The State of Digital HR 2019

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Together with AIHR, I worked on a digital HR diagnostic. With this diagnostic tool, it is possible to get an overview of the current state of Digital HR at your organization by completing a 30-minute questionnaire. In this article, I will go through some of these data to give you an overview of the state of digital HR

Note. The sample exists out of 83 participants. 58% of respondents work for companies larger than 1,000 employees, 23.5% at companies between 250-999 employees, and the remainder 18% at companies with less than 250 employees. Respondents mostly worked in HR (81%), and occupied VP/director (24.2%), manager (32%), and analytics/reporting roles (13.7%).

Digital HR Categories

We have included six main categories in our diagnostic. These are:

  1. Digital Strategy – How is the digital HR agenda integrated with the organization strategy?
  2. HR Technology – How is the organization supported by HR technology?
  3. Innovation – How do we cultivate innovation in the HR organization?
  4. HR Processes – How do HR processes support the organization and employee experience?
  5. People – How do our people’s skills, leadership and the way they collaborate support digital HR?
  6. Data & Analytics – How do we make use of data & analytics to support our people strategy?

The results on these categories reflect important talking points for you and your team in order to make the next step in digital HR. In this article, I would like to highlight the results so far on a specific category: Data & Analytics. Let’s find out how organizations are doing on this important category to support digital HR and what it means for 2020.

Data & Analytics, an important part of the digital HR journey

A crucial element in successfully building a digital HR organization is how data is used. Being able to drive business success through the effective use of workforce data can create the difference between an innovative frontrunner and a business that’s constantly lagging behind. 

Especially in a VUCA world, it becomes increasingly important to regularly analyze business needs and shape the workforce accordingly. Having accurate workforce data available for reporting and analysis enables quick and impactful changes to workforce composition and policies.

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When workforce data & analysis is embedded in the organization through strategic tools and methods, it can contribute heavily to the success of an organization’s digital HR strategy. So how are organizations doing on this important category?

Scores on 3 critical dimensions

In our diagnostic, we have covered three key elements that make basic and advanced workforce analytics possible:

  • Data – the core element for any effort to report on workforce insights
  • Analytics services – the methods and channels these data are used to deliver relevant insights
  • People – the people and their capabilities that create and deliver these insights

This is not an exhaustive list for key elements of workforce analytics, but they do reflect the basic necessities for any insight to reach a user. You will need data, a method to turn data into insight, a channel to deliver the insight, and people with the capabilities to facilitate this whole process.

Now let’s have a look at some highlights. We have included 153 organizations in this benchmark from 17 different sectors and 59 countries.

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Data

Most organizations (54%) have a central database for employee data and the data is for functional HR areas is stored in systems for 46%. Only 34% of organizations are confident that these data are reliable and only 39% are confident the data are up-to-date. For 44% of organizations, accurate data-entry is a top priority for staff.

HR employee database
accurate HR data-entry

So while most organizations have stored employee data centrally, data reliability is still insufficient. One way to address this is at the core process of data entry. For most organizations, however, this is still not a top priority.

Analytics services

When it comes to standardized reporting, only 26% of organizations indicate that their HR reports are standardized from a cloud-based system. On top of that, only 28% of organizations indicate data are readily available for business partners through custom made reports or interactive dashboards.

HR data for business partners

Next to dashboarding, only 23% of organizations report that they are able to conduct a people analytics project.

people analytics project

Analytics is leveraged to optimize HR processes and to customize the employee experience for 30% and 26% of organizations respectively.

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analytics leveraged to optimize HR processes

It seems there is still ample opportunity to standardize processes for delivery of standard and custom HR reports in three out of four organizations. Making HR data available to HR business partners through custom reports and dashboards is crucial for HR to service the business with key workforce insights. It seems only one in four organizations are confident they can provide HR business partners with the proper analytical tools and reports.

Gaining insights into key HR themes and subsequently changing processes seems to be important in one out of three organizations. One out of four organizations leverage analytics to make changes in processes that contribute to the employee experience.

Capabilities & Culture

44% of organizations indicate that they have sufficient people available in the HR organization to do basic reporting on HR data, while 35% indicate they have people available to conduct data analytics on HR data.

While 35% of organizations have indicated that HR professionals are able to explain analytical outcomes, only 26% experience a data-driven mindset in HR.

It seems about one in three organizations are confident that they have people available to conduct data analytics on HR data. Of course, this doesn’t necessarily mean that these people are in HR – they might well be data analysts or data scientists elsewhere in the organization. A data-driven mindset is still lacking in three out of four organizations.

Challenges for 2020

Considering these results, a number of challenges arise for 2020 in most of the organizations.

On the topic of data, creating a reliable central data source is imperative. Organizations might be able to make small incremental changes to data entry processes in order to increase the reliability of HR data. To find out where most energy to increase data reliability needs to flow, identify which strategic HR topics show most problems and prioritize these.

With analytics services organizations need to continue with standardization of standard reports so anyone has access to reliable reports. Furthermore,  it is crucial to make HR data and custom reports available to HR business partners, HR managers, and experts. Only then will it be possible for HR to have fruitful and strategic discussions with business stakeholders based on facts and forecasts.

Concerning capabilities and culture, the most important action organizations can take is to keep stimulating a data-driven mindset. This should be done in practical ways, where the main goal should be exposed to the use of data and analysis. People within HR should experience the benefits of having data and analytics present in their daily work and feel how this may help them and the organization make better decisions. From that, a data-driven mindset and culture will grow.

In conclusion

Any analytical effort within HR starts with a specific need or an idea. Creating a data-driven mindset is therefore crucial in order to make any kind of impact with data and analysis. HR professionals need to know what is possible within the analytical capabilities of the organization. From there they can help improve the basic building blocks of people analytics.

AIHR is launching a People Analytics quickscan soon which will give participants access to proposed actions customized to the needs of the organization.

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