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|An inability to interpret data is preventing organisations from predicting human resource (HR) trends and planning for their future, according to a new KPMG white paper titled People are the Real Numbers.
The white paper argues that many HR teams continue to provide their executives with generic operational measurements despite accepting the value of analytics.
The result seems to be uncertainty and distrust- an Economist Intelligence Unit (EIU) study commissioned by KPMG in 2012 indicated that 85 percent of 418 global executives surveyed said their HR teams “fail to provide insightful analytics”.
Said Ms Miranda Lee, director of people and change management at KPMG in Singapore: “HR’s current approach towards analytics is still very much mired in what has already happened. The focus is on data such as promotion rates and staff turnover.
“Instead of providing insights into the existing workforce and the company’s immediate priorities, HR analytics if applied correctly, can provide management with intelligence about the future. It can show connections, even causality between HR metrics and the organisation’s performance.”
She added that it is also imperative to understand external shifts in population and demographics in the current fast-changing, complex globalised environment. The identification of new and emerging competencies to up the game in analytics cannot be neglected as well.
“HR functions are beginning to better understand the power of analytics to help them transform from an administrative support unit into a strategic partner to the company and its leadership,” she said.
Indeed, findings from the EIU study last year show that:
- 56 percent of HR functions report an increase in using data analytics compared to three years ago.
- 31 percent plan to implement new technology to support this development.
- 23 percent reported that adopting new technologies such as data analytics would be a main focus in the next three years.
Obstacles standing in the way of HR’s path towards high-level analytics
The white paper also identifies three key factors that may be preventing HR teams from unlocking the full potential of analytics and, with it, credibility in the eyes of the Boardroom. These are:
- data fragmentation: too many systems exist within organisations for recording employee activity. Unless training records, reward programmes and absence data are housed together and updated in an uniform fashion, data will continue to be disjointed and meaningless;
- misleading questions: analysis, where it is attempted, focuses on basic workforce metrics. Too much attention is given to reporting past data that is not linked to business outcomes and strategic goals. HR professionals need insight into the value chain of the business before they can form meaningful hypotheses that can then be analysed with data;
- HR’s own skills gap: in many cases, HR lacks the skills required to carry out the sort of complex statistical analysis required. In short, too few people in HR know the difference between regression and correlation. Until HR teams address their own skills gap, they are unlikely to adequately influence others across the business
However, Ms Lee believes that the advent of cloud storage will ease the transition of HR teams from churning out unconnected data to providing well-thought out, predictive HR analytics.
“Cloud and the widespread adoption of HR management systems are making it easier for data to be stored in one place. These technologies are also making it less of a hassle to access information and integrate it with other parts of the business.
“Similarly, the software needed for complex statistical analysis are also more affordable and easily available now,” she said.
She added that HR functions should look into integrating internally connected data with qualitative information from social media and the external economic and population landscape to create a fuller picture.
Said Ms Lee: “Many organisations possess a treasure trove of data. However, without connecting the dots, the data remains just that- qualitative and quantitative information without strong significance and impact.
“This needs to change if HR wants to gain a seat at the Boardroom table and organisations wish to plan for the future effectively. Many CEOs today think that their HR teams are long on information but short on insight.
“HR teams should aspire towards a future when HR analytics will become as important to the CEO as the balance sheet or Profit and Loss statement.”