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.
- 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.
- 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.
- 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.
- 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
- 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
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
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 firstname.lastname@example.org.
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 email@example.com.