CHRO Guide To People Analytics - Issue 1

This is from the "CHRO Guide To People Analytics" Project

The Goal - what is People Analytics really about? 

In order to achieve success at anything it helps to be clear on what success is. What’s the end goal of this thing?

Reporting?

Is it about more reports? Not really. You probably already have access to hundreds of reports.  You could spend your entire day looking at the reports you already have buried in the nooks and crannies of the systems you have. If you don't have any reports at all yet, don't stress too much yet - we will get you there. My point is that the point of People Analytics is NOT REALLY about more reports.

Is it about prettier reports?  Not really.  I have seen reports that are pretty enough to frame but won’t amount to anything. Go ahead and line your hallway with petty reports – your office may be more attractive but your business will be in no different place than when you started.  All else equal I'll take a prety report over an ugly report, but pretty reports are not the goal of People Analytics.

Is it about having more advanced analytics, like prediction? Not really. A junior statistician can take any set of data that can be joined by some common variable and predict any other variable in that same set of data. This math is not new. Prediction can wow, but you have to ask, so what?  If you don't, someone else will.  The real important question is not can I predict this outcome. The real important question is what outcomes matter most for our business, right now?  Followed by, if I really care about this outcome, what can I do about it? Prediction can be a useful tool in achieving our goals but prediction is not the goal.

Outcomes?

Is it about achieving specific people outcomes. For example like: decreasing turnover? Not really. Pay your employees double the market rate across every job and your overall turnover rate will go down. You will succeed at this specific outcome. You don’t need any analysis to see this, but if you do this you’ll probably go out of business.  Is it about an analysis to hire better talent than your competitors to ‘win the talent war’?  Not really. Again, pay double the market rate across every job and you can hire the best of whatever talent you want. You will succeed at this specific outcome.  You don’t need complicated analysis to see this but if you do this you’ll probably go out of business.

What is People Analytics about then?

#1 : Better

Better Human Resources for Better Business.

There are two ways to improve organizations:

A.     Implement what you or someone else thinks might be the next great idea and hope this has the desired effect. (I call this tactics)

Or

B.    Figure out WHERE the biggest current business constraint is, then proceed to understand WHAT the people constraint in the business constraint is, then proceed to understand HOW you can eliminate or reduce the people constraint. (I call this strategy)

The first premise of People Analytics is that your Human Resource tactics are only as good as the strategy they are based on - that is to say, the success of the actions you take is at least as determined by the quality of strategy than the quality of the actions themselves. 

You can do much better Human Resources if your effort actually corresponds to solving a the biggest constraint for a specific business in a specific situation. You are looking for the most important current constraint, not any constraint.

Maybe it is too soon to say but I want to let you in on an important secret. Pay attention carefully to what this means. Once the most important current constraint is solved it will just move somewhere else! Something else will be the important constraint.  There is no one and done, there is no single right answer and there is no end, there is only one and on to the next one, until your organization ceases to be or you are no longer part of it. You need a constantly updating feedback loop or you are just guessing.  You won't get many wrong guesses.

People Analytics require tactics and techniques to acquire and work with data to answer questions (analysis, reports, metrics..) butdon't confuse tactics with the strategy.   

People Analytics tactics include things like how to write a good survey question, how to get data out of a database, how to construct good HR metric, how to conduct statistical tests, how to do “predictive analysis”,  how to visualize data and how to present data, how to establish a sound data workflow, among a list too long to put here. These include all the techniques, methods and process handed down to us from decades of organizational research and centuries of math and science.

People Analytics, as I propose, is a less established but definable framework you use to guide inquiry and position an analysis, before it begins. Before you have a lick of data. You use tactics during your analysis. Strategy comes before. With no strategy, you are just spinning your wheels.  You may find temporary elation and fist pumps, but eventually your tires are going to fall off or you are going to get stuck in the mud.     

I have worked with data in HR in 8 successful companies (a few very very successful ones) in HR my postgraduate career. In my line of work now I talk to HR people at different organizations every working day. I can say with complete certainty - most, if not all, of the work of Human Resources professionals is focused on tactics. We pay lip service to strategy but for the most part we try to improve the organizations we work with through tactics.

You would be surprised how many well-known company CHRO's are still completely in the dark on strategy.  They do some things well in general – or they wouldn’t be where they are, but they probably won't be there long and the wasted opportunity is gigantic.  You aren’t getting the results you are looking for because the strategy is never defined in the first place, not right for the situation, or it was right once and the situation changes.  Regardless, you are working but the strategy is not. 

Let’s face it - life is short and we spend most of it working and most of us are trapped working in HR.  We got it on us and now we can't get it off. Our work in HR is denigrated, disregarded and outsourced in direct proportion to its perceived value relative to other business functions. We also are paid less to do similar work as people in other business functions for the same reason. Do the research, it's true. I believe the potential value of what we do in HR is huge, and I’m guessing you probably agree with this too, but I’m not talking about potential . I’m talking about how we get the potential and perceived value to match.

The perceived value of HR to a business is dependent on how we make arguments to support business decisions. A majority of HR professionals either apply orders from a superior with no questions asked or advocate new HR programs on the basis of what other companies are doing: we call these “Best Practices”.   We put a halo around people or companies that have had some public success or recognition and we try to imitate all things that they do with the assumption that some of their success will apply to us too.  While “Best Practices” may seem better than “because this is the way we have always done it” there are numerous problems with “Best Practices”. There is not a lick of evidence they work.

#2:  Change

Accept Change, Choose to Change, Measure Change.

There may be no more widely agreed upon concept in business literature than that “change is  increasing”.   I don’t know if this is any truer now than it was before, however if there were ever a sure prediction, it would be this: there will be change.  

Change could come from any number of places:

·      New technology

·      New customers

·      New leaders or executives

·      New employees

·      New products

·      New competition

·      New economic conditions or market forces

·      New politics

·      New market strategy and tactics

·      New organization structure

·      New mergers, acquisitions, divestitures

·      Any number of these areas or any combination

Even if a practice was successful once, the environment in which it was successful at some point will cease to exist. Other organizations respond and so produce an environment that changes dynamically. You will get maximum benefit from your HR strategy if you accept the reality that change is the only constant - the only certainty is a world of uncertainty.

Where is change likely to come from next?  Ask 100 people and you will never get the same answer twice. And even if you did get the same answer they would probably be wrong. That should not be surprising.  In fact, that is the point. If people could predict exactly where the next change was coming from, change wouldn’t be a problem.   It is precisely because change is not likely to occur the way we expect that change produces problems.

If you want to survive in a world of uncertainty you need to have a process to constantly take in new information to understand changing reality and use this new information to adapt. You need a way measure to see if your organization is changing in the way that you and your leadership team expect. You need a way to understand why the changes you expect are not occurring so you can course correct. Change is what People Analytics is for.

To put together an effective People strategy you need to know that yesterday’s people pay, programs, policies and practices are not the solution to tomorrow’s problems, if not the cause of them. People Analytics may be less comfortable than working in time tested patterns, established policies and procedure, and the glow of “Best Practices”, yet accepting this premise is essential.  If it is correct that changing conditions is the only thing you can count on, then the organization that refuses to alter his or her methods to adjust to changing conditions will be left behind. It will cease to be, sooner than you know it.   Whatever got you where you are today will at some point no longer be sufficient to keep you there. 

#3 : Specifically

Specific talent advantage for a specific business.

The question to ask is this: How do we change what we want to change to have a business advantage? As achieving and defending market dominance is increasingly difficult, you can’t consistently win without a sustainable business advantage.

The problem is that most HR strategies are far too general to develop any sustainable advantages: “We will hire great people.”  Great idea- you and everyone else! You cannot do everything well all the time - as cost to attract and retain top talent just gets more expensive so you have to choose. You have to choose specifically where you want your business advantage to be and then you have to figure out how to create this advantage through other PEOPLE.  

Great companies are usually founded with great ideas by great people, and eventually we hire great CEOs, however things break down over time because they can’t do everything, they can’t be experts in everything, and they can’t make every decision. They need to figure out how to succeed through other people. They don't have the answers and nobody else has the answers either! 

Fortunately, with People Analytics there is a process to move forward. The answers are found in the process, in the ongoing feedback circle that we create.

What is the goal of People Analytics? In short : Better Change, Specifically.  

CHRO Guide To People Analytics - Issue 2 - Intro

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Other Issues:

CHRO Guide To People Analytics - Project Intro

CHRO Guide To People Analytics - Issue 1

CHRO Guide To People Analytics - Issue 2 - Intro - What is it you say you do?

CHRO Guide To People Analytics - Issue 2

CHRO Guide To People Analytics - Issue 3 - Intro - How Do We Start This People Analytics Thing? IF THEN NOW DO

CHRO Guide to People Analytics - Issue 3 

CHRO Guide To People Analytics - Issue 4 - Intro - Towards a New Method of Human Resource Decisions

CHRO Guide to People Analytics - Issue 4

CHRO Guide to People Analytics - Issue 5 - Intro - How traditional HR Metrics lead us astray

CHRO Guide to People Analytics - Issue 5

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Who is Mike West?

Mike's passion is figuring out how to create an analysis strategy for difficult HR problems. 

Mike has 15 years of experience building People Analytics from the ground up as an employee at the founding of Merck HR Decision Support, PetSmart Talent Analytics, Google People Analytics, Children's Medical (Dallas) HR Analytics, and PeopleAnalyst - the first People Analytics design firm - working with Jawbone, Otsuka and several People Analytics technology startups. Mike is currently the VP of Product Strategy for One Model -the first cloud data warehouse platform designed for People Analytics.

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