How to Get Started with Building Your People Analytics Function
December 17, 2019
People analytics — the practice of gathering and analyzing workforce data to drive better decision making — is a growing trend in talent management, with many organizations planning to build a program soon. And the majority plan to keep things in-house. In a 2019 study of HR teams, one in three respondents (32%) said they plan to upskill existing HR team members over the next 12 months to add people analytics capabilities. That’s compared to just 17% that planned to hire external talent and 7% that said they’d be outsourcing people analytics altogether.
“There are natural benefits to developing an internal function and upskilling employees,” says Benjamin Borchorst, engagement manager of Scandinavian management consultancy Implement Consulting Group and co-founder of The People Analytics Practitioner Network. “You get to build upon a basis of understanding about the organization, the challenges, and the culture that can help you anchor your efforts. And providing opportunities for development makes sense.”
Benjamin has spent years helping clients develop people analytics capabilities within their organizations, allowing them to use workforce data to do things like identify learning and development opportunities, gain a better understanding of turnover drivers, and more. He believes every HR team can benefit from developing these capabilities and positioning themselves as strategic advisors to the business. This is a great way for HR to earn that coveted seat at the table.
“The continuous efforts to become more data-driven really add value,” Benjamin says. “Most companies are already doing this on the customer side — trying to leverage data to become smarter, to make better decisions, and, ultimately, to create more impact with initiatives. Internally, this can help you bring in relevant skills when you need them, and avoid the cost when you don’t.”
To help you start building out a people analytics function to create more value within HR, here are five essential steps that Benjamin recommends.
1. Start by outlining the impact you want to have and the direction you’ll need to take to get to your winning aspiration
For Benjamin, the most important step any company can take when first starting out with people analytics is to decide what their ultimate goal is.
“I would definitely figure out where I want to go first,” he says. “After that, you can decide upon the most intelligent way to go about it.”
At Implement Consulting Group, the team kicks off every project by creating what they call an “impact case.” This details the goal, the people it will affect, and various milestones they’ll need to hit along the way.
“What do we want to achieve?” Benjamin says. “Who are our stakeholders? Who are our customers? What’s the vision? Where are we one year down the line? Where are we three years from now? What's our grand vision? In five or 10 years, if we do really well, what will put us on the front page of The New York Times or the Financial Times?”
If you’re not sure where to begin, Josh Bersin, founder of Bersin, Deloitte Consulting LLP, recommends trying to solve the biggest pain points your company is facing. For example, if your organization was getting a lot of negative feedback from customers, your first project might be to assess the link between customer satisfaction and employee engagement data. If you found a strong correlation, you could then focus on identifying the key drivers of engagement and building strategic initiatives around them to boost engagement across your workforce.
As you consider what your goal will be, don’t limit yourself to easily achievable results. Benjamin believes it’s good to have ambitious goals, as long as you can envision actionable steps to achieving them. In the example above, you could set yourself the goal of increasing your company’s net promoter score (NPS) by a certain number of points by the end of the year, since this is a strong indicator of customer satisfaction.
“Dream a bit,” Benjamin says. “Get that direction, and depending on where you want to go, figure out the initiatives you’ll need.”
2. Get an overview of your team’s existing competencies and figure out where your gaps lie
Once you’ve settled on your winning aspiration and the initiatives that will help you reach it, the next step is figuring out what capabilities you’ll need to get there. Benjamin outlines five key sets of capabilities that every strong people analytics function should have:
- Data collection, governance, and architecture: How you collect, manage, and store your data. To build this capability, your team will need to develop skills around gathering and cleaning data and designing a database.
- Data science: How you use the data you’ve collected to generate insights. To build this capability, your team will need to gain skills around statistical analysis and the various methodologies and tools involved, such as Tableau and Excel.
- Behavioral science: How you interpret your insights through the lens of HR, never losing sight of the people behind it. To build this capability, your team will need to develop skills around organizational psychology.
- Business acumen: How you ensure your analysis is relevant and aligned with the overall business strategy, not just with HR’s needs. To build this capability, your team will need skills like problem-solving and strategic thinking, as well as possessing a deep understanding of the business.
- Information design and change management: How you communicate your insights to key stakeholders within your organization and use them to generate impact. To build this capability, your team will need information design, data visualization, storytelling, and change management skills.
“Ask yourself, ‘How do we cover that?’” Benjamin says. “‘Do we need to build those competencies? Who do we need to partner with internally?’”
For some of these capability areas, your team may already possess the skills they need. They might, for example, have strong communication and storytelling skills that would allow them to clearly explain the findings of a project to stakeholders in order to secure buy-in for their initiatives. To develop other capabilities, though, you may need to identify experts elsewhere in the company who can help train your team (more on that in a minute).
Benjamin also stresses that you can’t go about developing these skills in the same way. Each set of capabilities will require a unique approach to train and implement.
“You can go about developing them in different ways, but I think they are separate,” he says. “It depends on what you're lacking and where you're partnering up.”
3. Find the right partner to help you build out your capabilities and consider leveraging external talent
It takes a village to build a people analytics function, so it’s unlikely that your team can get up to speed entirely on their own. Making a few strategic partnerships throughout the business can help you level up your skills much faster.
“It can definitely make sense to partner up with talent outside HR to accelerate development of the people analytics function,” Benjamin says. “Many teams struggle with data governance and we have seen examples of these capabilities being sourced from the IT department.”
Of course, you may not have all the skills you need in-house. Just because someone from IT was able to help you with data governance doesn’t mean they possess the in-depth data analytics skills you need to train or augment your HR team. If you find your organization has skills gaps, you may need to take some learning courses or get external help with certain tasks.
“Many companies, if they have a business service center (BSC), outsource to somewhere where the labor costs are cheaper,” Benjamin says. “For example, they leverage the BSC’s data analytics capabilities to automate reporting.”
As you start looking for partners, you may also need to identify new tech partnerships. If your team hasn’t handled a large amount of data before, their current tools may not be equipped to handle it.
“Many organizations have moved their HR information system into the cloud, and what these systems can deliver is continuously developing,” Benjamin says. “Others are in a completely different stage, with data dispersed across multiple non-integrated systems, and there's a huge task in figuring out how to govern and integrate these data sources.”
4. Don’t lose momentum — aim for some quick wins that pave the way for larger initiatives
Learning new skills is exciting, but it’s rarely an apprehension-free process. Benjamin cautions teams against letting those nerves get the better of them, leaving them hesitant to start putting their newfound skills in action.
“The big risk of building up a whole capability base from the ground up could be that you never really get off to creating real insights before you lose the momentum,” he says. “Basically, you are spending too much time trying to figure out what to do, and you're not delivering enough impact for your stakeholders and your business. You’re so focused on getting everything right that you don’t deliver impact. ”
If it takes too long for your team’s efforts to generate results, your business leaders may become impatient and kill your initiatives before they ever truly get off the ground. Getting the ball rolling with a few smaller projects — like testing the key assumptions around employee turnover (e.g. time since last promotion, scores from your engagement survey, or performance) — can help you prove the value of people analytics and get buy-in for future initiatives. And if you feel you still have gaps in your capabilities, this is where outsourced solutions can really help.
“Depending on where you’re going,” Benjamin says, “the best approach is a balance between relying on in-house talent and sourcing external capabilities to keep momentum and reach quick-wins.”
Another way to maintain momentum and grow your skills along the way is to join a people analytics network. Being surrounded by like-minded professionals and sharing strategies and ideas can help you keep moving forward with purpose.
In Scandinavia, for example, there’s The People Analytics Practitioner Network that Benjamin co-founded, offering practitioners of people analytics an opportunity to learn from each other and work on concrete people analytics use cases. At previous events, attendees got their hands dirty working on how to establish a data-driven culture in HR and nail the cost-of-hire calculation. Similar networks exist around the globe.
5. Measure the impact of your efforts and make sure your key stakeholders are satisfied
When you’re establishing a new function, it can be tricky to measure your success. This is especially true with people analytics, where establishing statistical causality is easier said than done.
Stakeholder satisfaction is one metric that you may want to measure, particularly among your business leaders. You could do this by sending quick surveys for them to fill out after a project is completed, or by running focus groups. This can help you avoid a kind of tunnel vision where you only focus on the impact you’re having on HR. Benjamin recommends thinking about your initiatives and insights as a product and your leaders as your customers.
“How are they perceiving us and what we deliver?” he says. “How are they rating our products and the offerings that we come to market with?”
Another area that can be useful to measure relates to efficiency. This will naturally improve over time as the team grows more confident in its capabilities, but to begin with, it may be slow going. In the initial phases, you’ll probably have to create a new flow of reports for each initiative, or tweak and develop any you inherit. Gradually though, as the business learns to read and interpret these reports, you’ll be able to build automation into the process, utilizing technology or a business service center for report generation.
Automating time-consuming manual reporting can both increase stakeholder satisfaction through flexible self-service and free up time for your people analytics team to pursue development of new insights through more advanced analytics.
“How much time are we spending on tasks that, in principle, could be automated?” Benjamin says. “And on the other hand, how much time do we get to do more ad hoc analysis and exploration of issues or interesting paths that we either have identified ourselves — or, even better, with input from the business or from the C-suite?”
When you’re doing people analytics right, people will come to you
For Benjamin, one of the best indicators that you’re on the right path is when other people in the business start requesting insights from you. He refers to this as moving from pushing to pulling.
“One of our clients was a business unit within a large financial service provider that initially had to convince the business of the value of the analytics insights,” he recalls. “With time, and through the impact they delivered, demand for their insights grew to the extent that the function now has to select among all the requests for insights from the business.”
It’s these kinds of results that can really help HR gain a seat at the table — and keep it.
“I think people analytics has the potential to, on the one hand, create a basis for allocating investments in HR or people development initiatives,” Benjamin says, “and on the other hand, to create and leverage insights to improve these initiatives — not only establishing the foundation for really getting a seat at the table, but also improving the value of what you deliver. And with that, people analytics can help suit the CHRO up for the C-suite.”
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