I recently attended the 2014 HR Technology Conference and Expo in sunny Las Vegas. I spent most of my time in the Expo Hall, networking with partners, discovering new companies and getting demos of the latest HR technology solutions. While many interesting things occurred, there were a couple of big trends driving the industry forward. Talent Acquisition and Talent Management were big again this year, but enough has been said about them. For me, the more interesting and growing trend was the number of vendors talking about HR Data Analytics.
I have to say up front that, for many years now, I’ve been a skeptic of a customer’s ability to get much value from their vendor’s analytics solutions. Business Intelligence packages with burst reports and 3D graphs on dashboards demo well and help sell software, but I’ve hardly ever seen a customer get the same results once the solution is implemented in-house. So, talking to these vendors, I had my BS hat on. I was looking for the sales pitch that sounds too good to be true and impossible to achieve. I was pleasantly surprised to find a more reasonable approach to achieving real results.
For those that don’t know what I’m taking about when I say “HR Data Analytics,” we’re talking about reports that highlight interesting relationships between data elements related to employee jobs, training, productivity, performance, satisfaction and compensation. The intent is to use data to identify actionable changes. For example, a report may show which employees are top performers and how their experiences, recruiting source, demographics or training differs from the lower performers. From this, either the low performers can be brought up to speed or they can be replaced with employees that fit the top performer profile.
One vendor offered the example of identifying a significant portion of a company’s part-time workers who were top performers, but were getting only 10-15 hours per week. Then, by intentionally finding ways to offer those employees more hours and reducing the hours of lower performers, the company increased revenue and customer satisfaction without increasing labor hours.
Independent vs. Build-In?
One big difference between Analytics solutions is who you buy it from. Most HCM/HRIS software vendors have an Analytics package built into their product, but there are also a number of independent software products that stand-alone. For these stand-alone solutions, data is imported from various sources (HR, Payroll, ATS, POS, etc.) for analysis. The decision of which solution to use will depend a lot on the systems you already have. If you’re a purist and have implemented an end-to-end HCM suite and all of its modules, your vendor’s built-in analytics package may work for you. However, if you’re like most companies and have a mix of many different packages, some in-house and some hosted/SaaS, you may need a stand-alone analytics package to bring all the data together. You should also check to see if your primary vendor’s built-in solution has ways to accommodate external data sources.
Pre-built vs. Build from Scratch?
The next thing to consider is whether your analytics package comes with pre-built content or whether it’s mostly a toolkit for building your own analysis. The issue with the latter is that you may not know what data relationships to look for, so how would you know what to build? In that case, in addition to the software costs, you’ll want to know how much consulting services you’re going to need to actually get results. In the best case, the vendor will have pre-built content based on best practices from your particular industry (but they rarely do).
The Missing Link
I asked many analytics vendors and customers the difference between a good implementation and a great one. Invariably, they all said that it came down to the people using the software rather than the software itself. The real missing link in getting value is your HR Data Scientist. Wait, you don’t have anyone working at your company with the title HR Data Scientist? Well, that’s the whole problem, nobody does.
Unfortunately, to get the most from your HR Analytics package, there’s an administrator position that can’t be filled by a typical IT Analyst, HR Manager or Generalist. That’s where the HR Data Scientist comes in. Data Analytics packages are complex and require an analytical, technical person to run them. However, a deep knowledge of business operations is also required if you’re going to understand the results of your analysis. If a techie was to just start building reports and pivot tables, there would be far too many data elements to dig through and speculate regarding cause and effect without a knowledge of the business.
This isn’t even new news. Check out this article from CIO.com from two years ago regarding the emerging need for Data Scientists across many aspects of Business Intelligence and Big Data analysis. The updated part of this story is that Analytics has now fallen into HR’s lap and we don’t quite know what to do with it.
My advice? When you shop for an HR Data Analytics package, build in budget for hiring or training your HR Data Scientist too. This is a role that must be filled and taken seriously if you want to get the most value from your investment.