Today, most HR teams feel pressured to show the value of what they do, measure the value of human capital, and show how people programs impact productivity and their company's bottom line.
If you are feeling it, you are not alone. For over ten years, leading research firms, professional HR associations, and consultants have been telling HR we need to become data-driven. If we don't, they imply, our competition will run us over like a steamroller flattening the Roadrunner.
The story is that most of HR lags in analytics and needs to upskill to become data-savvy. True, some companies have made genuine progress, but they are technology-based data natives like Google or have had the resources to spend years getting it right. Most still struggle or wonder how to get started.
The Real Reason HR Lags in Data Analytics
We can see why. How do you become data-driven and analytics savvy when locked in a culture that doesn't value data?
In organizations, top leadership drives culture, especially the CEO. If the CEO doesn't value analytics capability and the superior decision-making that can flow from it, there can be little momentum toward becoming data-driven. In recent separate surveys, Deloitte and New Vantage Partners found that mindset to be prevalent in most organizations.
- 63% of US executives do not believe their companies are analytics-driven. (Deloitte)
- 67% say they are not comfortable accessing or using data. (Deloitte)
- Only 31% of companies say they are data-driven, a decline from 37% in 2017. (NewVantage Partners)
However, there are three reasons it's now your time to take the lead in using people data to build a higher-performing organization:
- You want to do it. If you didn't, you wouldn't be reading this. Whether from a sense of self-preservation, a desire to add value, or both, we want to make better decisions.
- You need it. The value in people data doesn't just affect HR. It drives the entire organization. The old idea of "we do business and HR does people stuff" doesn't work anymore. HR's role is to help the organization become people-oriented—because that's the way the value of what people can do is at its best.
- It's required. Our innovation-driven, talent-driven, and knowledge-based economy creates external pressure is on companies to measure and report on the value of their people. Human capital and culture now comprise an average of 52% of a company's market value. Regulatory agencies, private equity firms, and institutional investors demand that companies show that value to stakeholders. Even privately held companies will come under pressure to conform. This requirement is motivating CEOs right now.
So, we must report the value of our human capital, tell stakeholders what we do to maintain and improve it, and align learning and talent activities and programs to business strategies.
We can do that by developing the right measures and creating data-driven teams.
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