People Analytics Software Is Changing the HR Game

For years, human resource leaders have faced significant obstacles in their attempts to use analytics to make better people decisions. They've often been forced to cobble together data from multiple spreadsheets or attempted to extract information from unwieldy systems to determine metrics on employee engagement, cost per hire, turnover rates in pivotal jobs and gender pay equity.

While such technology obstacles still exist in many companies, they've increasingly become a thing of the past with the arrival of more-sophisticated, cloud-based analytics tools that allow HR to employ people data in more timely and effective ways to support organizational decision making.

A renewed focus on people analytics in HR also reflects changes in how the C-suite views the workforce, experts say. "There's been a shift away from viewing people as a commodity and the thinking that 'as long as we have enough workers to fill jobs and it's not costing us too much, we're fine,' " says Ian Cook, vice president of people solutions at Visier, an analytics provider in Vancouver, British Columbia, Canada. "Now, more often CEOs want to know that they have the right people with the right skills in the right jobs to execute on their strategy. There's a growing focus on talent quality, not just talent costs."

People Analytics Options Grow

HR professionals now have next-generation analytics software at their disposal that either comes packaged as part of a vendor's technology suite or is available from providers that specialize in analytics products.

The evolution and growth of these tools has created a more competitive marketplace, experts say. "Most HR functions now expect to have some cloud-based people analytics tools, but the question has become do they use analytics embedded in a suite, tools from a stand-alone provider or even build their own analytics in-house," says Helen Poitevin, a Paris-based vice president and analyst with research firm Gartner who specializes in HR technologies. "In many cases, the question has become how much they're willing to pay for these tools."

Kathi Enderes, vice president of talent and workforce research with San Francisco-based Deloitte Consulting, says HR functions that get the most value from their analytics initiatives tend to employ a variety of software tools. In a recent study of the people analytics technology market, Deloitte found that the most mature organizations—those furthest along in their analytics journeys—reported using an average of seven analytics tools, as compared with four tools in the lowest-maturity organizations.

The study also found that the largest percentage of organizations (91 percent) were regularly using basic data-analysis tools such as spreadsheets, with 48 percent using embedded analytics in their HR or talent systems, 38 percent using data-visualization tools, 35 percent using data warehouses, 31 percent using analytics embedded in an enterprise resource planning system, and just 6 percent using cognitive tools.

Despite advances in technology, many HR groups still struggle to produce accurate and timely insights from their people data, Enderes says. To generate a high return on technology investments, the data that goes into systems needs to be accurate and up-to-date, the team analyzing the data needs a variety of analytics experience, and those making decisions based on the data need to have real-time access to the insights, she notes.

"The most challenging factor in my experience is creating a data-driven culture," Enderes adds. "Only 5 percent of low-maturity organizations in our research base business decisions on people analytics, as compared to 55 percent of high-maturity, high-performing organizations."

Beyond Standard Metrics

The metrics that HR leaders in progressive organizations track and report on also have expanded beyond traditional measures, such as employee headcount and turnover data, as analytics software has grown more sophisticated, versatile and user-friendly.

Visier's Cook says that while his company's clients continue to focus on using analytics to measure employee retention and turnover rates—in many cases to gauge the dollar savings from retaining employees in revenue-producing roles—there's growing interest in using Visier's tools to measure areas such as the progress of diversity and inclusion initiatives and worker overtime trends.

Cook says he still sees HR groups struggle with analytics when they focus on presenting people data only as a "prettier form" of reporting, with visually enhanced dashboards, charts and graphs. "Companies still too often see the delivery of people data as success in itself," he says, "rather than striving to answer the most pressing business questions with that data."

Data Security and Access Issues

One of the top concerns HR leaders have related to people analytics is ensuring data security. Pete Schlampp, senior vice president of analytics for vendor Workday in Pleasanton, Calif., says traditional approaches to people analytics often involve taking sensitive workforce data out of HR systems and putting it into spreadsheets or data-visualization tools for analysis. But that practice can expose the data to security risks, he says, especially if it's e-mailed across the enterprise in a largely unprotected format.

One way vendors like Workday tackle that problem is by employing platforms that allow HR users to bring their external data into the vendor's system and make it a data hub for HR reporting and analytics, rather than taking data out and exposing it to security risks. The data is encrypted and only accessible to individuals and teams authorized to access it.

Kim Lessley, director of solution management for vendor SAP SuccessFactors in South San Francisco, Calif., says data-privacy laws such as the EU's General Data Protection Regulation (GDPR) have also raised HR's antennae around risks involved with people analytics data.

"Companies have to be more careful today about who is allowed to create, view and share reports containing people data," Lessley says.

To help minimize the risk of data exposure, SAP SuccessFactors' analytics products includefeatures such as an authorization process that makes it possible to control the display and change authorization of people data "down to the field level," Lessley says. "Data purge functionality also allows companies to define which people data should be deleted when—one of the key requirements of the GDPR."

Diversity and Inclusion Analytics

An area where HR leaders have sought more-sophisticated analytics is in measuring the impact of their diversity and inclusion (D&I) initiatives. While HR has long needed accurate people data to ensure that it's complying with requirements of government agencies such as the Equal Employment Opportunity Commission, today the desire for quality data is tied as much to the relationship between D&I and positive business outcomes as it is to legislative compliance.

A recent study of the D&I vendor market by Mercer and Salt Lake City-based RedThread Research found that many of the 121 vendors operating in the space were focused on people analytics, second only to those with products tied to talent acquisition issues.

Rapid growth in the vendor market reflects HR leaders who are increasingly focused on measuring issues like pay equity, rooting out unconscious bias in hiring or promotion decisions, and ensuring that members of underrepresented populations feel included in the organization, says Stacia Garr, co-founder and principal analyst of RedThread Research.

HR has benefited from the enhanced sophistication and greater user-friendliness added to many vendors' D&I analytics platforms in recent years, Garr says. Some pay-equity software tools, for example, can now more easily analyze tenure, geographic location, work experience and skill sets when comparing the pay of men and women in similar roles.

HR leaders more advanced in their analytics journeys are using new tools such as organizational network analysis (ONA) to gauge difficult-to-measure inclusion rates in their companies, she says. ONA analyzes factors like participation on internal collaboration networks, e-mail communication patterns or data from calendaring software to assess how diverse populations are being included in conversations and decision making or being identified as high-potentials.

Garr stresses that it's important for HR leaders to conduct thorough due diligence of vendors in the fast-growing D&I analytics space because some have no experience in the human resources market.

"Not all of them arrive with a good understanding of the ethical and security implications that come with managing and analyzing people data," Garr says.

While next-generation people analytics software can help HR improve the gathering, correlating and analyzing of key data, success in using people data still rests more with people than with technology, say experts like Poitevin.

"It takes a mix of the right technology, governance and analysis skills to get a strong return on investment from analytics initiatives," Poitevin says. "But if I had to pinpoint the one area that's most important, it's the skill set of HR people. It's knowing which questions to ask business leaders and stakeholders in the organization and then being able to answer them with the help of data insights that tell compelling stories."

Dave Zielinski is a freelance business writer and editor in Minneapolis.

Illustration by Michael Korfhage.