Data analytics is an area where HR has historically lagged behind other functions — but that means there’s tremendous potential for growth. When HR data is properly collected, consumed, and applied, it directly influences business outcomes.
By focusing on data analytics, HR will enter the next stage of its evolution, says David Swanagon, executive consultant at Trellix. Swanagon has helped organizations merge people and technology functions, and he’s passionate about the future of people analytics.
Check out Swanagon’s predictions for the evolution of HR leadership and for how HR data is collected and applied.
Prepare for the evolution of the HR leader
HR is evolving along the same path as other business functions, such as the supply chain. “In the past they saw it as a cost function,” Swanagon says, “where it’s actually an analytics function and a process efficiency function.”
Similarly, HR will transition into a digitally driven function to better support the business. “The shift in HR is going to happen, and we’re going to know it’s happening when the type of CHRO changes,” Swanagon says. “I think the CHRO of the future is someone who can lead both people and machines, and who anchors HR activities to four business outcomes: revenue, growth, profit, and corporate reputation.”
The workforce of the future will rely heavily on machines and artificial intelligence, and HR leaders will need new skills to manage that complexity. “It’s something that people get more comfortable talking about as the type of CHROs change,” Swanagon says.
To prepare for that shift, HR leaders need to invest in training engineers and digital teams in what the people function does.
Reimagine how you collect HR data
Leaning into data analytics requires lots of data that most organizations don’t have. “A terabyte is the starting point of big data. It’s this massive amount of data,” Swanagon says. “HR, I would say, doesn’t remotely come close to that in even the largest organizations — and it’s only because it’s not tracked.”
HR can fix this problem. “Since human beings have a direct or indirect involvement in every transaction in the business, the HR dataset — if it was fully capturing those experiences — would be the largest in the entire business,” he says.
Most organizations lack the processes or infrastructure for capturing data points generated in the flow of work. Before solving the collection problem, evaluate the data you do have: “What is the size of my dataset? What aspects of the company’s operations do we capture data on? How does human capital interface with the broader revenue chain?” Swanagon says.
After you understand what you have, “HR’s investment should be in its data infrastructure,” Swanagon says. HR will change the business when it can easily feed data into prescriptive analytics models.
Align people data with revenue
If HR wants to showcase its business importance, it needs to use data to show how people drive profit — and that requires a shift in perspective.
When public companies file quarterly reports with the Securities and Exchange Commission, “employees are one of the largest expenses on an income statement because of their payroll and their overhead,” Swanagon says. “Executives are trained, through financial reporting, to not see employees as an asset — despite the fact human capital is embedded into every activity.”
The CHRO of the future will want a single chain of data that maps to the revenue logic model. They’ll want an HR information system that captures every stage of revenue transactions, the effects of human interventions, and where HR can increase revenue by enabling performance. “It’s anchored against revenue,” Swanagon says, “it’s anchored against profit.”
HR transformation starts by investing in it — and that requires conscious support from executive leadership, who “have to make a decision that HR is a domain worth analyzing,” Swanagon says.
The important thing for HR leaders to remember is the opportunity in front of them. Even as machines take over more of the work, it’s still people who drive the business forward.
Interested in learning more? Check out our comprehensive guide to unlocking the power of predictive analytics in HR.
Unlock the power of predictive analytics in HR.