Maximising the effectiveness of HR data

In the first of a series of articles on using data and metrics more effectively, Nick Kemsley of Henley Business School looks at why HR professionals need to become more “tact-tegic” in how they use data.

There was a time during my own career in HR when I was rather reluctant to bury myself in the numbers. Although I trained as an engineer, and I am no stranger to the importance of working with data, like many others at the time I was a blinded by the headlong rush toward the top two boxes of the Ulrich model (those relating to “strategic partnership” and “change agency”).

Nick Kemsley

Nick Kemsley, co-director, Centre for HR Excellence, Henley Business School.

Now, a few years and an economic crisis later, I instead find myself urging both HR individuals and functions to get to grips with data all over again. Why? Both practice and research at the Centre of HR Excellence at Henley Business School show that the economic crisis has prompted a sudden reappraisal of HR’s value proposition.

As many organisations have struggled with balancing growth and stringent cost management, a new space is being hewn out for HR. And where does this new need for HR sit? Unfortunately, it falls slap bang between two chairs. Using Ulrich and the “three-box model” of HR business partners, centres of excellence and shared services as their inspiration, HR has been busy introducing structural and skills-related solutions to demonstrate its value proposition. The result has been, more often than not, to create two camps within HR, with tactical, operational delivery on one side, and strategically driven development on the other. The operational camp has worked to an almost daily rhythm, while the developmental camp worked towards a longer-term, 18- to 36-month timeline.

A “tact-tegic” approach

This has proved a reasonably successful model in many organisations, but with the onset of the economic crisis, a new opportunity has emerged for HR in the zero to 12-month timescale. This “tact-tegic” approach addresses the need to increase productivity and efficiency. In many cases, this has proved to be the proverbial itch between the shoulder blades for HR. The profession has struggled to bend existing structures, processes, skills and behaviours to service organisations’ needs in a situation where organisations must make tactical and strategic trade-offs.

In the “tact-tegic” offer, organisations need to focus on shorter-term activities, but in a longer-term context, and put increased value on getting the basics right in areas such as resourcing, payroll and employee relations, as a foundation for moving forward. Recent work by the HR centre shows that a large proportion of HR’s business customers worry that the function is too keen to play at strategy when the “engine room” is not working as it should. Key to adding value at this difficult time is making better use of data to bridge the gap between shorter-term operational and longer-term strategic issues.

Better leveraging of data in this way means gathering new kinds of data that are more focused around this business need, and making more of the data we already have so as to provide more relevant intelligence. This means that HR’s approach to data must be re-balanced in three ways:

1. HR must become more comfortable using less precise macro-level or trend data to connect future organisational demand to current day operational supply.

A good example of this is manpower planning. The aim is to connect longer-term strategic intent with operational resourcing, talent and development processes so that they provide the right numbers of the right people at the right time in the right place. However, it often ends up being more tactical than strategic, and not operating as far ahead as it needs to.

The reason for this is that, too often, HR feels unable to work with ambiguity in scenario planning and trend analysis, asking the wrong questions and trying to engage with data at a level of certainty which cannot be provided. Our experience shows that those organisations that are able to derive real value through manpower planning do so through working initially with scenarios of future demand. So for example, they could ask “what would be the best and worst case scenarios?” instead of saying, “we can’t say until we have the project plan”, or ask “do you think we need a lot more than we have now?”, instead of saying “we need another 32 full-time staff”. This allows them to understand whether or not they have a problem sufficiently early enough to be able to do something about it, moving to more detailed approaches further down the line.

2. HR must increase its use of data relating to business impact as opposed to process operation.

Take performance management, for example. Here is a process which HR seems to be continually “embedding”, but what data are we providing to the business? To a CEO, performance management is often one vehicle for driving a strategically important behaviour change, or improving business performance for a given wage bill. Yet the data typically gathered relates to process compliance matters such as the percentage of ratings entered into the system on time or what proportion of employees have objectives assigned by a certain date. We have no way of telling whether or not these are the right ratings or even whether we are asking people to do the right things.

3. HR must use data to provide insight rather than just information.

Just using the employee data we already have in a different way can result in HR adding much greater value and generating increased credibility into the bargain. Mining employee data in human resource information systems (HRIS) can enabled us to understand broadly what percentage of our people are dedicated to, for example, business growth versus core operations. This allows us to measure the gap between words and deeds in an organisation, and can be used to monitor the resources required for productivity and efficiency improvement over time. Yet, so often, HR presents data at board meetings that fall under the generic heading of “look how many people used to work for us”.

By using data more effectively, HR can enjoy improvements in infrastructural capability, such as closer links with finance and the budgetary planning process, more accurate people data and a greater knowledge of how to get the best out of the HRIS.

Driving value through data

However, Henley HR centre’s work with many different businesses has shown that the real differentiator in organisations’ ability to drive value through data is through individuals. Organisations that use data well use the right person in the right place. They look specifically for people who are confident about using data and are good at, and enjoy, really mining the numbers. These data-centric people must be complemented by those who have sufficient perspective and tolerance of ambiguity to ask the right questions, work with emergent data, spot patterns and trends and undertake scenario planning. Our recent work suggests that HR functions are not getting this balance right in the way in which they hire and develop HR people, and sometimes fail to recognise that these skills may exist elsewhere within the organisation.

So, where does this leave us? Well, if we are to expand the value that HR adds into this middle space of productivity and efficiency, the evidence and research indicates that we need to do so on a foundation of a more commercial, insight-driven and proactive approach to the numbers. This can create a virtuous circle of credibility for HR, helping it to get the basics right and giving it increased licence to operate in a more strategically relevant way. The key to this may lie in some cleverer decisions around how we match people and roles.

Nick Kemsley is co-director of the Centre for HR Excellence at Henley Business School