Data’s Power of Persuasion: How People Analytics Is Changing HR
Workforce analytics is no longer just a headcount of employees, a list of compensation packages, or a report on exit-survey responses. Strategic leaders are connecting their traditional HR reports with business metrics, which is transporting their insights from the HR department and into executive meetings where it informs the strategy of the C-suite.
To advocates of using data for more rigorous decision-making, this development was long overdue. “It wasn’t clear why we don’t focus on HR analytics as much as we focus on customer-data analytics to make decisions on how to grow a company, how to develop talent,” said Maria Dolgusheva, HR systems and analytics manager at PandaDoc, a company that builds document-workflow software. Since employing a workforce is often the largest cost of doing business, said Dolgusheva, “Why wouldn’t you look at the dashboard from the same approach with which you look at the financial dashboard?”
As the influence of the HR department continues to grow across the business, HR professionals like Dolgusheva are positioning the department as a source of invaluable business information.
That’s what Jackie Bassett does at University of Chicago Medicine as director of people strategy. “Our role as it pertains to people analytics is to take the analysis, translate that into a business context, and bring that into conversations with the leaders that we support and advise them and work with them on making decisions based on the data.”
Because it’s a burgeoning discipline in HR, part of the job is leadership evangelism. Bassett said it hasn’t been a hard sell. After all, the C-suite is a strategic group, and they’re looking at the value of people analytics accordingly.
Old-School People Analytics
The HR department has always had reams of data: headcount, compensation numbers, tenure, performance scores, and more. Yet until recently, this data has found limited applications outside of the HR function, and so business leaders have largely disregarded it. It’s HR stuff.
Part of the problem was a lack of connection, said Vahed Qazvinian, co-founder of talent-retention software platform Praisidio. “People data alone is not sufficient. People analytics that relies only on people data sits normally within HR and interfaces with other HR folks and rarely with the business leaders.” That’s how it has been in the past: too far removed from the business of the business, responsive only to executives’ requests, and only backward-looking. On top of that, when business leaders do request data, the providers in HR seldom know how it’s used.
Some executives may still think of workforce analytics as simple reporting on one metric, like headcount, for example, and therefore haven’t considered it a source of new or insightful information, said Tiffani Murray, the director of HR tech partners at LinkedIn, who has worked in organizations where this has been the status quo. Maybe those reports include a second number, like compensation or tenure, but they’re not otherwise revealing, and they’re not used for making decisions about the future of operations.
Tiffani Murray, the director of HR tech partners at LinkedIn (Photo courtesy of Tiffani Murray)
“You can have an organization where you just have a strong set of reports, but there’s a difference in maturity when you get to actual workforce analytics and strategic people analytics, and you can’t just get to that with a bunch of disparate reports,” Murray said.
HR doesn’t live a lonely corporate life anymore, and as the department’s influence reaches beyond its own department in the form of initiatives like technology and diversity, equity, and inclusion (DEI), forward-thinking HR professionals are lobbying for new applications by combining HR data with business data.
Qazvinian believes that effective people-analytics practices will strengthen the. relationship between the C-suite and HR. “When you augment people data with business data, then suddenly people analytics can start making sense because the business leaders understand business data and behavior data and it has direct connection with the KPIs of the business, and this increases the frequency of meetings between these folks,” said Qazvinian.
For example, one of Praisidio’s clients needed to lower its time-to-resolution for customer complaints. The company combined time to resolution (business data) with tenure of customer service staff (HR data). “The time resolution was low because they have high attrition among high-tenure support staff,” he said. “High-tenure support staff are the ones that know how to close these tickets faster.”
Putting People Analytics to Use
People analytics in this new sense of a collaboration between the HR and business functions is still fresh and green, and when business and HR do work closely, the combinations are compelling.
One of the most popular uses of people analytics at the moment is employee retention. At University of Chicago Medicine, Bassett and her colleagues are lining up turnover data with tenure data with exit interview surveys to find out how reasons for departure differ between workers in their first year and long-tenured employees. Already, they’ve spotted a problem in the organization’s onboarding process and have corrected course.
This coming year, Bassett will introduce another layer of data to look for diversity gaps. “For example, what does turnover look like for nonwhite employees versus our white employees? What does turnover look like based on tenure, based on age?” said Bassett. She’s also thinking of ways to slice and dice the information to ensure they’ve reached pay equity.
At From Day One’s December virtual conference on the future of jobs, Ernest Marshall, the chief HR officer at power management company Eaton Corp., described the way his company is using workforce analytics to improve the representation of women and global ethnic minorities into general manager roles.
“Anecdotally, you’d say, ‘Well, do we have the right people? Do we have enough of our folks on succession plans?’” But, “what if we looked at it differently?” Marshall said.
So he identified areas in the company that tend to funnel into general-manager roles. “Then we said, ‘OK, let’s narrow it down. What are the numbers of people that we have in the ethnic minority category and women that are in those groups today?’ Shockingly, we found that we had a larger percentage of those people in the groups than we thought. So what does that tell us? The reality is we’re not pulling them through.”
Being Careful About the Pitfalls
People analytics is not without its flaws, of course, and in some cases it comes with a bright red warning flag. Perhaps most problematic is the idea of predictive analytics.
Kirsten Martin, a professor in the Mendoza College of Business at the University of Notre Dame, where she teaches the ethics of business analytics, told From Day One that any time a company introduces a use case for people analytics, it should be treated as a new workplace policy.
“These programs of who should be hired, who’s hirable, who should be promoted, or who’s promotable are, in effect, like the organization putting forth a new policy of what they think is correct. It just happens to be coded.”
Martin said that when a company introduces new technology like predictive analytics into its operations, “there is a mistaken notion that the normal rules don’t apply. They don’t think about the fact that they still have all the same obligations that they have as a company to both explain why someone got promoted or didn’t get promoted, or someone got hired or didn’t get hired, and they have the same obligations around justifying that it was all legal,” she said. “The question would be, Would you use it if it wasn’t automated? And if the answer is no, then it shouldn’t be used in a hiring decision.”
Many HR professionals consulted for this story said they’re excited to see what tech can do. For example: Predictive analytics about which workers are most likely to leave. But at some point, almost all of the HR leaders pumped the brakes and acknowledged that there is tricky ethical territory. Ideally, predictive analytics around attrition can help employers identify workers at risk of leaving and then give them reason to stay. But in the wrong hands, that same information can be used to penalize workers or even clean house.
“As soon as we predict, we tend to treat people differently,” Martin said. For example, “If I identify 20 future leaders, I put them through a leadership program, and what do you know? They look like they’re future leaders. We just told them that for two years. We gave them promotions above and beyond anyone else, so they start to act that way.” By the same logic, those employees who weren’t selected for the program, they don’t look like leaders now, and they might be missing opportunities they deserve.
Mona Sloane, PhD, senior research scientist at the Center for Responsible AI (Photo courtesy of NYU Tandon)
“AI is a scaling technology, which means when there is a problem, you have a problem at scale,” said Mona Sloane, PhD, senior research scientist at the Center for Responsible AI at New York University’s Tandon School of Engineering, who is currently running a research project on the use of AI in sourcing and recruiting. “The risk is just so much bigger than when you have, for example, one biased recruiter or one biased hiring manager and you can get to the bottom of it and you can fire that person. It is extremely risky.”
In some cases, these tools are based on problematic assumptions, like what makes a leader or doesn’t. They may not be culturally sensitive, or they may “interpret culturally different behaviors in certain ways that could negatively affect certain communities,” Sloane said.
Regulation for such technology is in the works. The European Union is on the verge of passing the Artificial Intelligence Act, which affects AI across all industries. “It adopts a risk-based approach, which means that any and all AI technology has to go through a risk assessment, pre-deployment and post-deployment, and, according to its risk tier, then has to have additional checks,” Sloane said.
Beginning in April 2023, employers in New York City that use AI in employment-related decisions will be required to submit to an independent bias audit. This “marks the first time employers in the U.S. will face heightened legal requirements if they wish to use any automated decision-making tools,” wrote reporter J. Edward Moreno for Bloomberg Law.
The Promise of Wise Use
Despite the risks, overall the outlook for people analytics is promising. “If we have good technology, we can uncover human bias, or if we are already aware of it, we can flag it and take action,” said Sloane.
Current practitioners, and prospective ones too, are approaching the discipline with optimistic caution. Bassett is well aware that people analytics can’t be done without proper education. “I think to really do people analytics well, it requires substantial investment,” she said.
She and the people-strategy team at University of Chicago Health are taking analytics courses “to get more comfortable in looking at the data, informing HR analytics team what kinds of analysis we want to see, and then being able to translate that to the business and have those conversations where we can advise and influence where they’re putting their focus,” Bassett said.
Murray is encouraged by workforce analytics’ rising reputation. At Linkedin, her HR tech team works closely with the people-analytics team. Their current project is building self-serve dashboards for business leaders and training them on their applications.
“We’re helping [people analytics] understand the needs of the business and they are helping us understand the mechanisms by which they can structure and provide these layers of data to be self-serve,” said Murray. “It’s actually one of our strongest partnerships.”
Emily McCrary-Ruiz-Esparza is a reporter writer based in Richmond, Va. She writes about the workplace, DEI, hiring, and issues faced by women. Her work has appeared in the Washington Post, Fast Company, Digiday’s Worklife.news, and Food Technology, among others.
Emily McCrary-Ruiz-Esparza
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December 19, 2022