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Fundamentals for Establishing an HR Analytics Organization

Over the last few years, companies have been increasing their focus on HR analytics. Whether this is due to the need to have a better handle on where talent is within the company or to prove that the HR organization adds value to the corporation, HR organizations are forming analytics groups that focus entirely on identifying—through structured, deep analysis—opportunities for plan design, process, or practice changes that lead to service improvements and/or cost savings.

So, what type of benefits would predictive analyses yield? Our clients have been able to save millions of dollars on benefit plan analyses, reducing the number and complement of plans available to different groups of employees. Talent studies that focus on analyzing retention patterns and levels of experience of hires can help your recruiting organization target more specific groups of candidates. Similarly, studies in compensation practices can also yield millions of dollars in savings by being able to direct your businesses on how they can offer lower or higher pay and different types of incentives based on market-driven analyses.

Logically, the questions on governance, formal objectives, and scope follow whenever there is a new HR organization created that supports other HR groups. We believe the establishment of an analytics governance board is critical to maintaining momentum and to provide value to the HR organization and beyond. The analytics governance board would be responsible for setting, deploying, and overseeing HR data, dashboards, data analysis, and analytics across the enterprise and centers of expertise (COE). As seen in the graphic shown here, the strategic analytics COE becomes the expert and focuses on data coordination, publication of dashboards, data analyses that target resolving specific business-oriented challenges, and general data access, leaving individual functional owners (e.g., talent acquisition, compensation, etc.) focusing on analyzing and improving operations of their own functions.

Let’s look at the talent acquisition function to demonstrate the difference in focus between the strategic analytics COE and a functional COE. The talent acquisition COE would be responsible for reviewing and analyzing data related to hiring and staffing for the organization on a daily, weekly, and monthly basis. The talent acquisition COE would look at its metrics and confirm that it is performing at the targeted levels or better, comparing themselves to other companies that are leaders in the talent acquisition space. The strategic analytics COE would pull the important talent acquisition measures into an overall HR scorecard, which would be used to review HR organization performance with company leaders. The strategic analytics COE would not be focused on leading practices within talent acquisition or how the function performs relative to other leading companies. However, the strategic analytics COE would be focused on how certain hiring and staffing measures are being impacted by other functional measures. For example, would new benefit packages offered to new hires result in a higher acceptance rate? How would new incentive plans impact acceptance of targeted hires in critical sales roles? The strategic analytics group would be focused on cross-functional analyses.

Because the strategic analytics COE’s main purpose is to integrate data and analysis across the HR function for use by HR and the business, it becomes incredibly important to clearly define not only the roles and responsibilities for the strategic analytics COE and functional COEs, but also the scope of what will be analyzed. When setting up your own analytics organization, we suggest the following:

  • Clearly define the objectives of the analytics organization
  • Outline the scope of the data elements and analyses to be owned and conducted by the analytics group and what will be owned and conducted by the functional COEs
  • Define annual, monthly, and ad hoc tasks to be completed by the analytics organization
  • Define the process and guiding principles for ad hoc analysis requests from the business
  • Confirm definitions, calculations, and sources for all data elements
  • Align with technology strategies to support HR data and reporting
  • Ensure understanding and agreement on roles and access of data users across HR

We believe establishing a firm foundation for your new analytics organization will reap benefits within the first six months. It will significantly increase the formal integration of your company’s HR function and will produce data and analyses that were previously not available. It’s the first step on the path to a stronger HR organization.

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Contributing Authors

Scott Manning Partner

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