HR Analytics Implementation: A Step-by-Step Approach
It’s very difficult to kick-start HR analytics within an organization, especially when this organization is not used to fact-based thinking in HR. When you begin, it’s important to follow a step-by-step approach. The question I’ll answer in this article is: What are the most important topics for you when you start to implement HR analytics in your company? And what are your top priorities?
The top priorities fall into five groups:
- Data management
- Pilot analyses
- Capability Building
In this article, I will discuss these groups and give some best practices.
Before you start with HR analytics – indeed, before you start with any kind of analytics – you have to get your data management right. These are the basics:
- Data management is the practice of gathering data and ensuring that it’s uniform, accurate, consistent and complete. To ensure this, it’s important to build a data governance program (if it’s not already there) to define a policy that specifies who is accountable for various elements of the data. This includes the data’s accuracy, accessibility, consistency, and completeness.
- It’s important to align your data definitions. Different stakeholders like IT, Finance and HR are involved in analytics. It’s very important to align with your IT department because they are tasked with the implementation of these definitions in the HR-systems.
- Facilitate your HR-organization by setting goals and KPIs and help them to measure these KPIs. How? The best way I found is to ensure that three or four key HR-processes (like recruitment, absenteeism and/or turnover) are completely fact-based. Your KPIs should focus on these areas.
Since your data is now (much more) accurate and complete with uniform data-definitions, you are now ready to serve your business with interesting fact and figures by offering insights through HR-reports and HR-dashboards.
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This doesn’t mean that these processes are sequential – to the contrary! I’ll talk more about this later.
When your data management basics are in order and when you’ve made the most important HR-processes fact-based by giving them KPIs, it’s important to show how its performance relates to the business. The easiest way to do this is to buy or build an effective (automated) HR-dashboard.
- Look around in your organization and ask yourself: which dashboarding opportunities do we have within HR? Moreover, which ones are already used within our company? You can learn a lot from your Finance and Marketing department in regards to dashboards.
- Don’t hesitate to look outside your organization. There are a lot of possibilities and external providers who can help you with your HR-dashboarding. The disadvantage is the cost – so start with your IT department. They can help you to build the ‘connector’ between your HR-system and the dashboarding tool. After that, you have to choose a suitable data visualization system (see Gardner’s model below for some great tips).
- Make a choice about who can work with your HR-dashboard. These stakeholders should have the opportunity to work with it. It’s desirable to let them make cross-sections to see which figures are most important for their own focus area. Ideally, you’ll start with basic dashboarding: figures about FTE, absenteeism, recruitment, training etc. However, in the long term its best to go for a more advanced dashboarding solution where you can find a benchmark with other organizations and a forecast of some key HR-processes.
After that, it’s time for proactive reporting/dashboarding for your business. The reactive reporting/dashboarding age is over! From this point forward you will be able to give your business insights into HR data and KPIs, anytime, anywhere, and on any device.
Now let’s talk about doing real analytics!
Related: What is HR analytics? An explanation
Of course, it isn’t necessary to (only) work on your basics for one, two or three years. A ‘two-track approach’ here is much more efficient and effective. So: work on your basics, but don’t hesitate to get started with strategic- and predictive analytics!
- Start with a business question that has priority. Ideally, there’s a lot of data and information present regarding the subject. And don’t forget to make sure that there’s a ‘business sponsor’ who supports the analyses (note: an HR VP could also be a business sponsor!).
- Make sure that you are not ‘alone’. It’s optimal to have several skills within your HR analytics. If that’s not possible, get different skills from other departments or search in the external market. Which roles do you need in order to analyze data?
- HR analytics Manager (for leading the project, disseminate HR analytics, connecting stakeholders, storytelling)
- Data Scientist (for building statistical models and analysis)
- IT Expert (for gathering and performing data analysis)
- Subject Matter Expert (knowledge about the analytics topics of interest, e.g. absenteeism, engagement, learning effectiveness, etc.)
- Business Expert (Business Manager and HR Business Partners for knowledge about absenteeism in practice)
- Don’t forget to think about using a methodology to shape your analytics into project form. An agile way of working is recommended. Use different sprints of two weeks where you focus on a specific area. Make sure that your project team is aligned and can think along on every moment (as illustrated below).
In the end, you would like to connect your business and stakeholders by developing conclusions and recommendations based on the results of your analysis. These stakeholders can point out some possible inconsistencies, or recommendations that will improve your final advice.
Related: An overview of the 14 most important human resource metrics
- Start with different target groups and prioritize them. Do you want to begin with the capability building of your HR Business Partners? Alternatively, do you want to begin with the Business Partners of the Centers of Expertise? I can recommend that you begin with your HR Business Partners. Why? Because they’re in contact with your customer (the business) on a weekly basis and are really helped by the use of HR analytics as a ‘tool’.
- Get your HR Business Partners together and give them a small introduction about HR analytics. Make a small agenda with:
- An in-depth introduction to HR analytics
- Definitions and applications to HR analytics
- Practical examples of HR analytics in other organizations
- The HR analytics process and role of the HR Business Partner
- Relevant indicators and target values
- Brainstorm: developing proof of concepts based on strategic issues from the business
- A third tip is to think about collaborating with an external supplier. They can bring the development of the HR Business Partners to a next level, for example by developing workshops with real actors and role-playing games to become more data-driven as a company, or by providing practice material to build internal analytics acumen.
Don’t forget to develop your target groups on a structural base. A couple of introductions and workshops are not enough. If you want to develop a fact-based culture within your HR-department, you need to structurally develop its analytical capabilities. An example would be the continuous development needed to develop analytics acumen for HR business partners. Learning them to become more data-driven requires you to challenge and educate them on a continuous basis and provide them with the material they need to reach this goal.
Privacy is, of course, a hot issue within every organization. It’s very important to keep this in mind before beginning HR analytics.
- Partner with your Privacy Department and Privacy Officer (or Legal & Compliance) and let them build an assessment framework with the most important privacy targets.
- It’s important to work within this framework and in good partnership with your Privacy Department. In this context, it’s also important to get your Privacy Department informed when you start with your analysis (ABN AMRO is doing it like this). Get in touch with them when you start to analyze data, show them the variables you want to analyze and let them green light your project.
- Discuss the results of your analysis with your Privacy Department and let them set the minimum number of people you can report on (to guarantee anonymity). When this is done, you are ready to present it to your organization!
HR analytics is hot and happening, and an especially good addition to companies. HR analytics can provide insight for the employee and employer. It’s advisable to start with a good (long term) HR analytics plan. It’s not crucial to have the basics in order before beginning. Start as fast as you can with a ‘two-track approach’, then you can definitively show the added value of HR analytics as quickly as possible.