Data-driven HR - what is it and how do you get started?
Data-driven HR is about qualifying the HR work with an objective perspective, adding an additional layer of knowledge before making decisions. Explore this article to learn how you can begin implementing data-driven HR.
Data-driven HR is a strategically important tool so that HR can increasingly become a decisive player in business operations. Data must nuance and improve the current HR processes, not replace them.
Embracing a data-driven approach empowers you to make objective, improved, and more resilient decisions for your organization. In a constantly evolving world and work environment, the ability to make sound decisions swiftly becomes a crucial competency. A data-driven approach also entails prioritizing initiatives that data forecasts will yield positive outcomes, even if they may not intuitively appear as the most obvious projects to undertake.
How to get started with data-driven HR
Overall, there are three steps you must go through to be successful in working with data-driven HR:
- Access data
- Work with data
- Create insights from data
Access data
Often, HR data is spread across different IT systems. This is perhaps the biggest challenge to create effective data-driven HR. It takes a bit of legwork to collect data, but it is possible in all companies, regardless of size (e.g. salary data and sales figures in bookkeeping).
HR itself has data on hiring, terminations and resignations. Investigate how the age and gender distribution is in the company. How many training options do you offer? This data will give you an insight into a lot of things. A good place to start to collect data and create an overview is to prepare a dashboard.
Data about people is more complex to interpret than classic Business Intelligence data. It requires more to interpret the results of a data analysis when the data is everything from soft metrics, satisfaction surveys, salary data, sales figures to personality tests and cognitive tests.
This may have been the reason why many HR departments hesitated to embrace this approach. However, it's not as challenging as it might initially seem, and fortunately, HR often possesses many of the necessary skills in-house.
Work with data
One approach to data work is to select a project that is relatively straightforward to initiate and has the highest likelihood of delivering prompt and tangible outcomes. This initial project is particularly advantageous when resources, both financial and in terms of the team, are limited. The aim of the data project is to demonstrate to stakeholders that HR data can have a positive impact on the company's bottom line, thereby securing support and resources for future endeavors. It can be viewed as a sort of "proof of concept."
If you opt for this approach, your first step is to identify the data you currently possess and the analyses you can promptly conduct. While this data might not reveal the most business-critical insights, the project will demonstrate the potential for creating value through data-driven HR. It serves as a robust initial move toward gaining support from management.
Another approach to working data-driven is to identify the most business-critical areas and then design a data project to create value precisely here. While this approach demands more extensive preparation and a higher level of buy-in from management, it also carries a much higher potential to create very great value for the company.
Regardless of the approach you select, it will contribute to a more structured and systematic HR workflow.
Create insights from data
When generating insights from data, HR's core competencies in areas like Change Management, organizational culture, work psychology, and employee motivation become highly valuable. Converting data into strategic insights necessitates an understanding of employee processes, and this is precisely where HR excels.
Here are some examples of where and how data creates insights:
- Data creates a basis for better decisions about investments (resources, systems, finances)
- Data can identify key employees
- Data can predict relevant outcomes - eg resignations from employees
- Data provides a valid basis for prioritizing tasks.
If HR data is used correctly, there is no doubt that in the future HR will have an even more important role for the company and will become an important link between employee data and strategy.
Furthermore, we observe an increasing trend among large companies to hire individuals in roles such as People Analyst or HR Insights Specialist, indicating a deliberate move toward a data-driven approach. It's important to note that data-driven HR is not exclusive to large corporations; it holds relevance for all HR departments and can be tailored to suit any company's scale. The undeniable truth is that data adds value to a business, regardless of its size.