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HR managers see HR analytics as a precondition for HR business partners

30 December 2014

HR managers think that HR will first have to become data-driven before they'll be taken really seriously by boards and senior management. 58% see HR analytics as a precondition for being a good HR business partner. However, in their daily practice, they don't seem to be able to keep up with that goal and board members are often critical of the analytic skills of their HR staff. This is borne out by the 2014-2015 Raet HR Benchmark, carried out by the leading Dutch market research company TNS Nipo among employees, HR managers and board members. Hans Janse, HR analytics specialist at Raet: “Board members and line managers want substantiated views and perspectives. HR can make the difference through an approach that's more closely based on facts."

Board members expect strategic advice from HR

The benchmark study shows that senior management expects HR to fulfil a strategic advisory role. 71% consider this as a key responsibility for HR although almost one in five senior managers find their HR department's performance insufficient in this respect. They're also critical of the analytical skills of their HR staff, giving them an average score of 5.9, on an increasing scale from 1 to 10 for this aspect. Janse sees a connection: “HR is used to recording data, but data in itself is of little added value to managers and board members. The real challenge lies in translating this data into useful advice that contributes to the organization's goals, for instance a lower turnover or better customer satisfaction. In this way, HR can prove its added value as a business partner. And that calls for data analyses that go above and beyond the level of the HR department.”

Little analysis of HR data in relation to other data

The benchmark study has also revealed that most organizations still have a long way to go as regards HR analytics. The majority of all HR managers (52%) say that they measure and analyze HR data in their own organization, but most organizations are not analyzing their HR data in relation to other data yet. This step has only been taken by 28% of all organizations. They analyze HR data by relating it to other organizational data, such as customer satisfaction, quality information and financial data. Only 9% of all organizations work with ‘predictive’ HR analytics, i.e. predicting organizational results based on HR and other kinds of data.

Janse thinks that many organizations don't have a good view of the types of analyses that are possible based on the data that's already available. Start with the low-hanging fruit, is his advice. For example, can you demonstrate the effect on employee productivity of education and training courses? Or can you identify any HR factors that explain why turnover or customer satisfaction in one department or location is higher than in another? These kind of analyses help to identify, in concrete terms, the effectiveness of HR tools and what the HR policy should be aimed at. For example, if you know that training course A has more impact on employee performance than training course B, you can spend your budget in a much more targeted way. And this will also benefit the employees, he says. “You also do them a favor by offering the most effective training course.”

HR analytics calls for different competencies

Why doesn't HR live up to its ambition to make more and better use of HR analytics? HR managers have mentioned a few bottlenecks in the 2014-2015 HR Benchmark. For example, 37% see the linking of data sources as an obstacle. More than a quarter (26%) say that the HR department lacks the necessary competencies to do HR analytics properly. Janse believes that hiring a data analyst will speed things up. “You can't expect every HR adviser to be multi-talented. HR analytics calls for different competencies than those associated with the traditional HR function. That's why I see HR analytics as a new kind of specialization - preferably inside the HR department, but outside the HR department is also viable.”

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