Technology

The in-demand potential of a data-driven CHRO

By Sarah Fister Gale

Mar. 5, 2020

Are you leveraging predictive analytics to reduce turnover? Using hiring data to improve recruiting? Monitoring internal social media comments to measure employee sentiment or identify diversity issues?

If not, you are missing opportunities to become your CEO’s most valuable advisor.

Executives are finally recognizing that the ability to hire, retain and mobilize top talent is the key to their business success. And they are turning to their CHROs for advice, guidance and data to chart their course forward.

“HR leaders who adopt AI tools for recruiting, engagement and reorganization are reaping the benefits of these trends,” said Ben Eubanks, principal for Lighthouse Research in Huntsville, Alabama, and author of “Artificial Intelligence for HR.” “They can absolutely gain credibility and add value for the CEO and every business unit.”

But to become that indispensable business advisor, CHROs have to know how to capture and analyze people analytics, then link those insights to business decisions. And not all of them are ready to deliver. 

Also read: AI is coming — and HR is not prepared

The power of data

When companies figure out how to leverage human capital analytics, they experience measurable business benefits that go well beyond improved engagement scores. Visier’s “The Age of People Analytics” report found organizations with mature people analytics processes generate 56 percent higher profit margins than those with less advanced capabilities. They also found that these organizations are more likely to link people analytics to improved business outcomes and labor cost savings. 

This shouldn’t be a surprise. People analytics has been a hot topic in HR forums for the last few years. KPMG’s “Future of HR 2019” report found 80 percent of these leaders believe HR can provide more value through analytics

However, just as many studies show that most HR leaders are still struggling to join the ranks of mature analytics users. PwC’s 2019 Saratoga benchmark report found 55 percent of companies failed their analysis of “good people data”, and another 41 percent were only “partway there.” They also found that lack of leadership around deploying people analytics severely limits how quickly companies can leverage this data for better business outcomes.

Also read: Are more companies in tapping HR executives for board seat? 

This combination of high interest in HR analytics and low maturity among HR leaders can either be viewed as a risk or an opportunity, Eubanks said. “Companies need HR leaders who can be on top of human capital analytics,” he said. “It’s an opportunity to become a real partner to the business.”

How to get started

Historically, human resources has not had a lot of experience in using data and analytics in decision-making, said Dan Staley, global HR technology leader for PwC US. “Finance has always been viewed as more data-driven, but HR has to realize that it is sitting on a treasure trove of data,” he said. Companies constantly capture information about hiring, demographics, salaries, performance, turnover, diversity and other stats that offer powerful insights into the behavior and ability of the workforce, he said. The trick is figuring out how to access that data and ask the right questions to uncover actionable results.

Staley encouraged HR leaders to start by talking to the CEO and business unit leaders about what business obstacles they face and how they can use human capital data to overcome them. 

Then look at what internal and external data sets you already have access to and what questions it can answer, Eubanks said. For example, combining internal salary data with industry benchmark reports can allow a company to determine whether it is offering competitive compensation packages and where they can afford to make more targeted offers to high-demand candidates. “It’s no longer just your opinion,” Eubanks said. “The data can justify the decision.”

And when HR leaders have data-driven results, they need to communicate in business terms that are relevant to board members. “Don’t just report on reductions in turnover or absenteeism or time-to-hire,” Staley said. “Talk about the impact those metrics have on the business.”

CHROs who embrace human capital analytics and who can communicate the value of linking that data to business strategy can become indispensable to their C-suite. 

Also read: AI’s growing role in human resources

“HR leaders have the most influence when it comes to workforce decisions,” said Michael Moon, people analytics leader for ADP in North Attenborough, Massachusetts. They already have experience with hiring and performance management. By integrating data into these decisions, it replaces gut instinct with with evidence based decision-making, and makes it possible to pinpoint what is happening with the workforce and why, she said. “Once analytics are part of the way things are done, it becomes easy to measure the impact on ROI.”

Sarah Fister Gale is a writer in Chicago.

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