People Analytics: A key component to your HR Technology strategy

By Jamaal Justice and Albert Hong

What do you get when you combine promising new technological advances, a host of evolving solutions, and droves of eager customers who see the potential of these new solutions to move their businesses forward but are uncertain about what they should buy? The people analytics market.

 The promise of generating actionable insights in every aspect of work, the workplace, and the workforce has created fast-growing demand for people analytics (PA). A myriad of vendors are seeking to meet the demand with an ever-expanding mix of solutions (e.g., tools for Human Capital Management Systems (HCM), data ingestion, data warehouse/lake, extract/transform/load (ETL), business intelligence, and advanced analytics that are evolving as quickly as their underlying technologies.

The explosive proliferation of Human Resources (HR) technology and solutions is a challenge for HR leaders at every step along the PA maturity curve for two principal reasons. First, the ideal set of PA tools and solutions for meeting all organizational needs has not yet emerged. Second, most organizations are still in the process of developing the capabilities needed to evaluate their PA needs: Deloitte’s 2020 High-Impact People Analytics study found that 82% of organizations globally are in the earlier stages of their maturity journey.¹

Whether HR leaders are in the early stages of building PA capabilities or trying to stay on the cutting edge of what is possible, they need a North Star — a guiding light and a path that will lead them to a strategy and HR technology architecture capable of delivering on the promise of PA across their organizations over time.

A plethora of PA choices

As is typical in emerging markets, there are hundreds of vendors offering a vast range of solutions that are powered by multiple technologies — all designed to meet the PA needs of organizations to one degree or another. To complicate the picture, the solutions and technologies are evolving, too.

Currently, there are end-to-end solutions aimed at specific domains, such as PA platforms designed for the HR function. There are focused PA solutions that are designed for a specific purpose, such as external data collection (including workforce listening and sensing tools and market/benchmarking data), task and workflow automation, and self-service analytics. There is also a fast-expanding set of tools designed to support PA’s technological backbone, such as tools for data ingestion, cleansing, and processing, that enable data flow from source systems to reporting applications. Lastly, there are products delivering advanced analytics capabilities, such as augmented analytics, natural language processing, machine learning, and organizational network analysis.

Eventually, as PA technologies mature and clear winners emerge, the market will consolidate, various solution features and functionalities of solutions will converge, and the choices for buyers will become clearer. Until then, HR leaders need to determine the right set of tools and technologies to meet the current and emerging needs of their organization and create a sound foundation for the climb up the PA maturity curve.  

A North Star for people analytics

HR leaders can begin to navigate the maze of PA choices by stepping back and focusing on the ultimate destination. This destination and the real promise of PA — its North Star — is the ability to drive more informed decision making and business outcomes with the insights derived from the rapid measurement, analysis, and reporting of the massive and constantly growing volume of work-/workforce-/workplace-related data.​ The very type of insights that 97% of respondents to Deloitte’s 2020 Global Human Capital Trends survey told us they need more of.

This promise can manifest in innumerable ways.

• It may be retention, as in the ability to offer a business unit manager who is struggling to hold onto talented people the insights needed to stem the attrition.
• It may engage, such as the ability to understand how the workforce at large views a controversial issue in real-time, such as a COVID vaccine mandate, and help the CEO formulate a response that enhances employee well-being.
• It may be planning, such as the ability to help recruiters as they seek to more accurately forecast and fill tomorrow’s talent needs.

Whatever the use cases, the business-centered North Star of PA provides the focus needed to see beyond vendor solutions and promises to the needs of your organization and the PA infrastructure and tools that can meet them.

Three steps forward

With this destination in mind, when we work with HR leaders to help them develop their organization’s PA capabilities, we follow a three-step methodology to identify the tools and technologies they need to move closer to their PA North Star:

Assessment: The first step is an assessment of the current state of PA within your organization. This requires identifying the current challenges, pain points, opportunities in developing sustainable differentiated insights in support of the business strategy, and then analyzing your PA capability across five components:

• Strategy, including your analytics vision, its value drivers and business case, key use cases, and your PA operating model
• Data, including data sources, quality, ethics, and regulatory and compliance issues
• Technology, including technology strategy, architecture, security, reliability, and continuity
• Process, including process design, agility, scalability, and governance
• People, including organizational design, leadership, talent, and knowledge management

Needs identification: The second step is understanding your future state requirements for PA to inform your short- and long-term tools and technology needs and the overall delivery of data and insights. It entails identifying the analytics needed to attain your PA vision from the perspective of your business and human capital strategies, as well as the challenges, pain points, and identified optimization opportunities surfaced in the first step. Ultimately, these future state requirements will lead to impactful, relevant insights that provide leaders with more confidence in decision-making and a quantifiable business impact.  As part of the requirements gathering phase, it is critical for an organization to identify visionary use cases and corresponding metrics that matter to continue advancing up the PA maturity curve.

Action plan: The third step is the creation of a pathway to the future state. This is a plan for both the near term (i.e., three months) and long term (e.g., three years) that will eventually enable your organization to attain the North Star— to make evidence-based decisions that will drive organizational, leadership, and talent capabilities and results. The plan should define and prioritize the initiatives and activities needed to reach the future state, identify capability impacts and/or gaps, and integrate activities and dependencies across the timeline. Typically, the roadmap will include activities that can provide an organization with quick wins that deliver differential value. Oftentimes these quick wins include data and process-related activities (e.g., data governance, report intake process, and data cleanup).

Business Outcomes at the Center

Though the volume and variety of solutions that can be leveraged to advance along your people analytics journey are great and the pace of change in the space is rapid, the value of investing time now to understand where you are, what your vision is, and how the tools in the market can be brought together to help you to achieve your business and people analytics aspirations is unquestionable.  As you embark upon the journey of assessing where you are, defining what your needs are, and outlining your action plan, make sure to keep business outcomes at the center of your planning.  This business outcomes frame will help you to narrow your focus to the criteria that matter most as you survey the tools in the marketplace and help you to invest in those most closely aligned to your current needs and future, strategic ambitions.

Authors:

• Jamaal Justice
• Albert Hong

Works Cited:

¹ Global Human Capital Trends, Deloitte Consulting, 2020