Damned Statistics: The relationship between HR analytics,
ROI and how HR can get a seat at the table.
By Grace McGillick, Leathwaite
Will HR take the opportunity to move
the function forwards with all of the
capability that people analytics
offers?
77%
Believe analytics
is important
7%
What is the current state?
Over the last two years we have
seen huge investment in HR Systems.
Possess analytics
capabilities to
maximise
application
This rise in investment in largely
cloud based systems should give
companies the opportunity to look
at their data in an integrated way,
People analytics, when effectively
used, gives HR the ability to provide with the knowledge that they can
substantive information allowing the access accurate data in a relatively
easy way.
business they support to reap
significant commercial gains.
This increased ability to extract data
This shift finally provides an entry for provides a unique opportunity for HR
to truly provide Return-onHR to obtain the much-vaunted
Investment (ROI).
“seat at the table” and to build
commercial credibility in an
In the CIPD’s HR outlook survey for
environment where previously they
winter 2015 – 2016 2, it was
may have been seen as a
highlighted that just 8% of HR
thoroughly transactional function.
leaders who had responded were
using no form of HR analytics.
However only 7% of respondents
who had people analytics
capability in their function were
optimising their use of analytics,
moving towards predictive
analytics which was in turn being
used to inform both the HR and
the business strategy.
Within this sample, just two fifths of
HR leaders believed that internal
stakeholders were satisfied with
The Deloitte Global Human Capital
the HR analytics they were
trends paper 1 stated that 2016 has
provided and this was reduced to
seen a real leap in terms of analytics
22% when asking internal
capability and interest, with 77% of
stakeholders directly!
respondents believing that people
analytics is important.
Perhaps most importantly,
IBM similarly has confirmed the
adoption of people analytics by
organisations across the globe.
1
Deloitte Global Human Capital trends paper
2
CIPD’s HR outlook survey for winter 2015 – 2016
3
S&P average share price
research from Bersin by Deloitte
shows that the 14% of businesses
with mature people analytics
capability were able to
demonstrate a clear link between
talent and leadership pipelines,
cost reduction and efficiency
gains. The share prices of these
pioneers was 30% above the S&P
average from 2011 – 2014 3.
30%
Increase in
share price
Businesses with
mature
people
analytics
performed
higher than
peers on the
stock market
With this in mind, companies
which invest in people analytics
talent will gain a clear competitive
advantage commercially – HR will
be able to provide definitive ROI.
What skill set is required for
People Analytics?
Given the commercial importance
of this talent pipeline, there is a
definite need to address whether HR
has the existing capability or skill set
to truly drive the people analytics
agenda forwards.
To understand where the talent
pipeline must come for people
analytics, fundamentally you have
to understand exactly what the
purpose of people analytics is.
People Analytics as defined by Mike
West (thought leader and
passionate advocate for people
analytics) is ‘the systematic
application of statistics and
behavioural science to Human
Resource Management to achieve
probability derived business
advantage.’
Essentially people analytics
practitioners are the statisticians of
Leathwaite: London | Zürich | Hong Kong | New York
www.leathwaite.com
The relationship between HR analytics, ROI and how HR
can get a seat at the table.
continued
HR. Having said this, using statistics
and data in HR, unlike in marketing
and finance, is still seen as
incongruent and potentially
awkward as West helpfully points
out. Arguably there are some cases
where realistically the capability
may not exist.
people analytics solutions at IBM)
identifies, Google is the ultimate
pioneer of all things analytics in HR.4
They popularised the idea of
predictive analytics in HR and even
created the brand People Analytics.
It is well known Google employs a
three-thirds model to its hires in HR:
It is likely that people with this skill set one third from traditional HR, a third
will come from what would
from academia and a third from
traditionally be thought of as more
strategy consulting.
business focused experience and
you may find them in other functions
“Google is
of the business, for example in
the ultimate
operations or finance. Alternatively
pioneer of
some parts of management
all things
consultancy will have developed
analytics in
these skills, as seen within PwC or
HR.”
McKinsey to name a few.
“Thinking
beyond the
HR Talent
Pool in order
to fully
understand people analytics.”
Ian Bailie, who leads the Talent and
People Planning Operations team,
recognises that in the early stages
analytics may be a side project,
however as it becomes more
integral, investment in dedicated
resources will become critical.
In his team of four he found some
recruiters who were numeric and
data driven and hired a dedicated
programmer.
Although a programmer is unusual
Statistics and data aside, arguably
Put quite simplistically, their HR talent as a hire, he now has a resource
the hardest element of people
have a fundamental understanding who can build the Cisco dedicated
analytics is
of the business and can deal
data visualisation tool that he could
implementing
the
intuitively
with
problems.
not find in the wider market.
“The hardest
changes
element of
The strategy consultants understand This team is maximised due to the
recommended
people
business, can take a complex issue
interface between the analytics
by the analysis.
analytics is
and provide results and the
capability and strategic sourcers
implementing
As Bersin points
academics provide a force for
who can interpret this data and
the changes.”
out, while the
evidence.
apply it to talent issues the business
statisticians are
is facing as well as offer direction to
Clearly this is a different make up to
the foundation of people analytics,
externally focused recruiters.
a standard HR department and
the real discipline of people
would provide some explanation as Patrick Coolen leads the analytics
analytics is multi-disciplinary.
to Google’s success in using
team at ABN AMRO and since 2012
Successful teams will include:
predictive analytics.
has been
process re-engineering specialists,
partnering with
“Since 2012
Given that Google has topped the
OD specialists, project
INostix & Bright
ABN
AMRO has
Fortune’s list of the ‘100 best
management specialists as well as
Company for its
utilised an
Companies to work for’ for six years
core IT professionals.
HR Analytics
external partner
in a row and the incredible speed at
projects.6
What have the people
for its people
which the business has grown, it’s
analytics pioneers done?
analytics.”
arguable that people analytics has His choice to do
so was born out
It is interesting to look at the 8% who had an incredible impact.
of a lack of data scientist talent with
currently measure themselves as
Cisco similarly has looked more
knowledge of the HR domain.
optimising their HR analytics
widely than just the HR talent pool in
function.
order to build capability in
He also recognised he didn’t have
5
predictive people analytics.
the time to build up capabilities and
As David Green (Global Director
4
Google case study article
5
Cisco case study article
6
ABN AMRO case study interview
Leathwaite: London | Zürich | Hong Kong | New York
www.leathwaite.com
The relationship between HR analytics, ROI and how HR
can get a seat at the table.
continued
needed an SME quickly.
This is an alternative way to ensure
quick results, plug the talent gap
and allows time to build up
succession talent internally.
knowledge of HR – be that an
executive interim provider or opt
to work with a small specialist
management consulting firm
with this capability.
Given the commercial advantage
that people analytics affords,
competition for talent will heighten.
Those who have chosen to align
themselves with a human capital
3. Once both of these are working services firm who have the
How to plug the talent gap
in conjunction and HR is close to established network and ability to
a fully functioning people
attract the unique experience
So what are the options for those
analytics team, begin to pipeline required, will reap the rewards both
who are comparatively in their
future talent and build out a
short term and long term.
infancy in the people analytics
permanent talent acquisition
domain?
As people analytics moves in to the
strategy. HR could also use
main stream of HR, those who are
If HR are looking to build out their
interim/management consultant
still in the early stages of adopting
analytics capability whilst
talent to carve out the true roles
technology and building teams with
simultaneously bridging the talent
and skills required in the team.
data skills are running the risk of
gap and ensuring the build out of a
being left behind.
capable team, it is proposed that a The above approach gives
three-step approach would be best. companies the ability to be agile
and nimble with regards to their
1. Identify numeric HR talent, who
people analytics strategy.
understand data and are able to
It also affords time to create a full,
digest it and have established
FEBRUARY
networks within the firm which will well informed strategy for building
2017
enable them to push the people talent in the people analytics
People Analytics
space.
analytics agenda. Also look for
Roundtable
real change specialists within the
Furthermore it gives companies time
HR space, who are able to drive
to define what people analytics
forward change projects.
means to them and how it can work
For more details and
to register, please
2. Use Coolen’s approach and look prior to making a permanent
visit:
for strategic talent partners who investment in head count.
leathwaite.com/
peopleanalytics
are able to plug the talent gap
Conclusion
for data scientists with
About the author:
Grace McGillick leads the Executive Interim HR practice for Leathwaite. Her main
area of focus is large scale HR transformation, alongside gap management solutions.
She recruits across the whole spectrum of HR specialisms with successes including a
global organisational design lead for a leading investment bank and a global
recruitment transformation lead for a leading investment bank. She is based in
London supporting Leathwaite’s full spectrum of clients globally.
Contact:
T: +44 207 151 5190 | E: [email protected]
L: https://www.linkedin.com/in/grace-mcgillick
Equitable House, 5th Floor, 47 King William Street, London EC4R 9AF
Leathwaite: London | Zürich | Hong Kong | New York
www.leathwaite.com