Six Reasons People Analytics Functions (and Leaders) Fail
People analytics has seen dizzying growth over the last few years and that growth is still accelerating. Almost every CHRO we have spoken to over the past year has shared that they will increase their investment in building out their people analytics capabilities. Research conducted by Insight222 in 2020 revealed that people analytics teams had grown in size in absolute terms, with 60% of companies surveyed intending to grow their people analytics teams further.
In a sneak preview of this year’s People Analytics research from Insight222, due to be published next month, we can reveal that the growth of People Analytics teams has accelerated even further. In 2021, 75% of companies indicated that they are planning to increase their team size.
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Source: Delivering Value at Scale: A New Operating Model for People Analytics, Insight222 2020
But with increased resource comes increased expectation. This blog summarises the most common failure points of people analytics functions. Its purpose is to help CHROs and people analytics leaders avoid a few critical mistakes, make investment decisions more confidently, and achieve the expected business outcomes.
Failure Risk One: Pursuing Quality Data
The first failure risk that people analytics professionals commonly point to is data: specifically, pursuing quality data. We have seen incredible impact created from rather rudimentary data. This opportunity to create impact is missed when people analytics teams become obsessed with building the perfect data set. Teams get stuck in their pursuit of the perfect data set and neglect to deliver meaningful insights with the data already at their disposal. They subsequently miss the opportunity to gain early investment and buy-in from business stakeholders.
How to avoid the risk: Emulate the finance function’s approach to imperfect data. The finance function makes assumptions, clearly labels these, and assigns confidence levels to scenarios. They don’t wait for the perfect data but deliver with the data that is available and the caveats that are necessary. They use the caveats as opportunities to make their case for investment in improving data over time.
Failure Risk Two: Growing Pains
The second failure point occurs when people analytics teams don’t plan ahead as they experience rapid growth. Many of our clients report that they experienced a tipping point where seemingly overnight the function shifts from trying to find value-adding projects to being inundated by requests. This is a critical career defining moment for every people analytics leader. Teams that are not ready for that moment fail, because the business will turn elsewhere. And you know you are failing when you hear statements from business leaders such as “oh, we don’t ask them, they are so busy.”
How to avoid the risk: The solution is to plan ahead. That’s easier said than done, but we have a selection of approaches that work, such as building a people analytics governance model. When these are deployed, you can respond and flex capacity to where it is needed.
Failure Risk Three: Talent Disruption
This leads to the third failure point: talent disruption. People analytics teams are increasingly built by hiring external talent (because there is (an often unfounded) belief that external talent is more readily available than internal talent) and this talent can be quite different in skills, attitude, and abilities than the rest of HR. In addition, they are often hired with the mandate to disrupt and given budget that is taken from other parts of HR. All these factors make for a difficult starting point for even the best people analytics leader.
How to avoid the risk: If you cannot elevate leaders internally, then supporting a leader by building a direct line of sight with business leaders raises their likelihood of success. These leaders and teams are better able to understand what is most valuable to the organization. Those leaders who focus on HR are more at risk of failure.
Failure Risk Four: Prioritisation
Related to the third failure point is the fourth: prioritisation of your people analytics projects. How do you decide whether to prioritise the request from the CFO or the request from the COO? Or the request from the Head of one business unit vs. a regional leader? People analytics leaders are often confronted by these challenging scenarios. If they look to the CHRO for guidance too often, then their ability to lead is questioned. If they decide for themselves which request to prioritise, then one wrong decision may be severely career limiting.
How to avoid the risk: Only with the right governance model for people analytics can your team succeed. By governance we mean that you need to establish a people analytics governance Council to advise you on these difficult calls. But the Council can only be effective if you have well-defined value and complexity criteria on which to base decisions.
Failure Risk Five: Trust
Fifth, a breach of trust. This is the most subtle and, at the same time, the most devastating failure because a breach of trust can leave scorched earth for anyone who tries to follow. When people data is used for purposes that breach employee trust, not only can this lead to the unceremonious exit of those responsible, but we’ve seen it poison the ability for insightful and impactful analytics… for example, employees don’t respond to surveys, and even when they respond you don’t know if you can trust the information anymore.
How to avoid the risk: This is a risk that you must avoid. And you can do that by clearly defining a set of ethical principles in people analytics and a process for an ethics project review. Unsurprisingly, we see those leaders who are experienced in building people analytics functions prioritise this failure risk above others.
Failure Risk Six: Insufficient Commitment
This sixth and final reason may be hard to hear for CHROs, because it is often their responsibility: haphazard investments. Haphazard investment leads to:
Insufficient capacity to complete assignments in a timely fashion. Business leaders subsequently make decisions without people analysis or build their own analytics altogether. Once that happens it is very difficult to realign business leaders and people analytics teams.
Bad organisational design choices with poor alignment of the people analytics team to the business.
Finally, a small, hesitant investment is a sign to the rest of HR that they can safely ignore people analytics.
In large complex organisations there are always forces that feel threatened by change. A haphazard approach gives these forces a distinct advantage. Underinvestment is not a failure of the people analytics leader, but a failure of the CHRO. Making half-hearted investments into people analytics is like a soccer coach who wilfully puts only nine players on the field. Or a basketball coach who puts a 5 foot 2 player at centre. You just can’t compete; you just can’t deliver.
How to avoid the risk: A clear roadmap and strategy is the best way to avoid this risk. Developing the roadmap is the responsibility of the people analytics leader. It is also the responsibility of the people analytics leader and team to ensure the roadmap identifies business opportunities that are compelling enough to warrant the significant investment an impactful team requires. Once approved it is the responsibility of the CHRO to give the team the promised room and resources over the required time.
Any of us who have worked in large organisations know and recognise what failure of a function or team looks like: whole topic areas that require people data are moved (to central analytics, HRIT, etc.); multiple people analytics leaders leave in short succession; and teams get dispersed and absorbed into other functions. We hope that pointing to these six most common points of failure enables CHROs and people analytics leaders to develop a radar to recognise these potential issues and tack to correct, before they veer too far off course.
Click here to learn more about how Insight222 can help your organisation avoid these common pitfalls when growing your team and ensure that you are delivering value through people analytics.
ABOUT THE AUTHOR
Dirk Petersen is a renowned expert in HR strategy, organisational change, digital transformation, and how analytics affect HR communities and those they serve. After his MBA at Harvard Business School, Dirk spent many years serving leading organisations at the Corporate Executive Board (CEB). From there he served as a HR Business Partner with the World Bank. Since then he's helped leaders better understand and strategise around how workforce analytics impacts careers, innovation, operational effectiveness, and executive decision-making.
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