People Analytics Drives Strong Business Outcomes: Study

by CXOtoday News Desk    Jun 13, 2018

people

A new global research from the CIPD in association with Workday illustrates an important relationship between the use of people data and strong business outcomes. It shows that organizations with a strong people analytics culture are much more likely to report strong business performance. However, the survey also highlights that the wide scale adoption of people analytics in business is still low and that more needs to be done to improve skills and confidence, particularly in the UK which is lagging behind South-East Asia, the USA and the Middle East and North Africa in both capability and confidence.

The research People Analytics: driving business performance with people data, surveyed 3,852 business professionals globally - including HR and finance professionals - to understand attitudes towards people analytics and how it is being used in organizations. It found:

People analytics is far from being business as usual: 

·  Just over half (54%) of global respondents stated that they had access to people data and analytics

·  Two-fifths (39%) have no access to people data for decision making purposes.

·  Just half (52%) of HR professionals stated that their organization uses people data to tackle business problems

·  Just 42% of finance professionals have access to their workforce’s people data despite the relationship between access to workforce data and strong business outcomes

However, when people analytics is used, it is adding value to organizations 

·  75% of HR professionals globally who are using people data, are using it to tackle workforce performance and productivity issues

·  65% of those who said that they work in an organization with a strong people analytics culture said that their business performance was strong when compared to other competitors, but only 32% of those in organizations with a weak analytics culture report strong business performance

·  Using people data was shown to predict the effectiveness of tackling key organizational challenges, such as workforce performance and productivity, showing that using people data leads to good outcomes

There are clear regional differences. The UK is lagging far behind other markets in data analytics capability and confidence: 

·  Just 21% of UK HR professionals are confident conducting advanced analytics compared to 46% of HR professionals in South-East Asia

·  Two-thirds (67%) of HR respondents in South-East Asia and 60% in the Middle East and North Africa (MENA) agree they have a standardised approach to using people data in projects compared to 50% of US respondents and just 42% of UK respondents

·  South-East Asia is also leading the way in using AI and/or machine based learning to compile data reports. Almost half (45%) of HR professionals in South-East Asia are applying it in this way, compared to 36% of respondents in MENA, 20% of respondents in the USA and just 13% of UK respondents

Global confidence in HR capability is low: 

·  Just 40% of global respondents said that their HR team was able to tackle business issues using analytics data

·  Only 53% of HR professionals globally think their HR team has demonstrable numerical and statistical skills and just 36% of finance professionals agree

·  Only 35% of non-HR professionals think their HR team are experts at using people data.

Edward Houghton, Human Capital and Governance adviser for the CIPD, the professional body for HR and people development said: ”It’s hugely encouraging to see that the use of people analytics in organizations is leading to positive outcomes. The more access HR and non-HR professionals have to people data, the higher they rate their organization’s performance. However, there are still clear challenges in terms of access to data and the confidence and capabilities in the HR function needed to get the best results from it, particularly in the UK. We need to see greater investment in the skills needed to understand people data and we need to encourage the use of people analytics across different functions in organizations, and in finance in particular. HR must lead the development of cultures that share a “common language” when it comes to people data and a shared understanding and appreciation of the positive impact people data can have on business outcomes.”

The CIPD/Workday research also highlights the importance of access to data. It found that access to people data improves outcomes but only 71% of HR professionals have access to people data, and just 42% of finance professionals do. For those with access to people, just 22% use it daily in their decision-making and almost a quarter (23%) uses it in decision-making just once a month or less.

Visibility of people data - through a dashboard for example - was shown to be an important driver of business outcomes. Almost three-quarters (71%) of respondents who said they were from a ’strong performance business’ said they have access to a dashboard of people data compared to 50% of those in businesses of average performance.

Gonzalo Benedit, president, EMEA & APJ, Workday, said: “It is interesting to see that businesses exhibiting strong people analytics’ cultures achieve stronger business performance than those who don’t. Yet, data is only really useful when it used and understood across the business. At Workday, we’re seeing organisations shift towards the general trend of keeping their people data securely within their HR system. People analytics should be available in real-time, and on-demand so that that they can be quickly used to make effective decisions. While the business case for people analytics may be clear, the data must be accessible and used, as only then will businesses have the confidence to use it most effectively.”

The report makes the following recommendations for HR practice: 

-   Build people analytics skills and confidence in to the profession: Low skills and low confidence have a clear impact on business outcomes. There needs to be greater investment in people analytics skills but HR professionals also need to build it into their daily decision-making in order to grow in confidence and capability.

-   Build strong cross-functional relationships to improve the impact of people analytics: There are clear differences in the perspectives of HR and finance professionals, and other professionals using people data. Non-HR functions need encouragement to increase the use of people data in their decision-making and HR has a role to play in generating trusted, relevant people data to serve wider business needs

-   Make better use of people data to understand business risks: People data can provide a unique way to understand value creation and risk within organisations.