Seven things we’re doing wrong with HR analytics

26 Apr 2017 By Cathryn Newbery

Experts shock HR analysts with stern wake-up calls over data pitfalls at the People Analytics World conference

Think you’re doing pretty well with HR data analytics by producing monthly workforce reports and providing data dumps on request? The two keynote speakers on day one of this week’s People Analytics World conference put forth a compelling case that the majority of current HR analytics work is a waste of time, and isn’t adding business value. Here are seven things they said you’re probably doing wrong with data.

1. Doing too much with too little data

“I see a great deal of potential for HR analytics, and I’m very, very afraid,” said Alec Levenson, senior research scientist at the Center for Effective Organizations at the University of Southern California Marshall School of Business.

An economist by background, Levenson said he always used to see economists trying to say too much with too little data. “I’m worried that HR analytics will make the same mistakes – of trying to tell too complex stories without enough data. We’re not focusing enough on the questions that matter, and we’re focusing too much on the data in front of us.”

2.  Wasting time on reports

Organisations that are typically doing HR analytics are usually working on reports, metrics and dashboards, said Peter Howes, VP of workforce planning and analytics at SAP SuccessFactors. But “you won’t get insight from a report you generate today – that’s just monitoring”, he said. “We are just publishing stuff; this is important from a hygiene perspective, but it doesn’t add value and it doesn’t demonstrate credibility.”

What HR analytics functions should be doing – and often aren’t, according to Howes – is formulating and testing hypotheses, developing a library of topics to investigate and doing predictive analytics.

3. Trying to use data to prove HR’s worth

HR needs to let go of its own agenda when using data, said Levenson: analytics shouldn’t be about proving HR’s worth. “The purpose of HR is to serve the business, and analytics help us to understand where the business needs to be served,” he said.

Much of HR’s work is done for compliance purposes, and to “keep the lights on”, Levenson added. “Not everything that we do in HR is of primary importance for helping the business to succeed. And we can do any number of things with data that aren’t relevant to business improvement. You have to decide what questions are important and will help you move the needle strategically.”

4. Focusing on the wrong skills

Too many HR analytics teams are experienced in the wrong skills, such as data extraction, creating ad hoc reports and supplying dumps of data. “We should not be building Excel pivot tables,” said Howes. “This is low-value work.”

Instead HR should be employing experienced statisticians – preferably those with a background in behavioural science – to do proper investigative analytics work. “These people are available, and they aren’t that expensive,” said Howes. “You should buy in quantitative research skills – don’t develop them in HR.”  

5. Concentrating on individuals

Most HR analytics work is focused on the capability, skills and attitudes of individuals, said Levenson. “The bit we ignore is job design. If jobs aren’t designed right and resourced properly, things will fall apart. HR is never given permission to focus on job design, which is why HR is so often ineffective.” Analytics work also needs to pay more attention to group dynamics, he added, because it is through teams that value and growth is created.

6. Idolising tech companies’ HR models

Levenson also had stern words for all those who’ve spent hours devouring the ‘teachings’ of Laszlo Bock. “There is nothing we get from Google’s [HR] lessons,” he said. “Google doesn’t make money because of its HR practices – it makes money because it has a virtual monopoly on the top talent in the search engine arena. Whichever tech company is ascendant, we think it has great HR.”

7. Arguing about ROI

“Don’t get in a pissing match with finance over return on investment (ROI),” said Levenson. “ROI measures short-term cash flow, and the best way to improve it is to stop investing in the future.” ROI is only ever asked for when someone is challenged to defend a project, he said; finance is always challenging HR to prove that spending is worthwhile. Focus on the competitive advantage instead, he argued.

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