Updated: Oct 23, 2018
When it comes to Cloud HR technology, it’s essential for you to have a reporting and insights strategy to enable your business to make better decisions and drive higher performance. Defining your reporting and insight requirements at the start of your Cloud HR implementation is key to getting what you want out of your HR solution.
Knowing the difference between operational reporting, HR analytics, and people analytics can help you define the information your business needs in order to tailor your reporting and insights strategy.
Operational is the type of reporting most HR functions are doing well today. It involves a basic level of people reporting which can be done by extracting data from the HR system and producing a report which is presented visually. Operational reporting typically encompasses information on people (e.g. headcount, absence, turnover), and information on the quality and efficiency of the HR service to employees (SLA metrics, analysis of queries).
Operational reporting is useful for companies to measure historic trends and to understand changes in operational service delivery, but it does not provide the insight that companies are pushing for in terms of how people impact results, nor the ability to model and predict future trends.
HR analytics moves up the food chain in terms of value-add. This is where organisations analyse all the people data they have available, and look for trends that may provide a greater level of insight than that achieved from operational reporting. In other words, data about employees is taken from many sources (such as Excel files, training systems, and HR systems), then collated and analysed to understand more about the relationship between different aspects of employee data. Usually HR analytics involves analysing at least two or more data-sets in order to understand how an HR intervention is impacting another aspect of employees’ behaviour or performance.
Typical examples of widely produced HR analytics include the analysis of performance and total comp together, to understand if there is any relationship between the way people perform, and the way they are paid. Other examples of HR analytics include training and performance, recruitment efficiency (spend and time to recruit), and recruitment effectiveness (selection process and employee performance).
HR analytics provides a strong opportunity to model future trends and understand how different aspects of the HR strategy and interventions may impact an employee’s behaviour and performance. Statistical regression can be used to provide this level of insight, which can be very useful if an HRD is considering a change in strategy (e.g. to compensation structures), or if the organisation is considering a change to its operating model or organisation structure.
Inevitably, HR Analytics provides more insight than basic operational data, but the data used is still contained within HR. Herein lies the fundamental constraint to any true understanding of how people effect organisational performance.
This is what we’re all really interested in, and what many HR Analytic Advisors ignore as the biggest opportunity available to organisations seeking better quality of information from their data.
People analytics is when you take your business KPIs (sales, customer services, safety, etc.) and merge that data with your people data to understand the relationship between how you recruit, train, reward, and manage your staff to encourage the best performance for the company. Great examples are understanding how specific training courses have impacted the ability of sales people to close deals, understanding how certain types of new hires are likely to sign deals earlier or later than others, and looking at how certain trends in employee absences may result in accidents.
The world is your oyster when it comes to the opportunities available with people analytics! Our experience is that it takes three things to make this work:
Executive engagement as to what matters and is interesting to the organisation
Capability to work with data and use different techniques to cleanse, collate and analyse this effectively
The ability to interpret the results and contextualise them into a story which makes sense and drives useful conversations
Many HR functions are still coming to terms with this opportunity and what it means to them in terms of both the service they provide, and the capability of those in HR to deliver. In fact, the best examples of people analytics transforming board level discussions is not when the HR function owns this, but when the business comes together to drive both the end result and the delivery of this type of insight.
Ultimately, people analytics is not just about HR. At the root, it’s about the whole business coming together and agreeing how people impact performance. Of course, this could be a whole new blog in itself, but you get the drift… it’s big!
Having a view of those three things, particularly HR and people analytics, before you start your Cloud HR implementation will determine (a) what you want to get out of your system, (b) how you work together within your organisation to achieve the outcomes you want, and (c) how you build that system to deliver the insight you want.
By Helen Thiel. For more information about reporting, insight, or implementing Cloud HR technology, please get touch.