Why People Analytics Doesn’t Work
And What You Can Do To Make It Work
We've heard how People Analytics (or Workforce Analytics or HR Analytics) can fundamentally change your business. All the countless solutions, sales pitches, magic bullets that will make your employees happier, more engaged, stay longer, [insert common HR problem] sounds great … on paper.
But most of these solutions don’t provide transformative value to organizations. For every Google / Laslo Block / Work Rules! (where People Analytics IS transformative) there are hundreds of CHROs scratching their heads on why People Analytics don’t drive meaningful results.
The first problem is that People Analytics is all about tracking human interaction and behavior. And tracking human interaction and behavior is difficult to capture in a way where we can model people’s true intentions with a high degree of confidence. And without a high degree of confidence, analytics and modeling won’t produce any meaningful or actionable insights.
The second problem is that ROI on People Analytics is difficult, if not impossible, to articulate. Not saying People Analytics doesn’t provide value. But People Analytics fails because it cannot articulate or attribute measurable ROI without using fuzzy math. In most organizations, ROI is the most important KPI when buying technology.
But if this resonates in your HR or people organization, there are simple principles you can follow to get the most out of your People Analytics:
- Look more into People Data Management instead of People Analytics — I get it, its not as sexy as the newest recruit prediction model. But having good people data, records, and stewardship is the foundation for anything possible in People Analytics. It’s also more straightforward to articulate cost / benefit, especially if you have a team of data analysts trying to manage thousands of sources. Solutions here: Cloud HR like Workday and SuccessFactors, Time Management like Kronos.
- Don’t buy People Analytics software unless the vendor is willing to price based on a ROI— Ok fine, probably won’t happen in reality. But if a vendor is serious that their software drives value, they shouldn’t have any issue getting paid based on the increase in return. If they are pitching cost savings — then they should articulate how meaningful cashflow will come back to the business (classic example, I can reduce attrition, but I cannot tell you the exact savings). If they are pitching revenue drivers — then they should articulate how they will measure and attribute increase to sales.
- But buy People Analytics solutions that provide new transactional data on People — If a vendor is pitching a People Analytics that does not provide new transactional data, proceed with caution. As mentioned, tracking human interaction and behavior is hard. But the more real transactional data that is captured on people, the better model you can build. Solutions here: Productivity like Microsoft WpA (shameless product promotion), Talent like LinkedIn or Indeed.
Thank you for reading my article. I’ve been working in this space for years and have formed many opinions. Which is what this article is, my opinion :)
Would love to hear comments and feedbacks from other’s experience in People Analytics.