knows though, making the case won’t be through hard mathematics, but in language the board will understand.
Dr Peter Bloom, head of the department of people and organisations at the Open University Business School, observes: “In all ROI conversations, there is a danger that there is a knowledge-gap between those presenting the data and those receiving it. The majority of business heads aren’t statisticians. HR needs to remember this.”
But, if they follow these rules, could the analytics ROI nut finally be cracked? “HR directors still have to convince those that need to see to believe,” says Eddie Short, managing director of data analytics at AON Hewitt. “But the signs are more CEOs are becoming interested in this area anyway.”
In partnership with intelligence provider Polecat, Mr Short is moving the bar to the next level, looking at analytics to predict risk in organisations. But he says organisations must get the basics right first. “There’s not normally a eureka moment with analytics, but when it combines fragments of data that are already trusted, that’s when it has the power to really prove itself,” he concludes.