myHRfuture

View Original

How People Analytics is Supporting Merck’s Growth in China

According to recent research, the people analytics market is set to grow annually by an average of 14.2% per year between now and 2027 to a value of $6.29 billion. Much of this growth is forecasted to come from the Asia-Pacific region, home to 60% of the world’s population and according to McKinsey on track to top 50% of global GDP by 2040.

As I’ve written previously here, People Analytics is also on the rise in the region, with LinkedIn’s The Rise of Analytics in HR regional report for Asia-Pacific finding that in the five years to 2018, there has been a 70% increase in specialised analytics professionals in HR in the region.

China is by far the biggest economy in the region, and People Analytics is growing exponentially in the world’s second biggest economy. Alongside India, China is the country I receive the most correspondence from about people analytics – both from companies looking to grow capability and from professionals seeking to learn more about this burgeoning field.

Many of the companies we work with at Insight222 as part of The People Analytics Program have ongoing operations and resources in their team based in China. One of these companies is Merck KGaA, and I caught up recently with Sherry Xie, who is based in Shanghai, to learn more about why people analytics is growing so fast and some of the work she and the People Analytics and Strategic Workforce Planning team are doing in China. 

1) Thanks for taking the time to speak to me, Sherry. Please can you explain why HR digitalisation and people analytics is growing so quickly in China?

Thanks David, it’s a pleasure to speak with you. The reasons for the rapid growth in China can be explained from a combination of external competitiveness and internal resources-based capability. In recent years, with the macro economy slowing down, lower return on invested capital and increased human capital cost, more and more Chinese companies started to focus on management efficiency. This has helped to create a breeding ground for people analytics. Simultaneously, for Chinese IT giants, data is sort of like “blood” they cannot thrive without – and data analytics has been a critical part of their business model. And now, even for non-IT companies, data is becoming the new “means of production”. This is further promoted by the relative ease of access to individual data, due to the lighter restrictions imposed in China compared to Western countries. 

2) What are some of the unique challenges and opportunities for HR digitalisation and people analytics in China? 

The majority of Chinese business leaders still consider people analytics as an extra cost, rather than an integral part of a business. When facing business challenges, hiring more people is still the preferred way to go as opposed to analysing current FTE cost structure and reallocating limited resources.  

Furthermore, HR repositioning is critical too. From my previous consulting experience, I have found out that administrative tasks account for more than 70 percent of HR’s overall capacity in many companies. Only when HR functions are defined as strategic roles with new capability requirements (with the strong support of a service centre), are they able to make the change to acquire digital capabilities to impact business.

In big Chinese companies, we see advanced AI and machine learning being applied to analytics. In order to accurately improve productivity, employees’ behaviors are being tracked and analysed for specific business scenarios. Instead of being led by HR, these analytics are conducted by business leaders with the support of data scientists. So far, a comprehensive people data infrastructure, people analytics tool for leaders to play with or HR analytics capability empowerment is still not well established in Chinese companies.

Small and medium sized companies, especially in traditional industries, are still more or less focusing on enhancing the structure of traditional HR functionalities. 

3. How is the People Analytics and Strategic Workforce Planning team at Merck Group set up to serve the Chinese market?

The team is part of the global Innovation Talent HR, and is composed of selected staff stationed in Merck strategic hubs, such as Germany, China, Singapore and the U.S. The team is centralised and very agile. I am based in China, leading people analytics enablement solution globally, while supporting other global People Analytics and Strategic Workforce Planning solutions and delivering Merck China specific projects. Under this organisational structure, I have seamless interactions with our advanced people analytics offerings and can very effectively serve China’s needs in a customised way.

4. Can you provide one or two examples of people analytics project delivered by the team at Merck Group in China?

As the fastest growing market for Merck, China has become one of the most sophisticated markets with high growth targets, a very complex eco-system, new innovative go-to-market models, as well as Merck’s internal sales and cost-effective targets.


Interested in learning more about People Analytics? Take a look at our online People Analytics certifications on myHRfuture


In this context, being able to make the most out of various data and leverage AI technology to help the management team make fast and agile decisions is crucial. The Global People Analytics and Strategic Workforce Planning team collaborates closely with Chinese business and HR leaders, to analyse several key business pain points and decided to start with proactive resources optimisation and better talent decisions. 

We built an analytics tool called M.I.A (My Intelligence Analytics) with AI and Machine Learning algorithms embedded (see the graph below). The first iteration combines HR and Business data to bring tailored and actionable insights of sales team capacity, ROI, as well as key drivers of attrition to commercial managers, helping them optimise the re-deployment of resources across sales territories and better manage attrition, as well as practically implement future organisation design in China.

M.I.A business stakeholder Steve Vermant (Managing Director, Life Science China) commented:

“The new People Analytics Technology M.I.A has already started to help us in many ways. With this tool, my sales leadership team and I can now spend less time collecting data and have more time analyzing future trends and driving sustainable growth. Furthermore, it accurately targets the pain points of sales resources allocation across territories and businesses. I truly believe that MIA is a great example of how we can practically evolve our Leadership of People and Innovation capabilities, by augmenting human intelligence with AI.”

The Global People Analytics & Strategic Workforce Planning team is working on a number of other China specific projects. One example is Flight Risk (see the graph below) - with local teams. In this project, the AI embedded algorithm helps managers: 1) predict the turnover possibility of employees and the key drivers that made this employee leave, and 2) identify the key background attributes that highly relates to the new hires who leave the company within 12 months. This model helps managers intervene with potential incumbents who are likely to leave as well as in the recruitment phase filter the candidates who are deemed likely to resign early.

We are delighted to see business leaders in Merck China starting to make the mind-set change by integrating people analytics in their work environment. At the same time, we invest on people analytics capability building in the China HR community as well. Under the strategic BMC (Boosting Merck China) umbrella, people strategy has become one of the prioritised business initiatives. People data analytics is being widely applied, from creating people strategy to talent sourcing and development, total rewards, and dealing with the Covid-19 related topics.

Some of the achievements so far include:

  • Role requirements - as the new operating model at Merck HR is implemented, some HR administrative work has been shifted to a Business Service Centre, so that China HR’s role can become more strategic and business oriented with data analytics making greater business impact.

  • Technology readiness - Merck implemented Visier in 2016, which contains a large amount of people data and has been deployed across the entire company globally. This has accelerated the exposure of our colleagues in China to people analytics from simple dashboards and descriptive analysis to advanced predictive and prescriptive analytics.

  • Capability enablement - Selected self-driven analytical thinking courses are provided to colleagues as well as people analytics/strategic workforce planning workshops delivered in China for both business leaders and HR colleagues.

  • Culture building: A “future of work” culture of making maximum data value is initiated by leaders. I am delighted that Merck China is putting in a huge effort for digital transformation and the future of work.

Merck China HR head Diane Zhu says:

“As part of our HR Strategy 2022 journey, we are evolving to become truly strategic in our partnership with business functions. To achieve this, we are building up new inhouse HR competencies, and it’s justified to say that Enhanced People Analytics and Strategic Workforce Planning are at the core of these ‘to be developed’ competencies. In a strategic market like China, where top talent is harder than ever to attract and retain, companies that know how to plan for future capability needs and predict and quantify the impact of talent programs will have a tremendous competitive advantage in their industries”.

5. What are the key opportunities you see for the further growth of people analytics in the Chinese market?

Given the increasing focus on competitiveness, efficiency, digital transformation and data accessibility, there are numerous opportunities for the accelerated growth of people analytics here in China. I envisage large Chinese companies taking the lead in digitalisation. In addition to quick win AI and Machine Learning embedded analytics, opportunities also lie in preparing organisations and their workforces for the future way of work, investing in people data infrastructure, building up analytics platforms and in order to enable all of these - focusing effort on people analytics capability empowerment for both business leaders and HR. The second wave of opportunities will come as other companies, inspired by those setting the pace, decide to undergo digital transformation.

Consequently, in order to help companies achieve their goals, the burgeoning people analytics ecosystem in China will also benefit. I see huge opportunities for a variety of players, such as academic institutions, consulting firms, start-ups, people analytics communities and other organisations. With the exponential growth of people analytics and with all these stakeholders’ effort, I believe the management maturity of Chinese companies will be driven to another level, and Chinese leaders will be equipped with the mindset and capability readiness required for the future environment. Collectively, these trends provide tremendous opportunity to improve the maturity of people analytics in China.

Thank You

Thanks to Sherry for sharing her insights and expertise about the growth of people analytics in China and for providing examples of the work Merck is doing in the country.


Get certified in People Analytics

The myHRfuture academy is a learning experience platform for HR professionals looking to invest in their careers. We have many online HR certifications that are designed for People Analytics professionals and HR Business Partners to help them build their knowledge and get a People Analytics certification or a certification in Digital HR and understand how to become more digital and data-driven. All of our online HR certifications reflect the core HR skills you need to develop for the future, giving you a professional edge while providing evidence of the skills you’ve mastered, helping you get ahead and press PLAY on your career for only £25 per month.


ABOUT THE AUTHORS

Sherry Xie is the People Analytics Enablement global lead at Merck Group, based in shanghai, responsible for promoting the future-oriented mindset changing and people analytics capability building among HR colleagues and business leaders. Sherry is an expert of embedding productised and customised concepts into capability buildup to help employees and teams to grow and thrive.

David Green is a globally respected writer, speaker, conference chair, and executive consultant on people analytics, data-driven HR and the future of work. As an Executive Director at Insight222, he helps global organisations create more cultural and economic value through the wise and ethical use of people data and analytics. Prior to joining Insight222 and taking up a board advisor role at TrustSphere, David was the Global Director of People Analytics Solutions at IBM Watson Talent. As such, David has extensive experience in helping organisations embark upon and accelerate their people analytics journeys. David also hosts the Digital HR Leaders Podcast on myHRfuture.