10 reasons People Analytics is set to go into orbit in 2016
As I wrote in my previous post for this blog, my top prediction for HR in 2016 is that people analytics – emulating British astronaut Tim Peake – is set to go into orbit in the coming 12 months.
Growth thus far in people analytics has been steady rather than spectacular to date and I confess to making the same prediction in 2014 and 2015, so what makes me so confident that this will be the year when analytics within HR goes mainstream?
Putting to one side my optimism and the hype that accompanies the advent of a new year, I detect a visible momentum shift behind people analytics both within and outside HR. All this points to 2016 being the year of the great leap forward to make fact-based decision making the norm within the HR function.
Here are 10 reasons why I am so confident:
- Like any other business trend, growth in people analytics will be exponential
In his recent article, People Analytics takes off: ten things we’ve learned, regular HR Tech World speaker Josh Bersin highlighted that the vast majority of business trends do not grow in a straight line but exponentially. I believe this is especially apposite when it comes to people analytics, as fact-based decision-making has long been anathema to HR where gut instinct has ruled for longer than the present Queen of England. So, in many respects, growth in the widespread take-up of analytics is dependent on a shift in the culture of HR. Fortunately, this is being accelerated because…
- …the business case for people analytics is irrefutable
Several studies have proved beyond doubt that the business case for analytics is clear. Nucleus Research reports that the average returns from analytics have been increasing and reached $13.01 for every dollar spent in 2014. Similarly, a recent Wall Street Journal article reported on a Bersin by Deloitte study into the benefits enjoyed by the 14% of companies who have already developed mature people analytics capabilities. As well as generating better talent outcomes in terms of leadership pipelines, efficiency gains, and talent mobility, the most telling finding was that the share prices of this pioneering 14% outpaced the S&P 500 by an average 30% from 2011-14.
- People analytics is a top three priority for HR leaders
Given the significant financial benefits of developing people analytics capabilities, it is hardly a surprise that CXO are increasingly looking for their HR leaders to provide people insights that will drive business outcomes and performance. Consequently, in almost all the conversations I have with HR leaders, analytics is a top three priority. The ability to adopt an analytical mindset is increasingly required for HR leaders to progress their careers.
- The new breed of HR leaders are data savvy and insight led
Moreover, a new breed of HR leader is emerging – one that is comfortable with data and driven by making fact-based people decisions that lead to enhanced business outcomes. One such leader is Mark Berry, CHRO of CGB Enterprises, who describes analytics executed correctly as the “GPS of HR” (see full interview with fellow HR Tech World blog contributor Luk Smeyers here). This new breed is helping to accelerate the growth of people analytics.
- The conversation has moved from the ‘why’ to the ‘how’ and the ‘what’
The required culture shift highlighted earlier is one reason why the growth of people analytics has been relatively sedate so far. Two other hurdles are knowledge (as in too little) and fear (as in too much). Combined these have led to scepticism, a desire for many HR leaders to preserve the status quo and conversations failing to progress beyond the ‘why’ for investing in a people analytics programme. I’ve seen this change markedly in the last six months as discussions have progressed to the ‘how’ of establishing a programme and the ‘what’ of the business problems to derive insights on. All this points to the fact that people analytics has finally arrived; although there is still much work to do to make it a staple part of HR’s diet.
- Analytics underpins the ‘new HR’
As a function, HR is being disrupted from every angle. Annual performance reviews are on the wane, employee engagement is morphing from a once a year survey to sophisticated continual listening programmes, and recruiting is becoming less about process and more about marketing. Organisational structures are being re-engineered and redefined. Analytics is the thread that binds all of these together. Uncovering insights that link recruitment, talent management, engagement and employee performance to business outcomes and performance has the potential to shake HR out of its traditional cost obsessed mentality to become a revenue and profit generating engine of the business.
- Technology has opened up new possibilities for HR
Every day, we create 2.5 quintillion bytes of data — so much that 90% of the data in the world today has been created in the last two years alone. Fortunately, rapid developments in technology for managing and analysing this data have opened up new analytic possibilities for HR. For example, traditional data from surveys can be combined with a plethora of other data points such as external social media data, personal devices that track individual activity and internal collaboration platforms to truly understand employee sentiment and reveal insights to improve business practices (for more on this specific example, please see the Amplifying Employee Voice white paper from the Smarter Workforce Institute).
- Analytical Talent is flocking to HR
HR is rapidly becoming a compelling career proposition for a number of hitherto unlikely bedfellows such as nuclear physicists, mechanical engineers, data scientists and even meteorologists. This is captured perfectly in ‘A Quant, Physicist and Chemist Walk into HR’ by Benjamin Taylor, Chief Data Scientist at HireVue, which explains what attracted him from Wall Street to HR. Taylor makes an irrefutable case of why HR is ripe for disruption, has multiple challenging data problems and demands cross-pollination from other industries.
- There are plenty of people analytics pioneers to learn from
It is perhaps not a coincidence that many of the organisations that have developed maturity in people analytics are also amongst the most successful businesses in their respective industries. This includes companies like Unilever, Shell, IBM, Google, Rackspace and GE. These also rank highly in terms of employee engagement and desirability from potential employees. Every organisation’s people analytics journey will be different, but there are plenty of inspiring stories to learn from – some of these are featured in my recent blog ‘The 21 best People Analytics articles of 2015’.
- Collaboration and open source HR
As I’ve written on this blog previously and thanks to the likes of Lars Schmidt and Ambrosia Vertesi with their #HROS initiative, the future of HR is open source. Organisations seem more willing to share their creative HR solutions openly, which will accelerate progress for all those prepared to collaborate. This is already happening in the People Analytics field, with the likes of LinkedIn (see Slideshare here) and Patrick Coolen of ABN Amro (see Patrick’s presentation from HR Tech World, Paris) openly sharing how they have built capability in this area. Google’s re:Work site has taken this a stage further and provides a helpful step-by-step guide to creating people analytics capability.
I believe we are in the midst of a perfect storm and all the indicators above have already turned or are about to turn green. All this suggests that 2016 will be a significant year in terms of the number of organisations applying an analytical and insight led approach to their people strategies. It’s certainly an exciting area to work in, which means 2016 will be an exciting year for me whatever happens!