We are talking about evidence-based HR: which is, simply put, using data, analysis and research to understand the connection between people management practices and business outcomes such as profitability, customer satisfaction and quality.
"Of all functions, the HR function is typically the most data rich but insight poor. The HR function typically commands 30 percent plus of an organisation's opex and has the most untapped data readily at hand [and easy to analyse] that can drive really competitive advantage if properly harnessed." commented Anthony Coops, Partner, Data Analytics.
"Evidence provides us with the intelligence to know how to tackle people challenges and their impact on organisational performance."
Partner, People & Change
Talent issues are firmly on the C-suite agenda – organisations across the globe are grappling with issues such as regulators, customer requirements, talent and the demands of the workforce. Now, we're seeing HR's opportunity to leverage technology and data in order to demonstrate its ability to deliver against these issues. For the first time ever you can draw a line of sight between HR activity and business insight.
But it's not just about the HR function. CEOs need to embrace and lead this change while at the same time demanding more accountability from their HR leaders on how they are integrating data into their people management strategies to avoid losing ground.
It starts with three critical success factors:
This means moving beyond basic HR KPIs to data that can deliver predictive insights about the role of people in your business. To do this well, data scientists should work within the HR function. Indeed, a number of our clients are recruiting data scientists as well as working out how to make the transition from analytical insight to action.
You have to develop both your industry and company knowledge. HR is not a generic thing, nor is it industry agnostic. You must apply what you know from an HR perspective to your industry and to the specific needs of your company. You should also know how to frame the questions that will direct your analytical efforts.
HR needs to be reconfigured so that HR and management work together within a model that promotes evidence-based people management. As much thought should go into designing the components of an evidence-based operating model:
Becoming evidence-based requires an effort of will and a sufficiently changed mental model that will surely be a challenge for many companies. We are, however, seeing a move amongst early adopters towards embracing big data and becoming more evidence-based. It's not quite widespread yet but we believe it is just a matter of time.
Our report reveals that now is the time for C-level and HR leaders to embrace evidence-based HR or risk losing ground.