Where Should People Analytics Be within an Organization? A Comparison of Two Approaches

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Where Should People Analytics Be within an Organization? A Comparison of Two Approaches

Some people are confident that the future of People Analytics is not as part of Human Resources (HR) but instead will become a critical part of overall organizational analytics.

In practice, in the current market, there is a good balance between companies that have a people analytics function within HR—consisting of data analysts, scientists, engineers, and consultants/translators—and other organizations where analytics sits within either IT, the Office of CEO or Business Intelligence/Insights and delivers a service to HR in terms of People Analytics. In this second scenario, HR would be one of the clients, and unfortunately, often not the most important one.

But what are the pros and cons of both scenarios? Let’s explore this below.

Contents
People Analytics team within HR vs. part of overall Analytics Center of Excellence
What to do next?

People Analytics team within HR vs. part of overall Analytics Center of Excellence

Let’s have a look at the pros and cons of having a specialized People Analytics team within HR vs. Centralized Analytics as part of an overall Analytics Center of Excellence (CoE) from 13 different aspects.

The image below summarizes how we see analytics or data science structured in organizations.

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People Analytics in an Organization
Image adapted from Lisa Cohen’s article Designing a data science organization.

It’s important to note that there is no right or wrong decision regarding positioning People Analytics in an organization. This will largely depend on the size of your organization, the resources you have available, and your leaders and stakeholders. Much of the time, there is no clear-cut People Analytics team and rather a hybrid of both models. This is likely to shift and evolve further as we edge into the future.

1. Strategy

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
The strategy will be determined by HR and therefore aligned with HR strategy and with a large focus on people.

A People Analytics team in HR may mean a lack of strategy and accountability with regard to business outcomes, making it difficult to meet business objectives. 
The strategy will be determined by the overall company strategy and be more focused on business objectives.

This broader business strategy will align with the short and long-term goals of the business and help drive productivity, revenue, and profit.

A Central Analytics team may have some ambiguity on who the CoE will report to, and additional employees may be required.

Such a team will require role clarity to avoid becoming a “dumping ground” for all HR-related data.

2. Priority

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A People Analytics team in HR is able to focus on long-term strategic impact through a people-centered first approach.

It allows for results to be demonstrated and for the entire organization to see the need for a dedicated People Analytics team.

It guarantees attention to urgent and relevant workforce issues that directly affect employees. 
A Central Analytics team will often focus more on demonstrable financial impact and attribute lesser value to long-term people implications.

Until you have demonstrated results, it may not be possible to centralize your analytics function in this way.

A Central Analytics team means that People Analytics responsibilities will be integrated into an overall CoE, which can lead to HR being placed at the bottom of the pile behind more pressing business objectives.

This setup may result in HR leaders feeling unsupported because of a lesser focus on People matters.

3. Experimentation/curiosity

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A People Analytics team in HR has a dedicated budget and autonomy to experiment more and follow their curiosity without service delivery expectations eating into their time and budget.  A Central Analytics team is limited with regards to experimentation because of a smaller team with limited time and resources which are allocated first to delivering on expectations set by business leaders.

This team will consist of diverse expertise and backgrounds, leading to out-of-the-box perspectives.

4. Impact

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A People Analytics team in HR lacks business context and could potentially miss opportunities or focus too heavily on HR problems only.

The team will have greater insight and experience with HR-specific issues and therefore have a greater positive impact within this area.
A Central Analytics team’s project portfolio will likely be driven by expected impact and ROI.

A dedicated team allows for greater impact across the business.

Forming a Central Analytics team that is separate and high-performing is a daunting task to undertake and will take time to create a noticeable impact.  

5. Skill acquisition and utilization

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A People Analytics team in HR can make it hard to attract, acquire, and retain the necessary data science and machine learning skills required for People Analytics within the HR talent pool.

However, creating such a team leaves room for willing individuals to learn the technical side of this role, whereas HR requires hands-on experience.

A dedicated People Analytics team in HR creates a ready-made foundation of HR-specific skills and experience that is critical when trying to support HR leaders in the business.

Building a People Analytics team in HR makes it more challenging to budget for (and find) the necessary data science and machine learning skills and leverage these efficiently when focusing solely on HR.
A Central Analytics team often makes it easier to attract people with the required data skills.

People from outside of HR may lack the knowledge, soft skills, and experience required to manage the HR side of this role.

On the other hand, team members may be able to learn these consultative skills, whereas an analytical skillset is believed to be much harder to teach.

A Central Analytics team may provide people with the right mix of analytical and consultative skills to interpret analytical outcomes and work effectively with business leaders.

Creating a Central Analytics team offers a scale advantage for high-in-demand scarce data science and machine learning skills.

6. HR opportunities

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
The team lives close to the HR specialists and can easily spot opportunities where analytics can add value.

A People Analytics team in HR creates an opportunity to make the HR department more data-driven, which is appealing to HR professionals and leaders because this is where the future of HR is headed.

It is also an opportunity to gain a seat at the table with business leaders and become stronger strategic partners.  
A lack of HR knowledge combined with increasing distance to function might lead to HR opportunities not being identified.

HR may be overshadowed by other topics deemed more pressing.

Having a Central Analytics team as part of Analytics CoE often leads to a more diverse range of perspectives and backgrounds resulting in more innovative and less standard projects.

7. HR knowledge

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A People Analytics team in HR consists of HR professionals with HR knowledge who understand how analytics work and how to use them effectively, which is a large part of making analytics work.

A People Analytics team in HR ensures correct interpretation of HR processes and HR data.

This setup may be preferred if an organization already relies on HR knowledge and data since it may be more challenging to launch a CoE. In contrast, if an organization has little reliance on HR knowledge and data, they may find it easier.
A Central Analytics team leverages cross-functional expertise as part of a hub of expertise.

Since this team is likely to have a more diverse range of perspectives and backgrounds, they can come up with innovative solutions where HR is concerned.

A Central Analytics team may make it challenging to achieve a vision for HR without specific HR knowledge and expertise. 

8. Credibility of results/function

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A People Analytics team in HR can be less credible due to avocating HR solutions from within HR.

However, there is more credibility because the HR department as a whole is evidence-based.

It can be challenging to get meaningful business information.

The team can struggle to gain respect and backing from leaders and stakeholders because HR has a long-standing reputation as a “soft skills” function.
A Central Analytics team will automatically gain credibility given its higher-standing position within the business.

It also offers a possible broader recognition of the importance of HR and workforce perspective to problem-solving.

9. Relationships

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A People Analytics team in HR helps build key relationships with HR stakeholders, and is perceived to be a trusted advisor and part of the HR team.

The team can often provide some of the most valuable HR insights with regard to the biggest challenges business leaders face.
A Central Analytics team means that HR becomes a client and has a pure service delivery relationship with shared resourcing for PA operations.

The team can use analysis and predictions strategically to build important relationships and influence business leaders and stakeholders, and lead to them championing analytics.  

10. Business context

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A People Analytics team in HR might lack business context and could easily miss vital opportunities to connect to other data. A Central Analytics team is positioned in a more central part of the organization with connections to all key departments and has great business context insights.

Such a team increases the likelihood of different data sets being connected, analyzed, and leveraged to their full capacity. 

11. Data

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A team within HR ensures correct interpretation of HR processes and HR data.

It is likely to be more aware of and therefore adhere to strict compliance with regards to data collection and privacy laws to protect both the organization and its employees.

An HR leader and data privacy officer will be able to offer required input when creating and implementing a data access model which will allow for continuous and unrestricted access to data.

The team in HR increases the possibility of developing a data access model, and the future predicted success of machine learning and artificial intelligence will depend on this.
A Central Analytics team has the ability to connect to other data outside of HR and create one single source of truth.

The team utilizes other business functions that are often ahead of HR in terms of gathering and leveraging data and makes business recommendations based on it.

12. Tools & technology

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A People Analytics team in HR may be limited in terms of tools and might not be able to procure desired tools and technologies to perform their job.

There may be a lack of skills with regards to using new software and technology and a lack of investment needed for upskilling/reskilling. 
A Central Analytics team has a larger budget to invest in data, tools, and experts.

This team will have access to a wider pool of resources. 

13. Data literacy

Specialized People Analytics team in HRCentralized Analytics as part of an overall Analytics CoE
A People Analytics team in HR allows HR organizations to actively tackle problems using a data-driven, evidence-based approach.

It also allows HR organizations to upskill on the job.

A People Analytics team in HR reinforces the belief that managing people is a job for people. Machines and algorithms should not replace humans when making key decisions, and HR professionals understand this.   
A Central Analytics team will be responsible for data and analytics within HR.

Such a team will usually consist of employees and consultants hired with specific analytical skills and are, therefore, likely to be more data literate.

The team must know why they are making decisions relating to hiring, promotion and terminations rather than simply following the “science.” If data is not properly managed, it can be counterproductive.

What to do next?

So, now that you have a solid understanding of the pros and cons of where you choose to position People Analytics within your organization, what are the next steps you should take?  

If you choose to place People Analytics within HR

Understand the bigger (corporate) picture

It’s vital that analytics take a central view, build business acumen, and take time to understand the key challenges and overall vision of the business. That allows you to gain credibility and nurture relationships with leaders and stakeholders.  

Ensure connection to business problems

When viewing, analyzing, and reporting data, make clear connections between the data and the business’s current challenges. 

Use more than just people data

People data should be combined with data from other departments across the business. That enables the team to gain the greatest insight and make the most of potential growth opportunities. 

Avoid a sole focus on HR issues/problems

When People Analytics is placed within HR, it’s easy to focus solely on HR issues and fail to address company-wide problems that may be of greater or equal concern. Avoid an HR bias like this and make sure issues are tackled based on urgency and importance.  

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Dedicate time to business impact, HR improvements, and experimentation

Ensure your People Analytics team splits their time between tasks related to direct business impact, improvements in HR, and experimenting with new ideas. This ensures that all the key areas of the organization are looked after while leaving room for creativity and innovation. 

Work on data literacy

Data literacy is one of the core skills all HR professionals should strive for to set themselves up for success in an increasingly technology-led world of work. Data has already dramatically altered our workplaces and will continue to do so.

Knowing how to read and interpret the data is essential if we want to take full advantage of its possibilities. Combine HR’s existing people skills with data literacy skills. Then, you’ve got a powerful combination that is guaranteed to win you a seat at the table with business leaders.  

If you choose to place People Analytics outside of HR / in a Center of Excellence

Ensure HR/Psychology knowledge on the team

While having a Central Analytics team means that you have excellent analytical skills at your disposal, HR knowledge and the ability to relate to and understand people are equally important when making people decisions and having conversations with managers and leaders. 

Act as a willing and curious partner / Work on data literacy 

When placing People Analytics in a CoE, it’s just as important to improve data literacy among the whole team. Ensure that it’s properly managed. That way, the leaders understand why decisions are being made, rather than blindly following the presented data. They must be willing to work with all departments in the business, be open to unexpected patterns and insights, and follow up on these to stay proactive rather than reactive.    

Explain your project ideas in terms of input required

Inputs refer to anything needed in a project to implement it. This can include employees (external or internal), financing, software, office space, etc. Ensure that proposed projects are explained to leadership in terms of input required and how these will help deliver intended results. 

Translate project ideas into short-term ROI and long-term strategic capabilities

When explaining proposed plans, make the short and long-term benefits clear to leadership teams. Explain how this directly impacts the business’s success. The more you can demonstrate ROI, the more likely you will secure the resources and support you need to move forward.  

Over to you

When deciding where People Analytics will have a place within your organization, consider the needs of your business and the resources available. The ultimate goal is for the People Analytics function to become part of the business strategy, continue being part of daily operations, and maximize organizational success.

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