The use of data in HR: making informed decisions for people management
Analysing talent is not drastically different from analysing customer relationships
In today’s data-driven world, it’s becoming increasingly evident that utilising data is crucial for making better decisions in various domains. Human resources (HR) is no exception. The practice of using data to enhance decision-making in HR has gained traction, initially pioneered in the US through the analysis of sports performance. Now, organisations are recognising the value of data in making informed decisions about their most important asset — their people.
I will always go back to the same point that HR can learn from marketing as they know the true value of data and how to leverage it. Marketing departments extensively employ data to segment customers and devise more effective strategies. So, why should HR not follow suit? By utilising data, HR can make better decisions about managing people. HR professionals can start by asking key questions such as: Where does collaboration occur within our organisation? Who should we be hiring or promoting? Is our training program effective? What happens if we change incentives? By delving into the data behind these decisions, HR can influence biases and improve overall decision-making.
Analysing talent is not drastically different from analysing customer relationships or managing the supply chain. The knowledge, skills, and abilities of employees are often regarded as a company’s greatest assets. Therefore, gathering and analysing data about people in the workforce becomes essential. People data can be found not only within HR systems but also in other departments such as IT and sales. Utilising this data offers a clear opportunity to contribute to the business in a more meaningful way.
Traditionally, decisions in HR were often based on intuition or hunches. However, many organisations are now setting examples of what effective people analytics looks like. Prominent cases include Teach for America, which tracks the performance of all teachers and compares it to evaluations conducted at the time of hiring. Google has also examined its interview process, finding that interviews have no predictability in performance. Consequently, they limited the number of managers involved in the hiring process to optimise efficiency. Credit Suisse explored talent retention and discovered that individuals who changed jobs were more likely to stay longer, prompting action based on this finding. Data-driven insights help identify the organisation’s most valuable employees in a factual manner.
Whilst much of this seems straightforward, one of the challenges HR faces is the noisy nature of performance measures. There is a range of outcomes influenced by factors outside the employees’ control, making it difficult to discern skill from luck. Similar to how many sports teams use data to distinguish between skill and chance, HR can utilise data to understand where performance improvements can occur. Skill persists, while chance is fleeting.
To leverage the power of data effectively, HR professionals should focus on four key levels of analysis. Descriptive analytics which provide a snapshot of HR metrics such as absence and annual leave records, attrition rates, and recruitment rates. Taking it a step further, descriptive analytics can be combined with multidimensional data, such as engagement scores and leadership capability, to gain a deeper understanding of what is happening within the organisation. Predictive data enables HR to forecast future trends, such as potential skills shortages, by utilising robust workforce data. Finally, prescriptive analytics combines descriptive and predictive insights to recommend actionable options. For instance, it can suggest online learning courses tailored to individual career goals.
In conclusion, data-driven decision-making in HR has emerged as a powerful tool for making informed choices about people management. By following the examples set by pioneering organisations and leveraging data at various levels of analysis, HR professionals can enhance their decision-making processes and unlock the full potential of their workforce.
The integration of data in HR practices not only leads to more accurate and impactful decisions but also enables organisations to optimise talent management, increase productivity, and drive overall business success.
If you have any doubts about people and data – just watch Moneyball.
The writer is the Group Chief Human Resources Officer of Galadari Brothers. He is a Chartered Fellow of the CIPD and a graduate of the Wharton CHRO programme. His work on organisational transformation has been showcased by the CIPD in their digital learning series and presented at the CIPD London Festival of Work. In 2023 he was listed in the top 50 most Influential HR leaders in the s region by the Economic Times.
