Data Literacy: An Essential Skill for HR Professionals

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Data Literacy: An Essential Skill for HR Professionals

Digital transformation of business processes is generating extensive amounts of data for decision-making. If HR professionals want to stay relevant in the current and future business world, they need to be data literate. What exactly does data literacy mean in HR, why is it essential, and how can you develop your data literacy? Let’s wade in.

What is HR data literacy?
Why is data literacy important for HR professionals and businesses?
Behaviors of HR professionals with strong data literacy
How HR professionals can develop data literacy

What is HR data literacy?

Just as literacy is the ability to read, comprehend, and write a language, data literacy is the ability to understand, interpret and apply data. Data literate people can think critically about what the data shows, deduce relevant information from the data, and know-how to apply the appropriate data for specific purposes.

Because data is such an asset to organizations, HR professionals must be data literate to glean the meaningful information from this data that they can use for strategic decision-making. This dimension of data literacy is being data driven. They must also have the capacity to translate these insights into actions that create business value. We refer to this dimension as analytics translation.

Data Literacy Dimensions

Let’s have a look at what it means in practice. BBVA is a US banking franchise focusing on commercial banking, retail banking, and wealth management. They benchmarked their employee turnover to other banks, discovering that they had an above-average turnover in some key roles.

First, the team explored the turnover data by region, branch, and demographic indicators. They discovered that 10% of their 700 branches accounted for 41% of all turnover for one key revenue-producing role, which enabled them to target their action at the problematic branches. Second, they analyzed survey feedback from existing and former employees, uncovering concerns with compensation structure, onboarding, and new hire and manager training,

By implementing branch-level action plans addressing these issues, BBVA managed to reduce turnover for the key role by 44%. What’s more, this also resulted in reducing the cost to hire new associates, as well as improved retention of customer relationships.

In short, data literacy is a crucial part of the new standard for HR professionals. Data literacy, together with business acumen, people advocacy, and digital proficiency, are the four HR core competencies that are essential now and for the future. Having these four competencies combined with at least one functional HR competency makes a T-shaped HR professional.

Not only being a T-shaped HR professional helps you stay relevant in the field, it also helps your organization achieve business objectives and drive business value.

Why is data literacy important for HR professionals and businesses?

Because there is an abundance of data generated from digital processes, HR professionals must be able to filter what’s relevant from the deluge of information. A DataCamp survey of L&D leaders from a variety of industries showed that 89% consider data literacy a high priority because data has such an evident impact on their business results. 

HR pros who can read, apply, create, and communicate data can leverage it better to reap the following advantages:

Making evidence-based decisions

A lack of information can lead to unproductive decisions, and one wrong decision can have an enormous impact. Due to rapid shifts in workforce contexts, it’s a challenge for employers to keep up. According to a recent Deloitte Global Human Capital Trends report, “Only 9% of organizations believe they have a good understanding of which talent dimensions drive performance.” 

Evidence-based decisions are supported by research and verification that mitigates risk to improve the quality of any field. Take the field of evidence-based medicine, which has transformed healthcare by improving patient outcomes and reducing costs. By all means, HR is up next to for its own revitalization.

Practicing evidence-based HR means gleaning information from data and translating that into knowledge and action.

Achieving operational efficiency

Widespread use of analytics can spot underlying causes of problems, as well as the factors in areas that are working well. With this knowledge, HR helps organizations design new programs to increase innovation and productivity. You can also use data and analytics to set targets and measure effectiveness. A thorough interpretation of this information stimulates continuous improvement methods and new efficiencies.

Gap, an American clothing retailer, wanted to improve customer service by engaging their employees. They decided to do this by introducing more stable employee scheduling and guaranteeing a weekly minimum of 20 hours for core associates in some of their stores. This intervention led to a 5% increase in productivity and a 7% growth in sales as a result of better customer service from retail associates. The increase in productivity was twice as much as the industry average of 2.5% per year recorded between 1987 and 2014.

Based on the evidence from this experiment, Gap rolled out two practices towards stable scheduling across all stores: two-week advance notice for schedules and elimination of on-calls. In short, they improved their operational efficiency through evidence-based people practices.

Creating business impact through the HR value chain

The ability to analyze and visualize data brings insight into what’s happening throughout the organization. Strong data literacy allows you to create measurable impact through HR processes and outcomes. You will essentially be able to connect the dots from HRM activities and processes to HRM outcomes and further, to organizational goals through the HR value chain.

Increasing productivity and profit while staying competitive

As more aspects of business are digitally tracked, more data is available for innovation. Companies that interpret this information well get ahead. 

A data literacy guide by Workday states, “Organisations using people analytics to support HR functions and business decisions see an 82 per cent higher-than-average profit over three years than their low-maturity counterparts.” If data literacy is lagging throughout your organization, you will end up yielding to competitors who do make it a priority.

Finding new opportunities

Data analytics can be a medium for exploring and solving problems and creating new prospects. When more teams can access and interpret data, it expands the capacity for collaboration. Turning this data into action helps you evolve day-to-day and strategic work practices. 

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Behaviors of HR professionals with strong data literacy

Data savvy HR professionals stand out from those who linger in the traditional approach to HR. They are also better equipped to collaborate with other data-driven functions within their organization. An HR professional with strong data literacy will display behaviors such as these:

  • Setting effective HR KPIs – Data literate HR practitioners are able to set strategic metrics to understand how their department is contributing to the rest of the organization and how successful it is in executing the HR strategy.
  • Reading and interpreting HR and business data and leveraging this data to make better decisions – Data is a valuable tool to complement human insight. Data needs interpretation to be relevant, and conclusions need to be reinforced with data. Using the two together results in more thorough decision-making than each does on its own. Brining this technical aspect to HR initiatives means you no longer have to rely solely on instinct. An HR professional who informs their reasoning with data analytics can offer more evidence that their idea will be effective for the organization. Instead of being limited to saying, “I think we should try this,” you can back it up with concrete statistics.
  • Spotting opportunities for value-adding data analysis – Stakeholders think and operate in terms of numbers. HR needs to be able to speak this language to heighten its influence and synergize with key decision-makers. HR professionals who strengthen their work with an understanding of the data have more to offer. For example, using data analytics to link employee performance to tangible business results demonstrates that HR plays a direct role in driving up profits.
  • Effectively communicating data – Competently presenting your analysis and findings makes a real difference in how it is accepted. Comparing results and pointing out trends brings out the data’s true value. A dynamic dashboard with charts, graphs, and gauges that puts data into context will help others visualize its insights. Data tells a story. Articulating the story with details of what’s behind it can turn it into knowledge for profitable decision-making.
  • Practicing evidence-based HR – When you know how to analyze and decode the available data, you can translate it into relevant insights. Then you can use it to make decisions to meet the needs of your organization. Making decisions and building your strategy based on proven evidence and data enables you to eliminate guesswork, risk, and subjectivity.
HR practitioners who are both data driven and able to translate data into action can create real value for their organization.

Please note: You can see more data literacy behaviors on pages 6-8 of AIHR’s HR Competency Framework document. It provides a more in-depth explanation and details of what data literacy looks like by breaking down the behaviors into beginner, intermediate, and advanced levels.

How HR professionals can develop data literacy

Some organizations are making data literacy a priority for their HR staff, but many people will be on their own to cultivate this competency. How can HR professionals change their mindset and learn to be more data-driven in their work? Here are a few ideas:

1. Familiarize yourself with data-driven working

Fortunately, it’s not necessary to have advanced math or tech skills, but you should take the initiative to adopt a data-friendly mindset. Don’t be intimidated by data. Instead, embrace the idea that learning this set of valuable skills will help you your job better and make you a more marketable HR practitioner. 

Find some data literacy instruction that works for you. If your company offers training, even if it’s been developed specifically for another function, take advantage of it. You can probably find ways to view it through the eyes of HR. 

Another option is self-training through a self-paced, online course on people analytics or HR metrics and dashboarding. Visual examples can help you understand the concepts, and then you can put the knowledge and skills into practice.

2. Partner with your HR data analyst or data teams to find relevant data

Connect with a data specialist or two who you can work with and ask questions. Take advantage of their proficiency and learn how you can leverage data to make decisions and improve processes. 

Internal knowledge exchange sessions are an excellent way to enhance your data and analytics abilities. These can be quite simple. For instance, hold an informal “lunch-and-learn” session focused on a specific data literacy skill. You and other HR staffers can learn something, and the data specialists will see how their expertise relates to HR functions. This can encourage cohesion and collaboration. 

Working together, you can find relevant data pertaining to certain areas, such as:

  • What are the skill gaps within the organization?
  • Predicting the attrition rate.
  • Success of an employee program.

3. Learn how to work with data by strengthening your Excel skills

Knowing the basic HR formulas and functions will help you analyze data faster and make better decisions. If you’re comfortable using a spreadsheet program like Excel, you’ll feel like you have control of your data.

Excel is a very useful tool for storing, organizing, and analyzing data. You can also perform calculations, print reports, and create charts. Both technical and non-technical departments throughout organizations use this program. Advanced Excel skills will help you use data more effectively and equip you for the future of HR.

4. Bring data to your next meeting

Presenting what you know is part of becoming data literate. Once you have a grasp on some data that fits within the scope of your role, don’t waste it. Put actionable data to work for you by sharing it with your team or other decision-makers. 

When you have enough data literacy to understand how relevant the data is, you can pass it on to others. You will be able to explain your thoughts and give the factual basis for whatever conclusion you’ve come to.

For example, if you’re having a meeting on next year’s recruitment strategy, why not bring data on time to fill and yield ratio to plan better?

5. Don’t be afraid to ask questions to your data experts

A significant part of your ongoing data literacy development is asking plenty of questions. 

Get comfortable being vulnerable enough to seek help from those who are more knowledgeable. If you don’t understand something, you can always ask people from your data team or people analytics team. That way, you constantly build on your data literacy skills. 

Keep in mind that seeking quick answers may limit how much you can learn. Don’t pursue only a simple response. Instead, ask for the behind-the-scenes information to find out why it’s done that way.

As you become more data literate, you will need to continue asking questions to gain deeper insight into the data your organization is collecting. The answers to meaningful questions will often lead to more inquiries. These further questions can lead you down a new path or give you something to focus on in the future.

To sum up

Data is now a vital component of the HR function. Developing solid data literacy skills helps HR professionals become truly strategic and contribute to business goals. It is a continuous process where it’s crucial not only to have an understanding of the data but also to be able to apply it and translate it into actions.

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