CAHRS Working GroupHR Analytics

September 17, 2012 Oak Brook, IL Opening Comments

This was the fourth CAHRS working group on the topic. The groups conversation revolved around four key themes: 1. Questions addressed through analytics; 2. Challenges involved with analytics; 3. Data governance issues; and 4. Building HR analytics capabilities For a summary of the first working group hosted in New York by American Express please see the HR Analytics/Metrics Center of Excellence on the new CAHRS website. On September 17, 2012, John Hausknecht, HRS Professor and Steve Miranda, CAHRS Managing Director, facilitated a day-long discussion on the topic of HR Analytics. McDonalds hosted the group in Oak Brook, IL which was attended by 16 executives from 12 CAHRS partner organizations including , Merck & Company, Pfizer, IBM, Corning, Lockheed Martin Aeronautics, Cigna, McDonalds, Aetna, Coca-Cola Refreshments, Boehringer Ingelheim, General Mills, Procter & Gamble, Terex and one guest company.

Questions Addressed Through Analytics

Working group participants are using analytics to address a variety of workforce issues. These included: Workforce planning: Forecasting retirements and assessing talent needs and supply. For example, several companies are using historical data to understand how retirement trends have evolved over time. Such analysis displaced previously-held hunches about who retires when. Predicting attrition: Developing analytical models to identify turnover risk for different segments of the organization. Drawing from disparate data sources (HRIS, engagement data, etc.), companies are fine -tuning their ability to predict when and why key talent leaves. Improving selection decision making: Gathering data to validate assessment process and understand candidate reactions to the hiring process. Recognizing that getting the right fit matters for performance, retention, and so forth, a number of companies take a very careful and rigorous approach to how they screen and select. Monitoring engagement: Tracking engagement data over time as an indicator of overall workforce health. Nearly every organization conducted an annual engagement survey (and some conducted pulse surveys on a more frequent basis). Such information serves as a valuable reference point for understanding employee commitment and intention to stay.

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CAHRS Working GroupHR Analytics

Challenges Involved with Analytics
Although many companies noted substantial progress in this area over the past five years, significant obstacles remain for many organizations. These included: Data quality issues: A variety of data quality issues surfaced through the discussion: these included frustrations around data that were described as inaccurate, stale, incomplete, unreliable, and/or irrelevant; it is safe to conclude that data quality remains a primary hurdle that needs to be overcome for HR analytics efforts to succeed. Over-surveying: Several participants were concerned that the organizational surveys were overused and not always the best method for data collection; when possible, they looked to complement survey data with information from other systems and/or sources. Educating others: Another key challenge related to difficulties in getting others to accept and/or understand analytics-based findings. Lack of training and understanding could undermine decisions that are in fact based on credible analysis to overcome this, companies took steps to involve peers in project design and provided in-house training on proper data interpretation. Balancing strategic vs. operational: There appeared to be two worlds of analytics; that is, projects were viewed as either (a) strategic: long-term, often customized and enterprise-wide analyses that led to big decisions about talent vs. (2) operational: short-term, day-to-day decisions that were informed by data found in routinely-produced reports. While both were seen as valuable, operational reporting was seen as getting in the way of more strategic uses of analytics.

Data Governance Issues

Another critical theme related to issues surrounding data governance (i.e., explicit rules, rights, and accountabilities for HR-related information). Among the observations were: Some companies had clear definitions of variables and had individuals who were accountable for maintaining and revising rules and procedures related to data variable definitions; Others commented that different parts of the organization hold different definitions of key variables (e.g., what is an employee) leading to disagreement and confusion when presenting results; Global organizations faced additional challenges related to data governance e.g., related to data sharing; these companies involved members from legal when discussing how data would be collected and used.

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CAHRS Working GroupHR Analytics

Building Analytics Capabilities
As organizations move forward, many have been (or will be) taking a close look at how best to build analytics capabilities inside of their organizations. Some of the approaches taken included: Assembling analytics teams with diverse (and mostly non-HR) functional backgrounds: Many commented that analytics work requires diverse and often non -overlapping skill sets. Analytics requires both consultative and quantitative skills as well as deep understanding of talent/HR and business issues. Few companies find a single individual who possesses strong competency in all of these areas, so they assemble teams from diverse backgrounds (statistics, HR, finance, accounting, consulting) to conduct analytics work. Centralized analytics work: Although several organizations have pockets of analytics expertise distributed throughout the organization, many have (or will) centralize these capabilities. This included hiring specifically for HR analytics (vs. as needed use of analytics talent), formalizing the groups scope and purpose, and, in some cases, establishing an analytics group that is separate from reporting. Developing an analytics mindset throughout the organization. Many organizations aspire to instill a data-driven mindset beyond the analytics team so that managers and HR generalists begin to see analytics as a routine source of valuable information for decision making. Formal training and new systems (reports, dashboards, etc.) that enable self -serve use of data were mentioned as a means to this end.

Summary
Despite the challenges, many respondents were optimistic about the value and potential of HR analytics in improving decisions that positively influence the organization and its people. When asked about what this area needs going forward, respondents noted the following observations: A continued need to move from reporting to analytics to insights; become less historical and report-driven and more future-focused. More effective approaches to identifying workforce needs how do we know what skills we will need and when? What does the future workplace look like and how do we ensure that we are prepared? Simpler, yet more sophisticated systems for doing analytics better data integration and consolidation so that more time can be spent on analytics rather than data management Better scenario planning using analytics to answer what if questions Greater linkages across disparate data sources e.g., matching data from HR, operations, and finance to understand how talent affects key business outcomes

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CAHRS Working GroupHR Analytics

The Center for Advanced Human Resource Studies (CAHRS) is an international center serving corporate human resources leaders and their companies by providing critical tools for building and leading high performing HR organizations. CAHRS mission is to bring together partners and the ILR Schools world-renowned HR Studies faculty to investigate, translate and apply the latest HR research into practice excellence.