The 4 Step People Analytics Strategy

 

Among his many notable quotes Mark Twain once said, “The key to getting ahead is getting started.”   If you’re one of the 71% of companies in a recent Deloitte study that rate people analytics as a high priority but have yet to do anything about it, then here is a four-step strategy to help you get started.

Step 1: Identify and Define the Right Metrics

A metric is a snapshot that measures a data point at a specific point in time.  Some common people metrics are turnover, time to hire, and average salary.  Metrics are the foundation of analytics, but it is important for an organization to track the right ones.  For example, a non-profit organization, which does not have much employee churn, may not be concerned about the amount of time it takes to hire new employees.  Whereas, a retail chain that is opening new stores every month would consider that metric very important.  So, before choosing a set of metrics to track, check with management and the business side of the house as to whether that data is important to them.  Human resources cannot operate in a silo if wants a seat at the table.

Once you have consensus on the metrics you wish to track, it also necessary to gain agreement on the formula for those metrics.  Turnover is calculated by some as taking the number of employees terminated divided by total employees in a given month, but others might calculate it as the number terminated in a month by the average number of monthly employees in a quarter.  These are subtle differences and are of relatively little consequence as to which one is chosen.  The important thing is to select one formula and stick to it, so your comparisons from month to month are accurate.

The last fact to consider in establishing metrics is what sub-groups it would be beneficial to see.  If a particular metric has passed a trouble threshold, it’s possible the problem might not be company-wide, thus being able to see if it may be driven by one department or location could narrow the breadth of the remedy.

Step 2: Establish Data Sources and Upload Process

Every metric is a calculation of some sort.  Many are averages that simply take a number from each employee such as salary or performance rating, whereas others measure a portion of the population versus the rest, such as turnover.  In any case, the organization needs these original pieces of source data to do the calculation.  When calculating people analytics the source data is often spread out over multiple systems such as an HRIS (Human Resource Information System), talent management system, or payroll system.  According to Lisa Rowan at IDC, the typical corporation has roughly 23 different human resource systems.  So it’s likely in most organizations that a good amount data collection will be necessary.

There are two common methods of bringing data together in a reporting environment such as an analytics platform.  The first, and more manual, is to combine all of the data together into a single file format and then batch upload.  The second would be to write direct connections to each source through the use of API’s (Application Programming Interfaces).  There are benefits to both.

The file upload method is initially easier and less expensive because there is no need to involve developers; also the manual compilation provides an opportunity to more closely inspect the data for correctness and formatting.  The value of the API connections comes after the implementation and cleaning of data, as it can provide for complete automation and real time production.  Thus many organizations choose the file upload method initially until the data is thoroughly cleaned, and then they proceed to write the API connections.

Step 3: Trending the Metrics to Analytics

Once the right metrics have been agreed to and the data is flowing in to calculate them, then it’s time to trend the metrics to analytics.  Whereas metrics are that snapshot in time, analytics are what provide context.  If it took an average of 30 days to fill an open position this month, 40 the month before, and 50 the month before then performance in this area would seem to be positive.  But if it were the reverse then some action may be required.

Also, being able to align events to trends is another key to analytics, so as determine root causes of a trend.  If turnover started to increase when a new benefits plan was introduced or a new general manger took over, it would be important to see these events in alignment to get the most complete picture of what is occurring.

Step 4: Taking Predictive Action

Now that you’re armed with a trend that can take you into the future, it’s time to make changes for a better future.  The event alignment can give you external insights, but what can the metrics you have been tracking tell you about cause and effect.  Does increased pay reduce turnover?  Can changing job boards decrease time to hire and produce better candidates?  Basically you need to be able to model future scenarios.

This is where technology allows the next leap. Powered by the latest AI (Artificial Intelligence) engines, the right people analytics solution can not only calculate future trends based on past results, but also detail what changeable factors can provide the most and best impact.

If people are an organizations best asset, then human resources has to think and act like a business.  Just as the sales division has to monitor trends to grow revenue, HR has to similarly forecast to build the best workforce.  Don’t wait to implement a people analytics strategy, start today.

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