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Q n A with Dave Millner on People Analytics

Editorial Team
28/01/2020 9:57 AM

Memory caught up with David Millner, a people
analytics expert to discuss people analytics and its impact on business.

MN: What is people analytics? 

DM: People
Analytics is the use of business and workforce-based data and analytic tools to
identify insights on people that enable faster, more accurate, and more
confident business decision-making.

MN: What is the business case for people

DM: The challenge for HR is
to take the leap forward and make the business case for data-driven HR
underpinned by people analytics to provide greater insights than ever before.
This is driven by two, elements strategy and focus. Strategy:  HR needs to not only map out a clear link to
its strategy but also demonstrate how HR will contribute to achieving the
objectives set out in the business strategy through the application of people
analytics. Hence, HR needs to outline its own strategy with clear objectives
and the data required to achieve these aims. People analytics only works when
it supplements the business strategy, remembering of course that not every
analysis will necessarily drive new insights. 
Focus: Any
data-driven initiative needs to owned by the whole organization. It is
sometimes hard to break a prevailing intuitive culture and introduce a
data-driven culture. Nevertheless, it is HR’s responsibility to develop a plan
of action outlining how a data-driven approach can enable the business to
answer key talent questions. This should highlight HR data-strategic objectives
and how this adds value to the organizational objectives. Having a strong
strategy with a focus on core objectives will allow HR to filter the noise that
big data brings with it. Nevertheless, success requires both the senior
management team and cross-functional departments to buy into the benefits of a
data-driven HR system. Remember not to over promise and under deliver.

MN: HR has been accused many times of not being able to show
the value of HR interventions on the business. Has this changed with the advent
of people analytics?

DM: Most
HR functions and organizations as a whole are starting to see the benefits that
people analytics can make to corporate performance.  However, when looking at business challenges
such as sales growth, market expansion, regulatory issues, customer experience
issues and supply chain bottlenecks, HR is not the first port of call to try
and address the problem.  Conventional
obstacles are most often addressed with conventional solutions and yet, as
high-functioning HR organizations know, nearly every business problem has a
talent component to it, an element that functional business managers don’t
always consider.  Therefore, proving the
value of people analytics to the larger organization involves two tasks,
convincing business managers of the relevance of people data and the insights
that can be derived from them and then applying the people analytics discipline
to the specific challenge at hand. 
Opportunities exist to show the benefit of people analytics, it’s the role
of HR to find them and show what can be done.

MN: How can HR through people
analytics show value  to the business in
the following areas:

MN: How
can people analytics be applied in the area of training and development? Do you
have a top case study you may want to share in terms of key learning points?

DM: Without strong learning and
development (L&D) programs employees may have a harder time being
productive, moving up in the organization, and contributing to financial
performance. Additionally, it can also lead to lower employee engagement and
increased turnover.  Without this
capability, L&D is seen as an overhead rather than a competitive advantage
and the whole function clearly needs to up its game when measuring the success
of the interventions it provides, especially as the technological driven future
of work will demand the application of new learning in a far quicker way than
ever before.  It’s one of the easier
areas to work with in terms of data availability and yet learning seems to be
behind the curve when it comes to analytics. 
Case Study:  I worked with a
utilities organization where the capability of Customer Service Managers were
perceived to be a business-critical issue due to productivity challenges,
upselling targets not being met and service management issues, especially relating
to customer problem resolutions.  Key
behavioural gaps were identified from research and a learning program was
devised (generic learning solutions alongside personalized learning solutions
focused on each of the 100 leaders/managers involved).  Their capability was assessed both before
they commenced the learning, and six months after the learning.  The outcomes using people and business data
were that capability improvement of between 5 and 15% were seen in 3 key
competencies, team engagement had improved by 8% across the teams that were
managed by these leaders/managers, productivity of teams had improved by 5.6%
(c€155,000), Customer Net Promoter Score had improved by 9% and upselling of
services had exceeded targets by 4.5% (c€145,000); all of which demonstrated a
clear business return on the learning program.

MN: How can people analytics be applied in the recruitment
and selection of competent staff {share examples where possible}?

DM: Data provides
the opportunity to learn and improve the recruitment process itself using
reports and analysis to where candidates come from (which job boards, social
media or referral routes), how long it took your eventual hire to be recruited,
where your hiring bottlenecks are, which line managers require support
in their recruiting capability, etc. 
These are important but too much recruiting analytics have been focused on calculating the
cost per hire. The point is not to hire more cheaply but to obtain better hires
as a result of the process being used; the quality of hire.  Case Study: 
I was involved with the technology solutions business arm
of a
European projects organization.  The organization needed to improve the quality of the Project
Manager (PM’s) recruitment.  There was no one perfect measurement or metric but
wanted to focus their efforts on their best hiring sources, the factors that
drove superior job performance from PM’s and identify a benchmark for their
Quality of Hire.  The research highlighted
a standard of 55% and was raised to
97% within a 6 month period saving c€250,000 in terms of improved
organizational project performance, saved training, onboarding and saved
recruiting costs. 

MN: How can people analytics be applied in
the area of employee compensation?

 DM: Strategically using people
analytics enables organizations to optimize salaries and rewards which can help
HR positively impact the bottom line while also providing employees with fair wages.   There is no shortage of available people
data from technology systems such as HRIS, payroll data, LMS, etc. – the key is
being able to use it appropriately to help make better decisions based on
fact.  Whether it’s about managing job
candidate salary expectations, addressing pay concerns or helping managers
understand the opportunities to differentiate between average and top talent,
this has to be done using data not intuition or guesswork.  Take a simple example where an employee
receives a competing offer from another organization.  The first instinct is to match that offer but
that can lead to costly mistakes or poor judgment. Reviewing data can enable
you to find out how the employee compares to the rest of their team, their
peers and also consider what the market is paying for similar jobs. By comparing compensation profiles,
incentive rates, performance ratings, and attributes of employees to others on
the same team or in similar positions, managers can make decisions that are no
longer based on emotion, but reality. 
The value of employee talent will emerge as a key area over the next few
years as it will be driven by the measurement of Capability divided by Employee
Cost to provide a talent index.

MN: How can HR show business value through
people analytics?

DM: With the ongoing
global economic uncertainties that all HR functions have faced, it’s not
surprising that the function has tended to focus on process efficiency which
has meant ongoing trade-offs between quality and cost.  When cost containment efforts start, the results
can be fairly significant but as time passes and the efforts continue, the
value of the savings starts to diminish. Today, cost containment efforts
relating to people are likely to be a small proportion of the overall corporate
budget, so the savings are likely to be minimal when the focus should be on
growth which has far fewer limitations.  Every Head Office function has to
focus on “adding tangible value” and should ultimately aspire to become a
profit centre in their own right. Against this backdrop, analytics can support
the HR function in demonstrating the economic value of its programs and
practices through a commercial focus (what activity will impact upon the
business effectiveness of the organization such as costs, efficiency,
productivity?), a data focus (how can the HR function prove the financial
benefits and “added value” of their interventions?) and a growth focus (what
activities can tangibly impact upon the “bottom line” of the organization such
as increased income and growth streams?). There needs to be an ongoing drive to
demonstrate the business impact of everything that the HR function does.  This might be a direct correlation between
the improved business outcomes such as sales, process efficiency from an
employee program, or the linkage between a particular people process, such as
recruitment for example, and its’ impact upon productivity, sales revenue or
profit.  With that mindset, it means that
we can now think about HR being a profit centre not a cost centre because we
are ‘on the front foot’ and talking about growth, profitability, productivity
not about process efficiency and the “HR to employee ratio”, the most
irrelevant metric ever invented.

MN: When HR is preparing a report for the
Board what can HR report cover at the predictive and prescriptive levels?
Currently, they seem to focus entirely on the descriptive level.

DM: When preparing a
report for the board it needs to be concise yet incisive, with data that tells
a story, whether it is looking backward or predicting something into the
future.  Boards are focused on making key
strategic decisions so there is a clear need to ensure that any analytics-based
insight is focused on an organizational challenge that could shape and change
the way that the organization is currently operating.  The priority for me, therefore, is to provide
the right information and insight at the right time using the right analysis
technique.  Whilst it would be preferable
to shape the organization of the future through prescriptive or predictive
analysis, for me, it is more important to make an impact on the board that
changes the perception of the HR function; i.e.: HR is as much a business function
as any other support function.

MN: Can you give a brief summary of a case
study at the predictive analytics level in the area of people analytics that
you would rank number one in terms of value?

DM: Case Study:  I
worked with a retail convenience store chain in the UK where the business
problems revolved around a lack of consistent business growth and that the most
business-critical job in the organization, the Store Manager, had an annual
turnover of 32% per annum!  By working
with the HR and Finance functions I was asked to build a business case to make
changes to the “out of date” recruitment process that existed (costing
c£500,000 per annum to operate). A new evidence-based process would cost
c£650,000 per annum to operate and hence the CEO wanted a clear rationale to
make such an investment.  By working with
Finance and their cash flows that they had available for the next 3 years for
every store, I was able to identify and predict that the difference between
high performers and average performers in that role was 400%
sales and 190% profitability.  Based upon
this, new cash flow projections were created on the basis that if high
performers were recruited through the new recruitment process rather than
average performers the impact on the bottom line for the organization in
profitability terms would be £100,000 in year 1, £250,000 in year 2 and
£275,000 in year 3.  The new process was
agreed upon and implemented.  Over the
next 3 years, profitability increased by £95,000, £263,000 and £278,000 respectively
– HR had made a real commercial difference to the organization through people

MN: Can you give a brief summary of a case
study at prescriptive analytics level in the area of people analytics that you
would rank number one in terms of value?

DM: This is a piece
of work undertaken by a Dubai and US consulting business that I have worked
A Dubai Government agency needed to grow its productivity by 10% or
better to reverse a downward trend and it needed to decouple output growth from
headcount growth (i.e.: the only way to increase productivity was to recruit
more people).  They use a
Trigger-Task-Time algorithm, that observes employee behavioural and work
patterns and productivity.  The aim is to define new levels of
productivity through capability improvement, process refinements/changes and
proposed new management behaviour through nudges that help leaders and managers
to drive focused business improvements.  Based on the analysis of four business
functions and twelve months process data (some 480 million rows of data from
twelve disparate systems), a series of outcomes emerged: only 1.1% of
the work actually led to its’ intended result from a process point of view;  there was a 261% like-for-like
task variance between high and poor performers; 65,000 hours were replaced due
to poor process and capability issues; 270,000 hours of increased workforce
capacity was identified and finally an 11.5% productivity
increase was achieved through the process assessment and improvement activity
allied to behavioural change to support those changes.

MN: Can HR be digitally transformed? If so
what are the key learning points?

DM:  HR can and must be digitally transformed as
technology is an enabler that will allow HR to focus on “value add” processes
such as workforce/succession/scenario planning, organizational and job design,
personalized learning strategies, etc. rather than the “low value” operational
processes with which HR has been bogged down with for years.  Digital transformation is commonly defined as
the process of integrating digital technology into a business and for HR this
means incorporating digital technology to improve how the function (and the
organization as a whole) operates. This digital technology includes cloud-based
HRIS, digital recruitment solutions, internal communication platforms,
workforce engagement software, new continuous performance management processes,
24/7 personalized learning solutions and much more.  When integrating these digital
technologies, HR needs to consider how new apps, tools, and programs that will
transform the workforce and how work is performed and completed. HR teams that
are able to look beyond just their own function and operations will start to
develop a competitive edge.  HR
needs to:

  • Goals: 
    Establish goals before introducing any new technology that ensures that
    you’re moving in the right direction. Having a clear aim before starting your
    transformation will give you an aligned path to work towards and give you
    guidelines to measure your success.
  • Expert Team:  Your digital transformation team should be comprised
    of multiple experts such as someone who understands the HR processes and how
    they contribute to the organization’s productivity as a whole, experts in
    digital transformation who know how technology can refine and enhance those
    processes and a change manager who can should facilitate the shift and ensure
    everything is aligned and in place to drive success.
  • Strategy:
    A strategy is key to efficiently transforming your organization.
    Without a clear process in place, your transformation team will not know what
    steps to take next or what kinds of technology they need to implement.  You need a step-by-step plan that outlines how you’re going to
    get from where you are to where you want to be. Identify what steps you’re
    going to take first, and what you’re going to do when those steps are
    completed. Think both short term and long term to create a complete strategy
    that brings you through your transformation process.
  • Technology:  Consider the user throughout the process;
    it’s about the right technology that is relevant for the users, not necessarily
    the most complex or “leading edge” technology.
  • Prototyping and Experimentation:  Don’t be afraid to try something new. Experiment
    with the technology you’re using or the processes you’ve created. Look for more
    efficient ways you can achieve your goals and try new paths to getting them
    done. Evaluate how well each system works and eliminate the processes that
    don’t bring you closer to achieving your goals.
  • Measurement of Results: measure
    before and after all changes to capture the savings and value that the process
    changes can bring (time, cost and efficiency savings, etc.).  What gets measured gets done!
  • Communication Transparency:  Digitally
    transforming your HR function and practices will not only influence the way
    employees work but will also create changes for the entire organization.
    Transparency, therefore, around what is happening can help employees deal with
    the growing pains.  Employees
    will need to be educated on how rules are changing, what new processes they may
    need to know, and what new technology will be introduced. Keeping them well
    informed not only helps with the user experience but also enables them to
    provide ideas and feedback throughout the transformation.
  • Culture:  Never forget the organization’s culture as
    every transformation is a culture change that can impact on the way the
    organization operates and the behaviour expected from the workforce.

If you are
interested in more case studies and insights into the role of people analytics
within the HR function of the future then consider buying “Introduction to
People Analytics: A Practical Guide to Data-Driven HR” by Nadeem Khan and Dave
Millner, Kogan Page – available 3 April 2020.

Milner is an Author, Futurist and Consulting Partner at @HRCurator. He is skilled in Executive
and Career Development, HR Transformation, Culture and Employee Engagement
programs, Organisational Development interventions (organisational design and
workforce/succession/scenario planning), and Executive Coaching. Strong
consulting professional - Chartered Institute of Personnel and Development and
Occupational Psychology professional.

An author of "Introducing People
Analytics: A Practical Guide to Data-Driven HR" and futurist looking at
the world of work, the HR function and the people practices across
organisations. A regular conference speaker across the globe on these subjects. 

Editorial Team

This article was written by one of the consultants at IPC

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