Demystifying People Analytics – Part 1. Where should the team sit within the business?
Since the start of the year, I have lugged my suitcase around speaking, chairing or attending people analytics conferences all across the globe. This world tour has taken in Paris, San Francisco, Amsterdam, London (twice), Sydney and New York. I am also fortunate to have seen at close hand organisations at various stages of maturity with their people analytics initiatives. Combined, these have taught me a lot.
I’m happy to write that my long held confidence that the people analytics and data-driven movement in HR is on the precipice of going into orbit has been imbued. I sense a genuine excitement and resolve from the people I have met to to up the ante and redouble efforts to underpin their HR functions with data, analytics and insights.
Common challenges in getting started with people analytics
I’ve also seen that practitioners globally face common challenges as they struggle to get their analytics initiatives started. Where should the analytics function sit within the organisation? What should be the size, composition and skillset of the team? What should be the core mission, objectives and focus? How do we get started and then continue to build momentum? What technology and tools do we need? How do we get our data ready?
As such, over the coming months, I will publish a series of articles under the ‘Demystifying People Analytics’ banner that will aim to answer these questions and others. First up, let’s look at where the people analytics function should sit within the organisation.
Where should my analytics function sit?
In my conversations with organisations at various stages of maturity, five main options – both in and outside HR – emerge as to where the people analytics function should reside:
1. An Analytics Centre of Excellence within HR
At first glance, creating an analytics Centre of Excellence (CoE) – as a number of organisations have done, makes a great deal of sense. If an organisation has CoEs for Talent Acquisition, Talent Management and L&D, why not one for analytics too? The danger of this, and indeed any other structure that sees the analytics function located in HR but NOT reporting to the CHRO, is that it will likely lack influence, sponsorship and the wherewithal to get anything done outside the realm of HR. The analytics leader may find themselves embroiled in politics as the other CoE leaders compete for the ever-dwindling budgets allocated by the business to HR. A life in the shadows restricted to working with HR data only as well as endless requests for meaningless reports is the likely fate of the unfortunate soul in this structure. One to avoid for the intrepid, would-be analytics leader.
2. A dedicated team within HR, reporting directly to the CHRO
Of all the analytics teams I’ve had access to, this is the option that most correlates with success for organisations that have chosen to locate their people analytics functions inside HR. A data-driven CHRO will have a good understanding of the key business challenges facing the organisation, which the analytics team can then focus to identify insights and provide recommendations. The CHRO is also more likely to have the influence to ensure that compelling stories are delivered to the right business leader and, crucially, that changes are then implemented.
For more on this theme, I recommend reading ‘Why HR Analytics reports to the CHRO’ by Luk Smeyers, head honcho of iNostix by Deloitte.
3. A dedicated team outside HR, with a dotted line to the CHRO
Whilst I would counsel against creating a people analytics team under the auspices of Finance or IT, for some organisations it has made more sense to create a dedicated team in the business under the COO. This structure certainly seems to have helped the likes of LinkedIn and Chevron deliver people insights that have created real business impact within their organisations. Crucially, both created teams that had dotted line responsibility to the CHRO and included team members with HR domain experience. This combination of focusing effort on what is important to the business, having easy access to HR and non-HR data and having the expertise to interpret findings from a people and a business perspective is a pretty compelling one. For the ambitious CHRO though, I wonder whether it is wise to allow a potentially game-changing initiative for HR, to sit outside the function.
4. Part of an enterprise wide analytics function
Another option is for an organisation to locate HR analytics within an enterprise wide function. Many industry experts such as Josh Bersin and Max Blumberg have predicted that this is a natural evolution as people analytics organisational capability matures. Whilst this may be attractive on one hand, due to the depth of analytical capability centred in one place and the likely ready to access to all relevant data within the business, the danger is that people related initiatives may receive low prioritisation. Some organisations though have struck a balance. Aviva, for example, has found that having a single enterprise wide function rather than several domain specific teams enables greater insights, better business outcomes and a higher level of visibility in the business. Interestingly, Sally Dillon – the leader of the analytics enterprise function had previously been responsible for the insurance giant’s people analytics team.
5. Outsource to / partner with an external service provider
Finally, some organisations have either outsourced the people analytics function partially, in its entirety or at least sought external assistance to help build the business case, accelerate capability and/or work on a greater number of initiatives. This approach can certainly help overcome some data and technical challenges as well as speeding the maturity level of the function. Perhaps the best-known example here is the highly successful partnership between Patrick Coolen of ABN AMRO and predictive analytics consultancy iNostix.
There is no one size fits all. Each organisation will need to evaluate the option that works best to deliver their own people analytics vision. My view for what it’s worth, is that whether the function is located in or outside HR it has to report directly or via dotted line to the CHRO. This gives the fledgling function the best chance of success and also the opportunity to work on initiatives that are actually important to the business. Partnering with an external service provider – at least initially – may also help deliver a quicker ROI and thus more opportunity to grow the function’s size and influence.
For more on the pros and cons of locating the analytics team within or external to HR, I recommend reading this excellent duo of blogs from the distinguished consultant Morten Kamp Andersen: ‘5 reasons why HR Analytics must sit in HR’ and ‘5 reasons why HR Analytics should not be located in HR’.
Of course, there are a number of factors other than where the function sits that will impact on the success or failure of a people analytics initiative, but siting the team in the right place for the organisation is a good place to start.