HR Insight: HR Analytics
At the forthcoming HR Working Breakfast next month, I am going to talk about:
How HR can succeed as a business function – and therefore how the careers of senior people in HR will continue to develop.
The challenges that we face, and give some guidance on how we can solve these challenges.
The sort of capabilities that HR functions are building, and the way we can link HR to important strategic issues such as customer service, customer centric organisation designs, innovation, lean performance and global delivery.
I shall discuss what this means for the sorts of delivery models and structures that are being adopted in HR.
In this first piece, I want to set the context for the discussion – to take us through the task that we face – which is to offer organisations a much more business-focused set of skills and knowledge, to offer performance-led HR.
We have to start somewhere, and for me a good example of an area where HR needs to build its capability, and rapidly, is in the area of HR analytics.
Analytics of course can be applied to the whole range of HR activity, but for many organisations, they learned the tools of their trade by looking at employee engagement and its link to performance.
Why is this proving to be such a popular debate?
We seem to know more about our customers than our workforce: wholesale changes at Tesco
A decade ago, there was a famous strategic planning meeting at Tesco, at which each function presented its contribution to the analysis to the CEO.
The marketing function took everyone through their analysis of their customer base – their consumer behaviour and needs, and how this could open up some interesting and profitable business opportunities.
HR came along and took everyone through some rather mundane analysis of the workforce, standard metrics and demographics.
The CEO was not impressed, and famously said “we seem to know more about our customers than we do our workforce”.
If HR wished to do anything with its seat at the table, it needed to be able to link its knowledge and insight into the workforce to some useful organisational outcomes.
It needed some data that could predict something, not just describe things.
The response is now history.
Tesco set up an employee insight unit, applied marketing thinking to their research, identified a range of different employee segments (the want it alls, live to works, work to lives, pleasure-seekers, and work-life balancers), and showed how each segment could be engaged through appropriate employee value propositions.
They then adopted a core retail model – the service-profit chain – and used their data on employee engagement to show that gains in engagement were linked to (or correlated with) important business unit outcomes around store profitability and customer service.
HR had gained a way of being able to show the rest of the business that if some business initiatives, or leadership behaviour, ignored engagement, there could be a price to pay. Subsequently some of the that insight team moved on, one to McDonalds.
In my second instalment, I use the example of work done at McDonalds to show how expanding the scope of analytics work becomes important. They too adopted service-profit chain thinking and identified how this worked in the more transactional service environment of fast food.
Part 2 is now available. Click here to read.
Professor Paul Sparrow will be speaking at our Working Breakfast event next month. If you’d like to attend, click here to register your interest.