In the Harvard Business Review Analytic Services study, How CEOs and CHROs Can Connect People to Business Strategy, researchers found that:
Although most large enterprises collect a variety of workforce data, many CEOs currently are not using human capital metrics or analysis to make strategic business decisions. CEOs don’t ask for the metrics, HR does not deliver them effectively, or the CHRO is not using them to help connect people strategy with business strategy.
This has led many organizations to find a CHRO who can be a full partner – and even serve as a guide – towards using workforce data to make decisions that drive both business and people outcomes.
As such, it is more important than ever that the CHRO play an active role in selecting, enabling, and modeling usage of people analytics. If CHROs don’t possess the knowledge and experience described below, they must start taking steps now to upskill themselves and continue being relevant in the future of business.
The CHRO’s role in analytics success
The CHRO is most often the buyer for people analytics. Others – the people analytics leader or HR business partner manager – will be involved in delivering the day-to-day strategic and operational activities involved in using and implementing analytics, but without the support of the CHRO, this will all be more difficult. Ultimately, the CHRO is responsible for the success of technology solution enablement.
As such, there are some primary CHRO responsibilities when it comes to people analytics:
1. Drive the vision for success
The CHRO must be a stalwart champion for fact-based focus when making decisions. She must be able to communicate why data and insights are important for people leaders, and emphasize the value of using analytics to help diagnose workforce issues (and their impact on the business). As such, she must also be able to prioritize top issues based on data and act strategically to improve on HR and business outcomes. Here are some words of wisdom from Mark Berry, CHRO at Indiana Packers, who has driven success at several organizations:
I think about vision as the future – where are we going? We are trying to create an organization that makes better decisions using people analytics. It will be an ongoing journey that I expect to take several years. The science of the people analytics function is so new and how to get from A to B changes in every organization. It will be a trial and error situation to educate and sophisticate our staff to make better decisions.
2. Model the usage of fact-based tools for people decisions
We see a range of CHRO involvement in the use of people analytics. On one end of the spectrum the CHRO simply has a general awareness of it, while on the other end she is a super user of analytics. And somewhere in the middle is the CHRO who understands people analytics (and its importance), even at a high level, and uses it periodically.
Regardless of where this leader falls on the line, at the very minimum, she should advocate for other members of the executive team to use facts and analyses to support their people decisions.
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After using people analytics to view incentive pay and performance, the CEO of a commercial bank with over 500 branches realized that pay and performance were out of sync. As a result, he began to require all his direct reports to review performance prior to even putting in a request for a pay raise.
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3. Coach leaders on value and outcomes
The first aspect of coaching is to upskill the organization’s business leaders on the benefits and the costs of using analytics tools to identify, analyze, and solve workforce issues.
Leaders will need to be trained to look forward (e.g. predicting likely turnover) and moved away from being backward looking (e.g. being satisfied with operational reports that merely report turnover). The CHRO must guide these leaders to ask questions such as: If absence days can be improved, how much money does the organization save or make? What is the value of reducing absence days by X days?
To accomplish all this, the CHRO needs to translate potential workforce outcomes into compelling business language.
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A specialty healthcare provider was not satisfied with making the case for reducing turnover based on national salaries of nurses and technicians. Instead, the business used local salaries for positions throughout its health system so that it could confidently estimate the benefit from turnover reduction in its various locations.
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4. Take a broader view of business benefits than strictly bottom line
The CHRO must be the ambassador for employees too. She represents the business to the employee as well as employees to the business. Consider the notion of “Economic Value Added (EVA)” for employees – it is important that interventions made and outcomes delivered as the result of analytics insights be for them, and not just for the organization.
For example, an intervention to reduce absence days may be to focus on employee wellness activities such as job swapping to reduce repetitive motion injuries – a common reason for increased absences. Employees appreciate such interventions and it makes them feel good about the organization they work for.
5. Establish governance related to data and ROI
The CHRO will need to be involved in – if not drive – data governance and specifically, data privacy. Further she must require that any effort and technology solution must have a projected return on investment and associated metrics. According to Mark Berry: “It’s table stakes that any people analytics initiative must have a business case and its impact must be measured.”
6. Help in the selection of people analytics vendors
The CHRO must participate in the selection of a people analytics solution. Once a vendor is selected, the CHRO should be actively involved in the relationship. She must ensure that the vendor and business will continue to create mutual value. For example, by co-sponsoring efforts to get new innovations, while also supporting the vendor in its initiatives to garner more customers (such as through customer reference programs).
This article was originally published on Visier’s Clarity magazine.