Human resources is, by definition, all about managing people — historically considered the softer side of business. But companies are increasingly tying staffing decisions directly to specific business problems, strategies and goals, an approach popularized in part by tech companies such as Google. And to do that, they need data — lots of data.
Enter workforce analytics systems. These applications mix HR data with information from sales, finance and other business operations to create reports and forecasts that C-suite executives can use to, for example, determine the best way to allocate funds for compensation, nip increases in turnover or figure out why sales reps in one office close deals twice as often as others.
But for workforce analytics to do what it’s supposed to, HR professionals have to collaborate with colleagues from other parts of the business, including IT. It’s unusual for organizations to start an analytics program without IT’s help, because the many HR systems involved can make it a complicated undertaking.
Some HR groups team up with representatives from IT on workforce analytics projects; others have internal IT staff. “In either case, you need IT people to help you. I don’t think that’ll ever go away,” says Josh Bersin, an HR technology expert, and principal and founder of Bersin by Deloitte, a division of Deloitte.
A few organizations have cracked the code by employing data scientists to run workforce analytics projects or by creating interdisciplinary teams with members from HR, IT and other departments. Some find ways around IT departments that might be too understaffed or overcommitted to focus on HR projects — perhaps by buying cloud-based workforce analytics tools that require less in-house technical support.
HR has lagged behind other departments, such as marketing and sales, in realizing the value of data analytics. And HR practitioners who use such tools are still in the minority. But that’s changing.
An expanding user base and the availability of inexpensive technology for building cloud-based HR platforms has resulted in steady growth in sales of workforce analytics systems, either as stand-alone offerings or as integrated components of HR platforms. In a 2016 Bersin by Deloitte survey of 7,096 business and HR leaders at organizations in 130 countries, 48% of the respondents said they used staff analytics for workforce planning, up from 38% the previous year. Moreover, 39% said their organizations correlated data about their employees to business performance, up from 24%, and 36% said they used personnel data to predict future business performance, up from 28%.
Sierra-Cedar, an HR systems integration and consulting firm, reports that just 11% of the 1,528 organizations participating in its 2016-17 HR Systems Survey said they used dedicated HR analytics and business intelligence systems, which include predictive analytics tools, among other applications. However, the firm expects the number of users to grow by 52% over the next year.
Startups like Visier and established vendors such as Oracle, IBM and SAP sell workforce and predictive analytics modules that can be bolted onto other cloud-based HR systems to create reports and forecasts.
Other longtime HR technology vendors, such as ADP, Cornerstone OnDemand, Kronos and SAP’s SuccessFactors division, have added analytics to their payroll, hiring and people management platforms at little or no extra charge to stay competitive or gain market share.
Industries such as insurance and retail are further along in incorporating data analytics into personnel management because they’ve long relied on statistics in other parts of their business and know the value of data-based decisions, says Bersin.
TIAA is one such employer. The Fortune 100 insurance and financial services company spent two years launching a workforce planning and analytics initiative, with HR and IT personnel working together from the start.
Before then, the HR team had a poor track record of correctly predicting how the company should adjust its approximately 13,000-person workforce to keep pace with changing business needs, according to Jocelyn Caldwell, TIAA’s senior director of workforce planning and analytics. “We’d see a lot of variation from quarter to quarter in what we were forecasting and what was happening,” Caldwell told attendees at Deloitte’s HR Technology Conference & Expo in Chicago recently.
To improve, TIAA needed to do a better job of pulling accurate data from finance and elsewhere into HR systems for forecasting purposes. Caldwell says she put together a team that included an HR program manager, an analytics and workforce planning expert, and a project manager from an IT group assigned to HR, among others.
The team collaborated on everything, including scoping out requirements for a workforce planning and analytics tool, picking a vendor, implementing the Visier system they eventually chose, and training other people how to use it, she says.
Including an analytics specialist on the team made it easier to work with their counterparts in other business functions. The HR analytics specialist spoke their language “and could translate HR-speak into business language,” says Caldwell. “Once that connection is made, then you start to take the journey together.”
“Early engagement and being an integral part of the team every step of the way helped the technical team have full context and bring the best ideas forward,” says Karuna Annavajjala, executive application development manager for TIAA corporate solutions technology. “We had a shared vision of success and a clear sense of accountabilities among all the areas involved.”
So far, the HR analytics team’s biggest breakthrough has been creating data sets that other TIAA business functions trust enough to use, Caldwell says. The company refers to the data as “the one source of truth,” she says. “It’s such a simple thing, but that’s not always the case. Once that happens, you build more momentum and you can work more cross-functionally.”
Having trustworthy data is crucial, especially as the pace of change increases and companies need to make quick decisions about workforce needs. “Being able to have data at your fingertips is going to be increasingly important,” she says.
HR and IT work well together at TIAA, but at many big companies the opposite is true, says Mark Berry, vice president of HR at CGB Enterprisesand a longtime HR executive who has helped implement workforce analytics at several companies.
“I don’t know of anyone at a large organization who doesn’t have issues because of the tension in the relationship between HR and IT with respect to analytics,” he says.
Tensions exist because projects for revenue-generating departments like sales are often IT’s first priority, pushing HR to the back of the line, Berry says.
At one former employer, a multinational agricultural products conglomerate, Berry says he worked with IT to build a web-based reporting tool with dashboards for business leaders on key HR metrics such as employee head count, transfers and promotions.
The tool was so successful that after another 18 months Berry says he couldn’t keep up with demand. Enamored business leaders wanted even more dashboards, but IT was backlogged and couldn’t deliver. And, of course “business leaders didn’t want to wait,” he says.
Instead, Berry signed up with a cloud-based analytics vendor. Coincidentally, developers at the vendor had created the SAP-based technology the company’s in-house analytics platform had been built on, so transferring from one system to another wasn’t difficult, he says.
In addition to cleaning up and uploading existing data to their platforms, cloud-based workforce analytics vendors can help clients build interfaces so their programs can “talk” to clients’ other HR platforms. In some cases, the only services IT might need to provide are evaluating a platform’s security protocols and ensuring that file transfer processes work the way they’re supposed to. Depending on how the cost is accounted for, IT might also have to sign off on the expense, Berry says.
Berry didn’t have the same IT problems after joining CGB Enterprises about two years ago. A privately held grain purchasing and shipping business in Covington, La., CGB has seen its workforce grow by nearly 50% in five years, to about 2,500 employees worldwide. As the company grew, personnel costs started eating into profits and management needed help figuring out which people-related expenses were to blame. On top of that, the company had high turnover in key positions.
Berry’s mission: Create analytics system that could pull, aggregate and analyze data from payroll, recruiting, relocation and other systems to find ways to minimize turnover and keep labor-related costs under control without adversely affecting employees. “You don’t want to do something to help control costs at the expense of losing people or having them less committed to working there,” he says.
Berry decided to use cloud-based analytics systems from Visier and ADP. He says it was important for HR to own the process so it wouldn’t be seen as a partisan initiative. It was also important to help executives get their heads around the fact that HR could build a business model just like other people would do with supply chain or accounting systems. “We didn’t want to be dependent on [IT] to do it because we knew there would be times we wouldn’t be the priority,” Berry says.
When Berry presented his HR analytics strategy, it was easy to see the benefits to be gained from the rapid deployment cloud-based systems could provide, according to Gus Gelpi, CGB’s senior director of information technology. HR and IT jointly vetted the analytics vendors so IT was comfortable with the security, stability and recovery options each offered. Early in the project, an IT database administrator taught the HR team how to get spreadsheet data from other departments into the analytics system. An IT senior manager sat on the project’s steering committee to share insights on the resulting analytics product.
To gain insight into CGB’s turnover problem, exit survey results were tossed into the analytics platform along with turnover rates for the company and industry, as well as company ratings from Glassdoor and Google. Once the data was analyzed, Berry determined that higher-than average turnover was isolated to specific jobs and locations, and the company has taken steps to address problem areas.
It will take longer for analytics to help Berry’s HR team figure out the best way for CGB to allocate more than $200 million in variable personnel-related expenses to curb costs without alienating employees.
Meanwhile, the quality of HR reports is improving. Before, producing an employee head count report involved asking three people — none of whom had the same answer. Now, Berry says, “if managers want to know something like how many interns were hired last summer, it takes 30 seconds.”