Evidence-based HR can change the perception of the function’s apathy towards business outcomes by demonstrating the link clearly with financial indicators
There’s never been a better time to be involved in delivering the people agenda. For the first time ever, HR has a massive opportunity to demonstrate the value it adds to the delivery of business objectives, something that HR practitioners have struggled with till date.
I’m talking about Evidence-based HR. Simply put, it is using data, analysis and research to understand the connection between people management practices and business outcomes such as profitability, customer satisfaction and quality. However, while the growth of evidence-based HR is gaining momentum, our KPMG report conducted with the Economist Intelligence Unit (EIU) reveals this new era of evidence-based people management is by no means guaranteed. Moreover, even while insight-based HR has been around for a considerable time, specific action points to enable research-driven decisions have proven to be largely elusive.
People-related risks that directly impact the bottom-line, which can be in fact be effectively mitigated through predictive analysis, continue to linger. But it’s not just about the HR function. CEOs need to embrace and lead this change while at the same time demanding more accountability from their HR leaders on how they are integrating data into their people management strategies to avoid losing ground. Businesses must understand that this is a massive ask that requires long-term commitment and paradigm shift.
It starts with three critical success factors:
1) Get Comfortable with Data
This means moving beyond basic HR KPIs to data that can deliver predictive insights about the role of people in your business action. In India, companies are looking towards external consultants to address the capability issue as HR Analytics still remains a scare and nice skill set.
2) Hone Your Organizational and Industry Knowledge
You have to develop both your industry and company knowledge. HR is not a generic thing nor is it industry agnostic. You must apply what you know from an HR perspe-ctive to your industry and to the specific needs of your company. You should also know how to frame the questions that will direct your analytical efforts.
3) Reconfigure the HR Department
HR needs to be reconfigured so that HR and management work together within a model that promotes evidence-based people management. Such a shift will also play heavy on capabilities, cost and resources. As much thought should go into designing the components of an evidence-based operating model:
Information flows: Who sees what, when and where?
Visualization: How to portray data and insights in a way that leads to action?
Decision-making: Where, how frequently and under what governance are things decided collaboratively? Specifically, To do this well, data scientists should work within the HR function. Indeed, a number of our clients are recruiting data scientists as well as working out how to make the transition from analytical insight todecisions that are required or implied by predictive insights as opposed to “rear view mirror” insights.
Responsibilities and critical people management roles: Who is accountable for what?
Capabilities: What skills are needed to enable and implement evidence-based decision-making? How can HR evaluate the best research within the organization and combine with external management and social science thinking to determine which research is pointing to something really important?
Becoming evidence-based requires an effort of will and a sufficiently changed mental model that will surely be a challenge for many companies. What we need here is a culture and mindset change that goes beyond tracking information to actually uncovering key insights that transform and fortify organizations.