For decades, the HR function has always been seen as the support function of an organisation that focuses on employee benefits, payroll and administration. As the business landscape evolved and C-level executives realised the importance of HR in achieving successful business outcomes, the HR function has become a critical part of all organisations.

HR departments need to arm themselves with HR analytics to be strategic partners. After all, data can drive insights and decisions that can help organisations improve employee engagement and reduce turnover in ways that genuinely create tangible business outcomes.

However, even though many understand the importance of using data in HR, the path to actually implementing it can take time and effort. Therefore, this article will provide an all-encompassing guide on how HR departments can develop a data strategy that aligns with their business strategy and bridge the gap between data and HR.

The Benefits Of Using HR Analytics

As revealed in our 2022 People Analytics Trends report, using people analytics can help organisations to achieve a variety of business outcomes, such as:

Improved employee engagement: By leveraging people analytics, HR departments can gain deep insights into what motivates employees and better understand the factors that lead to improved employee engagement.

Reduced turnover: HR teams can use data and analytics to identify why employees leave, pinpointing reasons like low compensation or lack of advancement opportunities.

Enhance Workforce Planning: Taking a data-driven approach to workforce planning, and understanding the current skills of the workforce, allows HR functions to better anticipate career planning and internal talent mobility, enabling them to better plan for the future.

Improved Diversity & Inclusion: People analytics allows for deeper insights into the workforce, understanding the demographic makeup and uncovering any disparities.

Talent Acquisition Boost: Not only can people analytics help to reduce recruitment costs by optimising the recruitment process, but it also allows for more effective candidate selection.

Developing a Data-Driven HR Strategy That Aligns With the Overall Business Strategy 

Developing a data-driven HR strategy that aligns with a broader business strategy requires careful planning, analysis, and execution. 

Here are a few key steps to consider:

Identify the Business Goals

Start by understanding what the business seeks to achieve and how it plans to do that. This will help you determine which HR metrics should be tracked and identify potential areas for improvement.

Collect Relevant Data

Gather data from employee surveys, performance reviews, and exit interviews. This data can then be used to evaluate the current state of your human capital compared to the desired business outcomes.

Analyse the Data

Using analytics tools and techniques, analyse the data to uncover patterns and relationships that can inform the HR strategy. It is also important to note any potential biases in the data that may distort your conclusions. When implementing people analytics to understand your data, as Ian White, Founder and CEO of Charthop, explains on the Digital HR Leaders podcast, you must visualise the data so that everyone in the organisation can understand it.

"It helps people tell data-driven stories that are informed by the actual information, that can help create the change and alignment that HR Leaders are trying to create in the organisation."

It is equally important that you also consider the ethical implications of using people data ethics in mind when dealing with HR data. Unethical use of your people data can lead to significant reputational and legal risks, so design processes and policies to protect your employees' privacy.

Implement Processes for Continuous Improvement

After understanding the insights from your data analysis, develop processes and initiatives to ensure continuous improvement. This could involve employee development plans, training programmes, or other initiatives.

Measuring the Impact of Data-Driven Strategies

Building a data-driven HR strategy continues after the implementation. It is equally important to measure the impact of these strategies, evaluating whether they are achieving their desired outcomes.

To do this, establish a baseline measurement of progress against desired business outcomes and track your chosen metrics before and after any changes. This will help you understand whether your strategy has a positive effect, allowing you to adjust as needed.

Ultimately, by taking a data-driven approach to HR, you can improve your organisation's performance and achieve greater success in achieving its goals.

By measuring the impact of these strategies and continuously improving them, organisations can ensure that their people strategies are aligned with the overall business strategy, helping with improved employee engagement, a reduction in turnover, and ultimately leading to enhanced business outcomes.

Bridging the Gap between Data and HR

It is easy to get lost in a sea of data and forget that, ultimately, this information needs to inform real-world decisions. For people analytics to be effectively used in HR, we must bridge the gap between data-driven insights and practical HR solutions. For example, how can you use your people data to make crucial decisions around turnover reduction or improving employee engagement?

To help bridge this gap, creating a data-driven HR function that can interpret the data and provide suggestions is key. They should understand exactly what outcomes are being measured, be able to identify trends in the data, as well as have an understanding of HR processes so they can create practical solutions that will have a positive impact on business outcomes.

And while you can recruit for this skill set externally, it is also essential to upskill existing HR staff so that they have the necessary skills to understand and use data-driven insights to inform business decisions. This can be done through a range of people analytics courses or training programmes, which will equip HR teams with the tools needed to understand and interpret HR analytics and create strategies that will ultimately lead to improved business outcomes.

The bottom line is that data-driven HR is essential in today's organisations and crucial to any successful HR strategy. By focusing on upskilling existing HR staff with the knowledge they need to understand people analytics and create effective solutions, you can ensure your organisation can make the most of available data and ultimately build better business outcomes.

ABOUT THE AUTHORS

Nerea Gonzàlez

Nerea is an experienced consultant having worked in professional services for PwC and Aon for over five years, prior to joining Insight222 in 2022. She has consulted with global clients in the Manufacturing, Retail, Consumer Goods, Pharmaceutical and Financial Services sectors, amongst others, and in a number of functional areas such as human resources, finance and M&A. Nerea was dual educated in Spain and UK, is Spanish by nationality and also has lived in Ireland for part of her education. She is a certified accountant (ACCA) too! Outside of work, Nerea enjoys skiing, wake boarding, water skiing, tennis, paddle and scuba diving for which she is PADI qualified.

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