Big Data in HR. The big questions being asked

Big Data in HR The big questions being asked

The big questions being asked Everyone s talking about big data but what does it mean for HR and for HR professionals? How can HR harness big data insights to help make better informed business decisions? How useful is big data to the HR function in anticipating and predicting workforce trends? Can big data help HR professionals (HRPs) establish themselves as strategic partners in their organisations? The value of an HR big data initiative depends on the usefulness of the insights it creates. Executive Summary HR big data like big data in any other field of business is all about offering businesses insight about their operations. But ultimately, the value of an HR big data initiative depends on the usefulness of the insights it creates. Embracing big data and HR analytics will allow HRPs to engage more knowledgeably as strategic partners to the business. HRPs need to be more data fluent. Big Data presents a challenge to the HR profession s adoption of HR analytics - and more and more HRPs are acquiring the necessary mindset and skills. Traditionally, HR data has been disorganised: distributed across multiple functions within an organisation and often across multiple databases or systems. Cleansing and structuring data is the first step to adopting HR analytics and this is a major challenge. But data is not the whole story. HR s relationships (networks) and experience will continue to play central roles in shaping the future of organisations. 2 Big Data in HR

Finding answers to the big questions In April 2014, ADP brought together some of Europe s leading HR thinkers and practitioners to consider these questions and suggest some answers. The HR Question Time panel Maria Black, President of ADP TotalSource Dr. Max Blumberg, Research Fellow at Goldsmiths, University of London; and Founder, Blumberg Partnership Dr. Anthony Hesketh, Senior Lecturer and Associate Professor, Lancaster University Management School Matt Stripe, Group HR Director UK & Ireland, Nestlé Trevor Townsend, Product Director, ADP UK Chair: Jackie Murphy, Managing Director, Flagship Consulting Big Data Question Time panellists (left to right): Max Blumberg, Maria Black, Matt Stripe, Anthony Hesketh and Trevor Townsend This ADP Perspective paper captures the main points of a thoughtprovoking and fast-paced discussion. It catalogues the chief topics addressed by the ADP HR Question Time panel, and offers some key insights to take the debate forward. There was consensus on issues such as the value of big data in helping HRPs and their peers gain a clearer view on key people factors like talent management. Everyone could agree on the need for HRPs to become data fluent : to understand the language of big data and be comfortable speaking it. But there was also a lively diversity in views, particularly on whether the adoption of big data could enhance the status of HRPs within their organisations. Big Data in HR 3

Big data defined it s all about value Steering away from technical definitions, the panel preferred to talk about big data in terms of outcomes. Big data is clearly on the business agenda, and impressive claims are made about its potential to transform every aspect of the organisation 1. But what does big data mean in the context of HR and is everyone talking about the same thing? Steering away from technical definitions, the panel preferred to talk about big data in terms of outcomes. For Dr. Max Blumberg, HR big data means using all the data available to you to improve the performance of your workforce. Agreeing that big data equals better outcomes, Trevor Townsend added that achieving those outcomes depends on how effectively the organisation deploys big data insights. For Maria Black and Matt Stripe, big data s role is in helping leaders make better decisions and providing the evidence they need to support those decisions. As Maria Black said, it is about actually doing something with big data. Dr. Anthony Hesketh challenges the textbook Three V s definition of big data: Volume (there s a lot of it), Velocity (it moves fast) and Variety (it comes from multiple sources). Instead he offered his own modified trio of: Volume, Veracity (i.e. can you trust this information?) and Value (i.e. what is the Return on Insight, how does it help you value your people?) as the pillars of HR big data. Transparency and globalisation drive HR data onto the business agenda "HR big data could prepare companies for transparency [...] giving them insights to drive the appropriate people strategy." Matt Stripe Why is big data so topical right now? For Maria Black, globalisation is the explanation. Competitive pressure compels companies to anchor resource and investment decisions in big data insights to gain competitive edge. For Matt Stripe, a growing need for transparency is pushing HR big data up the agenda. Websites like glassdoor.com the TripAdvisor for job search mean outsiders, such as prospective employees and competitors, can see deep inside a company. HR big data could prepare companies for transparency, helping them make sense of a complex interconnected world and giving them insights to drive the appropriate people strategy. 4 Big Data in HR

The other panellists looked to events within the HR function. Dr. Max Blumberg believes the experience of outsourcing is forcing HR to become more organised in its handling of data, and therefore more aware of its value. Dr. Anthony Hesketh detects a growing willingness to allow HR data outside the organisation but within the boundaries of adequate data security. Previously, this information has been seen as too sensitive to share. Meanwhile, some of the panellists warned against being seduced by the hype around big data, with Matt Stripe stressing that big data is fundamentally an evolution of HR reporting, and Dr. Anthony Hesketh arguing that many commentators are in danger of overplaying its potential through what he called big data, no theory. Understanding data can lead to better decision-making Smart executives don t need analytics. Their experience allows them to see value that others don t. Dr. Anthony Hesketh The panel agreed that it would be great if HR big data could help business leaders predict and shape the future. But there were differences of opinion on the ability of big data to fulfil this promise. Matt Stripe is sceptical. Big data provides useful insights into the business today what Matt refers to as the Reveal dimension. It can also drive forward-looking initiatives like Strategic Workforce Planning - the Enhance dimension. But it has limited use in the predictive or Model dimension because there are too many questionable assumptions. Dr. Anthony Hesketh also doubts the benefit of big data in modelling the future. Business leaders should rely on their insight and experience what Anthony terms executive craft. HR analytics cannot substitute for that. Smart executives don t need analytics. Their experience allows them to see value that others don t. Dr. Max Blumberg, however, believes HR big data can shape business outcomes, citing the example of a company which used HR big data to build a demographic profile for recruiting sales teams. Revenues reportedly increased by over 30 per cent in countries that had used the model. Big Data in HR 5

Making sense of the numbers: are HR professionals fluent in big data? HRPs need to provide meaningful strategic insights and ask the right questions, so as to understand what is going on in the business and help shape future growth. Matt Stripe A 2013 research project by the CEB 2 revealed that the majority of HRPs do not know how they could use big data or HR analytics to support their work. The panel considered to what extent HRPs possess the numerical and analytical skills to deal with big data. Dr. Anthony Hesketh believes HR tends to talk in PowerPoint, while other functional departments talk in Excel. Besides creating communication issues, he warned that unfamiliarity with numbers could make it difficult for HRPs to make informed decisions about where and how to deploy HR analytics. According to Matt Stripe, HR has not traditionally harnessed metrics effectively. He describes many HR measures as so what? measures, offering up basic numbers about absence and attendance that do not help leaders make better decisions. Instead, he argued that HRPs need to provide meaningful strategic insights and ask the right questions, so as to understand what is going on in the business and help shape future growth. Reinforcing HR s place in the boardroom The status of the HR professional is a recurring theme in the debate on big data. So can big data finally hand HR the key to a permanent position in the boardroom? Matt Stripe disagrees with the premise of the question: The argument about why HR is not in the room is 10 years old. If you re not in the room, you need to ask yourself why. He believes the debate needs to move on. The future demands that HR thinks beyond transactions to encompass strategy, transparency and flexibility. Dr. Anthony Hesketh also detects an evolution in the attitude of HRPs. There s an appetite now among HRPs to be part of the business. And [they] are coming from more diverse backgrounds a lot of HR Directors these days are accountants. In contrast, Dr. Max Blumberg believes HR still struggles to get a place at the big table, but argues that people insights, which are grounded in big data, could allow HRPs to become a regular part of C-suite conversations. 6 Big Data in HR

Putting a price on people inputs: HR professionals and the City The new generation of HRDs are going to have to walk around the city justifying why the company is spending money on human capital management. Dr. Max Blumberg Linked to the discussion about the status of HR, and the role of the HR professional as a strategic partner, could the adoption of HR analytics affect a firm s equity valuation? While Dr. Anthony Hesketh is not convinced - The City is driven by KPIs, not PIs - he does believe HR is part of the conversation. With equity analysts primarily interested in optimisation not maximisation ; human capital is nestled in the middle of enabling that, he argued. Dr. Max Blumberg went further, stating that the new generation of HRDs are going to have to walk around the city justifying why the company is spending money on human capital management. Specialist support is crucial The data is all over the place on different business systems and a lot is locked away in people s heads. Trevor Townsend The panel turned to the practical steps HRPs can take to introduce HR analytics. Assembling and structuring HR data is widely acknowledged as an issue: research by the CEB 3 reveals that fewer than one in five companies are satisfied with the ability of their current data management systems. Trevor Townsend sums up the challenge: The data is all over the place on different business systems and a lot is locked away in people s heads. Matt Stripe advises companies intent on deploying HR big data to not underestimate the challenge of finding and organising diffuse information. Cleansing data to make it useful is hard. With the relevant data-sets distributed across different systems it took Matt s team at Nestlé some time to organise the data and put it into a useable format. To make it happen, Nestlé created an analytics team composed of big data specialists with no HR background. We protect the team from HR people who want to HR them. By preserving this functional separation the big data team is free to focus on the numbers and ask the difficult questions. Maria Black underlined the importance of creating a functional divide. Ring-fencing the analytics specialists allows them to focus on the numbers and removes the subjective. Big Data in HR 7

Integration is the Holy Grail At ADP, we are having very different conversations today with our clients. HR professionals have changed Maria Black Obstacles to the adoption of big data within HR and the wider organisation is a recurring topic in the big data debate. Numeracy is a key challenge. A survey for HR Review 4 found that 78 per cent of HRPs do not feel they are very effective at HR analytics (the interpretation of HR big data). Dr. Max Blumberg agrees that HRPs must get more comfortable with numbers: You need to be numerate, to sniff out the snake oil and understand the correlations. Among the panel, there was consensus that the HR profession is rising to the challenge of data fluency. For example, CIPD training for HRPs now links big data to strategy, while Matt Stripe has seen signs that new entrants to HR within Nestlé are more confident dealing with data: We re seeing this ability in new entrants to the company, and that wasn t there four years ago. The panel was also keen to stress the importance of integrating HR data with the rest of the business. As Dr. Max Blumberg explained: Not everything is HR. Analytics belongs to the organisation as an integrated whole. The HR department must therefore make sure it works with other departments to gain a holistic view of business performance. There is also an issue of transparency and a need for HR to feel comfortable making its data available to others in their organisation. Dr. Anthony Hesketh made the point that the figures may not show what the HRD would hope and, as a result, collaboration with other areas of the business is all the more important. Despite the challenges, the panel agreed that progress is being made, with Maria Black noting a shift: At ADP, we are having very different conversations today with our clients. HR professionals have changed. Trevor Townsend added that HR consulting and services providers such as ADP are now on hand to help HR professionals put big data to work in their organisations. 8 Big Data in HR

ADP has a holistic integrated view of Human Capital Management, which includes technology, as well as addressing people and process aspects of business. Steve Hardy The ADP Perspective on HR Big Data Steve Hardy - VP Global Brand Strategy In most businesses, there are multiple systems which hold various employee information, ranging from spreadsheets to bespoke databases and disparate HR or payroll legacy systems. The challenge of multiple silos gets more problematic as a business grows - a recent ADP Research Institute survey found the average multinational business had more than 22 HR systems many of which were deployed over two decades ago. But as ADP has a holistic integrated view of Human Capital Management, which includes technology, as well as addressing people and process aspects of business, we ve definitely found that alignment of people, process and technology helps drive a more cohesive culture, all focused on the needs of our 625,000 clients. I truly believe Human Capital Management analytics tools will have a major impact on HR. Analysing big data will allow simple questions like how many people do we employ? to be answered in an instant, allowing HR to focus on more strategic business issues. Using big data analytics will enable HR professionals to better anticipate changes in their organisations and to provide leadership teams with real strategic insights. Big Data can also support HR teams in increasing employees performance, while the introduction of analytics may also create new professions within the HR function. Panellist Biography Maria Black Maria is the President of ADP TotalSource and was previously the General Manager ADP UK and brings a C-suite perspective to the subject of Big Data. Maria has been with ADP since 1996 and held several roles before taking on a senior leadership position in Client Services in 2005, where she led a major launch in California. Maria was promoted to General Manager of TotalSource's Western Region in 2008 and expanded this role by combining West and Central regions in 2010 generating revenues of $150million ($685million across 26 offices in 15 states). Big Data in HR 9

Human Resources is a key area for Maria who is committed to developing people and fostering leadership opportunities while sharing talent across the organization. Maria has a Bachelor s degree in Political Science and International Affairs from the University of Colorado-Boulder. Dr. Max Blumberg Max is a Research Fellow at Goldsmiths, University of London and founder of the Blumberg Partnership, a group of corporate psychologists who develop human capital analytics techniques by linking HR and business strategies. Some of their clients include the BBC, Rentokil Initial, Barclays Bank, and Friends Provident. In his academic capacity, Max is responsible for developing the CIPD s Human Capital Analytics training programmes. Max is also a regular contributor to the media, and prior to the Blumberg Partnership, he worked as a management consultant at Accenture and founded a technology start-up, before successfully exiting in order to pursue his PhD. Dr. Anthony Hesketh Anthony is the Senior Lecturer/Associate Professor at Lancaster University Management School where he focuses on the impact of human capital and strategy on organizational performance. He has written a number of books about talent and leadership and is the recipient of numerous prizes for his academic work, including the US Academy of Management. More recently he contributed to the Hutton Review of Fair Pay and last year was appointed as an advisor to the Deloitte Analytics Institute. Anthony is currently leading the Valuing Your Talent research project for the CIPD, CIMA and UK government, exploring the financial capitalisation of human resources so HCM. Matt Stripe Matt is the Group Human Resources Director for Nestlé UK & Ireland, and started his career in the defence industry, designing manufacturing facilities for missile systems. He then moved to Human Resources and progressed in a number of roles before joining BAE Systems as Head of Human Resources and Employee Relations for the Hawk Aircraft. During that time Matt spent two years working with Dave Ulrich, Wayne Brockbank and CK Prahalad from the University of Michigan on the future role of Human Resources. In 2003 he joined Nestlé and was promoted three years later to the role of Director of Human Resources for the Nestlé Rowntree Division. 10 Big Data in HR

Matt spent two years in Switzerland as Assistant Vice President Human Resources before returning to the UK in August 2010 to take up the role of Group HRD Nestlé UK & Ireland. Matt has a Masters in organisational design and development and is the Chair of the Centre for Performance Led HR at Lancaster University. Trevor Townsend Trevor is ADP s Product Director. Having worked in HR software development for many years, both at ADP and elsewhere, Trevor is regularly sought and widely quoted in the media on self -service, outsourcing, flexible working and other issues facing HR and payroll professionals. Watch the HR Question Time event This debate was filmed before a live studio audience at the Hospital Club, London, on April 2 nd 2014 and is available to view at http://bit.ly/bigdataadp References 1 Price Waterhouse Coopers, Capitalizing on the Promise of Big Data, 2013 2 CEB 2013 Global Assessment Trends Report. Alpharetta: CEB. http://bit.ly/gatr2013 3 HRReview (October 25 th, 2013). 78% of HR managers do not feel they are very effective at workforce analytics. Retrieved March 2, 2014, from HRReview: http://bit.ly/hrranalytics 4 HRReview (October, 2013). Global survey of 1,300 HR, finance and IT managers, commissioned by SuccessFactors and conducted by the international research firm, Vanson Bourne. Big Data in HR 11

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