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For real HR impact, focus on people analytics now, not digital transformation – by Lexy Martin

For the past few years, the focus of a multitude of organizations spanning across industries has been pursuing HR digital transformation. The ideal goal of this transformation is the empowerment of the employee and a shift in thinking across the organization ultimately leading to a digital and data-driven mindset. But over time, most have lost sight of that goal, instead focusing on operational efficiencies to be found in digitizing business as usual.

We are no longer in a time of “business as usual”, and time is of the essence. Organizations must refocus on the original goal of transformation and take bold, decisive steps if they are going to survive and thrive in the new normal. According to McKinsey, businesses that once mapped digital strategy in one to three year phases must now scale their initiatives in a matter of days or weeks.

Much like every other part of the organization, the digital transformation of HR is essential in an age where technological disruption is the norm. According to a Deloitte survey in 2019, digital transformation budgets were going to increase by 25 percent in 2020. But with the advent of Covid-19, these budgets will likely decrease or even cease. If maintained, they need to deliver to the end state of supporting that data-driven mindset in support of employee and organizational effectiveness optimization, but now, not later.

Why? First and foremost, organizations are needing to do more with less.

Covid-19 has created so much unexpected change to our current environment. Pursuing a classic HR digital transformation means an organization goes to the cloud for digitizing its HR processes, enhancing its processes to deliver an optimum employee experience, and then three years later or more finally implements a promised HR analytics capability. This means organizations will not have critical data to make better decisions, improve workforce processes and enhance productivity and do it at reduced cost now when it is needed the most. While the promise of a cloud HRMS implementation is as low as six months, it takes considerably longer in practice. With very large organizations, there are horror stories of spending five years and hundreds of people, while going through multiple implementation partners.

Organizations instead need a strong people analytics solution now to answer key workforce questions. In doing so, they can bypass the traditional HCM application roadmap. Organizations do not need to spend exorbitant time, money and resources implementing a new HRIS to achieve the desired end-state of a digital transformation. Further, they need to augment Excel at a minimum, with about 50% of HR teams still using that, with all its issues, as their primary reporting and analysis solution.

Why is data and analytics so critical now? What has, and is, changing?

  1. Initially organizations needed to keep their employees safe and well. They needed to understand employee risk and proximity to Covid-19 hot spots. They needed to identify critical employee groups necessary to keep the business running and to ensure they can retain these employees. They needed great insights into the type of work and skills needed by location. They needed to support the transition of work environments from office to home. For this, they needed data and analytics readily available to answer all these questions. They may need this again for future outbreaks.
  2. All organizations have ramped up remote working from home. Training employees how to do this well is important. They are also realizing and planning for remote work to continue even after recovery from this crisis. We are seeing more emphasis on developing remote collaboration capabilities – look for indications this is increasing. Early on and continuing for the foreseeable future, we need to know who can work remotely, who needs training, and what is the effectiveness to foster collaboration.
  3. Organizations are focused on the well-being of their workforces. Managing the new stresses of working from home demands this. For this, organizations need to know the sentiment of their workforce. They need to be able to marry pulse survey results with data on absences in order to focus on necessary actions to ensure continued employee well-being.
  4. Skills-based hiring is critical. Organizations are starting to think about new business models. They need to focus on recruiting candidates or developing employees with the skills and capabilities needed for these new business models rather than for their academic pedigree. We’re starting to see an emergence of apprentice-ship programs. For example, Infosys is accelerating this with its Digital Apprentice program for community college students to learn-earn work to land digital backbone jobs. Community college enrollments are also dramatically up, as out-of-work workers are returning to school to develop new skills just as they did back in the last economic downturn of 2008-2009+. Organizations need to know which skills are available to support new business models emerging, which are needed, and the effectiveness of learning and development programs that can feed back into hiring, when possible to identify great quality of hires.

SIDEBAR: Let’s talk more about learning and development. I managed the Sierra-Cedar HR Systems Survey from its inception in 1997 to 2015. This survey looked at a breadth of HR technology adoption and which delivered value to adopting organizations. During the last economic decline, almost all HR technology spending declined–except for learning technologies and workforce analytics where adoption continued to grow. Organizations realized they wouldn’t be hiring during the economic downturn but they did need to continue to develop and expand the skills of their workforce.

Adopting workforce analytics was always an early adopter organization move. And, the interesting finding from this adoption is that starting back in 2000 when I first started tracking analytics adoption, those that adopted outperformed financially those that didn’t. Each year, I correlated adoption of those with analytics vs. those without, with return on equity and revenue per employee for all the publicly traded companies. Every year, from 2000 to 2015, those with analytics outperformed. Correlating to ROE and revenue/employee work in a growing economy. Except during the 2008 economic decline and for a few years thereafter, few organizations saw revenue growth, so I switched to looking at profitability. For those downturn years, those with workforce analytics sustained profits better than those without. That may be the best outcome for organizations for the next two years again.

One other observation from that last downturn. When organizations began to see light at the end of the economic downturn and started to think about buying technology solutions, they had to compete for funds. The need for justification of expenditures on HR technologies demanded concrete value propositions with lots of proof.

END OF SIDEBAR
Good data is critical for wise decision-making. In a crisis like Covid-19, good and timely data is essential. Having a short-term lower-cost, higher-value investment that gives managers the ability to make decisions daily can save lives and at a minimum ensure employee well-being.

Through research work with Visier, we have clearly identified the value from countless stories on how organizations save money with analytics across moments that matter:

  1. Across the employee life cycle of attract, develop, retain processes
  2. Across organization effectiveness activities of planning, optimizing structure with spans and layers, and optimizing productivity. https://www.visier.com/clarity/how-people-analytics-delivers-financial-impact-new-report/

Figure 1: Moments that Matter that Drive Value of People Analytics and Workforce Planning

The stories from organizations identified here in an analytics path series show how organizations have saved significantly. The same analysis approaches can be used now, still with a focus on saving money and doing more with less.

People analytics and workforce planning can make a huge impact, now. Stop unnecessary digital transformation work and pivot away from the time and expense of using transactional data systems that only deliver analytics at the end of your long implementations. At the very least, lead with analytics for your digital transformation. You can deliver value and competitive advantage to your organization now, answering the above questions and focusing on the moments that matter to ultimately improve your employee experience during hiring, onboarding, developing, and retaining processes and during key organizational effectiveness activities.

 

About Lexy Martin:

A past active member of IHRIM, I was the Managing Director for the magazine a few years back. You may also remember me as the director of the SierraCedar HR Systems Survey for its first sixteen years that continues today to look at HR technology adoption, value, and more. I’m a long-time researcher now focused on the people analytics space and am currently myopically focused on leading practices to implement people analytics and achieve value…fast. Lexy.martin@visier.com

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