Published on the 19/10/2016 | Written by Donovan Jackson
Nascent BI discipline provides insights on a range of employee metrics…
While BI is generally well-understood and widely used, it does tend to focus on the financial and operational aspects of company information. People analytics, by contrast, is targeted at human resources; with its recent acquisition of Optimum Performance, Australian rostering, scheduling and payroll company RITEQ caught our attention; ‘What’s that’, we said.
Turns out that people analytics entered the broader BI discussion around a year ago; Forbes described it as ‘The geeks arrive in HR’.
Stephen Moore, who sold Optimum into RITEQ and joins the company, said a simple way to get your head around the concept is this. “Say you’re the HR director at Fonterra; the CEO asks you how well you’re managing the workforce.”
Sub-questions might include ‘how productive, efficient, capable, well trained, satisfied, engaged and aligned with the company employees are’. And, ‘do we have enough people to meet our needs, what skills do we want, can we find them, what happens if we can’t?’
New Zealand dairy cooperative Fonterra is a good example for two reasons; Moore worked with the company, and it has some 17,000 employees. Impossible to get an idea of the answers to any of those questions across such a large number of people.
“These are the questions that people analytics answers; it applies in three areas: metrics around how well the workforce is managed today; planning and sustainability for tomorrow; and how effective and what value does the HR department add to the business.”
Companies, said Moore, tend to measure everything. Everything, that is, except people, despite the workforce typically constituting around 60 percent of the cost of total operating expenditure.
Now, BI for finance and operations is obvious low hanging fruit because the metrics are an accountant or computing specialist’s dream. Numbers arrange themselves neatly into columns and providing useful fodder for analysis. Not so when it comes to HR data, where the markings on the rulers aren’t necessarily pegged off in centimetres. How do you measure engagement? Personal efficiency? Productivity?
“As a starting point, people analytics isn’t about measuring at the micro or individual level. It us about the macro, divisional or departmental level. The initial metrics we gather are linked to organisational structure, depending on those results, we can drill down further into sections or people,” said Moore.
Examples of measurements include training expenditure, investments into people development versus labour cost and what that equates to per full time employee, or the tracking of linkages between training and the development of new products or services. “We look for correlations, we use data which enables questions to be asked and patterns to be exposed to better understand what is going on and to create meaningful management reporting to understand, over time, how well the workforce is being managed.”
The principles are the same as those for financial and sales reporting, but are focused on people and organisation.
How well, or indeed even if, the market recognises a need for people analytics is an interesting question, Moore has plied his trade for over two decades, but he noted that there is a fundamental challenge which relates to HR professionals’ alignment with and understanding of metrics. “The reality is if HR people had great kinship with numbers, they’d be in the finance department. That means analytics is a slow burn; on the other side of the coin, CEOs and senior managers don’t expect reporting from HR as they don’t know what to ask for.”
That said, Moore believes there is a growing interest in workforce planning in the Antipodes, in particular around the predictive aspects of people analytics in terms of understanding and planning for the future of HR. “If you’re serious about this, though, you need good data and metrics as a foundation to underpin it.”