Are You Ready for Data-Driven Decision Making in HR?

A few weeks back, Management Concepts released the white paper Federal HR Trends in FY14, our take on the five trends we believe will shape the Federal human resources and human capital space this year.  In this blog, we’ll explore the third item on our list: Data Analysts in HR.

It’s not news that the rise of big data is a leading story in the field of human resources or that the push for HR departments to embrace data driven decision making strategies is a major focus across the industry.

Much has been said about the importance of analytics for HR and the early results suggest that organizations who are adopting data analytics to support HR decisions are reaping the benefits. As government agencies continue to feel the pressure to optimize their investments, the push for data driven workforce decision making will continue to mount, while the resources available to implement analytics programs are likely to continue declining.

The focus on analytics, combined with growing (and perhaps unrealistic) expectations about the benefits of big data and mounting pressure to make use of available data from HRIS are combining to create a high pressure environment where CHCOs are being pushed to grow their ability to apply quantitative analysis techniques to support HR decision making.

Introducing analytics to the Human Resources Line of Business (HRLOB) will require HR personnel with a set of skills that has not traditionally been part of the human resources function. To ensure your organization can realize the benefits of data driven decision making here are a few key skillsets you’ll want to make sure are part of your workforce for 2014:

• Business Acumen
  The ability to tie HR data and study results to core organizational performance metrics will be critical for successful implementation of HR analytics.  While it’s one thing to design a research study, gather data, and analyze the results, making those results compelling by linking them to key performance indicators that are of interest to senior executives is a distinct activity that has not typically been part HR’s area of expertise. Because introducing analytics to the HR organization will require investment (and as such, tradeoff decisions) HR leaders will be required to demonstrate the return on those investments with solid links to business outcomes that are of interest to leaders across the organization.
• Research / Hypothesis Design
  Effectively using analytics to drive decision making requires a carefully formulated question and the design of a data collection and analysis strategy that will yield actionable information. HR practitioners need to understand how to design research studies to explain events within their organization. Knowledge about effective statistical sampling techniques and what type of analyses will provide the right view of the data at hand will ensure that the right data is collected  from the right subset of your workforce in order to obtain the information needed by HR and leaders in other functional areas.
• Statistical Analysis
  Along with knowing how to design a study so that the right data is collected, it is imperative that HR practitioners develop strong capabilities in statistical analysis using tools such as MS Excel, SPSS, or MATLAB.  The ability to calculate and appropriately interpret key statistical metrics like measures of central tendency, as well as more advanced analyses such as correlations, t-tests, and analysis of variance will be essential in correctly interpreting the results of analytic efforts.
• Data Reduction
  One of the challenges of big data is that it is, well, big.  While there are countless tools available for managing large data sets, some effort and skill is still required to clean and filter noisy data streams so that analysis can focus on the best set of available data.  A strong analytic cell within HR will require personnel with the ability to effectively employ tools and techniques for defining and implementing the funnels and filters needed to create a manageable dataset from big data repositories.
• Evaluating and Presenting Analysis Results
  The previous skillsets highlighted here focus on the expertise needed to execute analytic studies.  Along with performing the studies, HR personnel will need to be able to review the analysis work performed by others and translate the results into useful and useable visual displays.  This skillset will be especially important for HR leaders who may not actually perform analyses, but will be the first line consumer of analytic studies.  As such, HR leaders will need to be able to verify that the methods and tools were appropriately used, that the data collected appropriately addresses the question at hand, and that the results are correctly interpreted.  And, once they’ve verified the validity of the analyses, it will be up to the HR leader to organize the results into a meaningful visual presentation that clearly explains study findings in a way that is linked to organizational metrics and performance indicators (which requires the aforementioned business acumen).

In small or mid-sized agencies, it might be a challenge to find HR personnel with the requisite skills for turning data into information in support of decision making. However, colleagues in information technology, finance, business analysis, and engineering functions may have some (or all) of the skills that aren’t currently present in your HR staff. Consider creating a cross functional analytics cell within your organization that brings together the best analytic minds from across the organization and allows them focus on conducting analytic studies to improve organizational performance – in HR and in other critical functional areas.

Additionally, many organizations are offering analytics training programs geared specifically to HR professionals.  Analytics training provides the dual benefit of increasing capability of the HR organization and providing high value professional development to key HR team members.

With careful planning you can build an HR organization that rises to the challenges of introducing data driven decision making to your business planning and execution toolkit. What challenges are you facing with bringing data driven decision making to your HR organization?  What successes have you had in introducing analytics to the HR organization?