Using analytics in HR to show business impact and predict future performance is the next trend in our profession. Many organizations want to achieve success using this approach, but are unsure how to get there. Unfortunately, HR analytics has gotten off to rough start because it hasn’t been well-defined. In our 2011 article for People and Strategy, we articulated what analytics are and what they are not. True analytics that drive the business and show a real return-on-investment is about linking HR data, using cause-effect statistics, to actual business outcomes.

We often hear from organizations that a key challenge in adopting an analytics-based approach to HR is "getting all of our systems (i.e. HRIS) in one place so that they can talk to each other.”  

Although system integration is important, it is not the key to successfully implementing analytics as part of your HR strategy.

Here are five practical paths that organizations can take to achieve the goal of creating an HR strategy based on analytics.

1. Big Analytics Behind-the-Scenes
   Data collected at organizations are typically housed in different places (i.e., on different servers/platforms). When data are housed in this manner, analytics can be conducted behind-the-scenes by gathering the relevant data – including business outcome data - from the disparate platforms. The process is not sexy, but executives don’t need to know how the sausage gets made. 
   
   
2. Big Analytics and Big Integration
   The integration of multiple HR platforms can be a huge undertaking for big companies. Organizations in this position can put together a comprehensive approach in which the analytics (and impact!) begin immediately while an IT transition plan is executed in tandem. The key here is to do the real cause-effect analytics work behind the scenes and expose the leaders to the outputs of the analytics – make them want more.  This is an approach that is quite effective because getting executives excited about analytics now, but spending multiple months/years to integrate data will reduce that excitement very quickly.
   
   
3. Start Small—Generate Interest
   Many organizations think that they have to examine all of their HR data at the same time to conduct rigorous analyses and have a meaningful impact. Not true. Start with one HR process or piece of talent management data and show how it impacts an important business outcome. A great one to start with is your employee opinion survey. Using cause-effect analytics, you can show which specific attitudes have a direct impact on important business outcomes (e.g. profit, productivity, safety, turnover). Use this initial analysis to get leaders bought into the process of HR analytics.
   
   
4. For Small Business—Start Strong
   Small businesses often have a distinct advantage when it comes to integrating their HR data and conducting analytics—they don’t have old legacy technology platforms or vast quantities of data….yet. Strong analytics can be done within small businesses in much the same way as in large businesses. The focus is typically on individual performance, so having a strong performance-based culture and performance management tools are keys to analytics success.
   
   
5. Have Integration, Need Strong Analytics
   It is scary to think that putting all of this data in one place and paying a company to house it all will actually increase costs for your organization. Warehousing your HR data in one place is a good thing, but the critical next step is to pull together the business outcomes from other functions to show how HR has a cause-effect relationship with those business outcomes and calculate an ROI.

The good news is that any of these paths can be taken quickly and effectively, and all will lead you to being a business partner by showing the impact of HR on real business outcomes.

Scott Mondore, Ph.D., is currently a managing partner of Strategic Management Decisions (SMD) and is the co-author of "Investing in What Matters: Linking Employees to Business Outcomes” and the upcoming book:"Business-focused HR: 11 Processes to Drive Results” both published by SHRM. Mondore has significant experience in the areas of strategy, talent management, measurement, customer experience and organizational development across numerous industries. Mondore holds a master’s degree and doctorate in Industrial/Organizational Psychology from the University of Georgia. He can be reached at smondore@smdhr.com.

Shane Douthitt, Ph.D., is currently a managing partner of Strategic Management Decisions (SMD) and is the co-author of "Investing in What Matters: Linking Employees to Business Outcomes” and "Business-focused HR: 11 Processes to Drive Results.”Douthitt has significant experience in the areas of measurement, training, talent management, executive assessment and coaching, and organizational development across a variety of industries. Douthitt holds a master’s degree and doctorate in Industrial/Organizational psychology from the University of Georgia. He can be reached at sdouthitt@smdhr.com.