At HR Tech World in San Francisco, Josh Bersin stated that the discipline of workforce analytics has grown up and progressed from doing ‘cool experiments’ on the fringes of HR to something that is far more embedded and valuable to organisations.
Undoubtedly, workforce analytics is central to the future of HR, as it lies at the heart of initiatives to personalise the employee experience, optimise organisational design and improve team collaboration and effectiveness.
Interest in workforce analytics continues to rise and I expect the Smart Data track I am moderating at HR Tech World in Amsterdam this week to once again see standing room only. There is a sense though that whilst adoption is also rising (though not as quickly) many HR functions are struggling to get to grips with analytics.
Partly in response to this, HR Tech World teamed up with researchers the IBM Smarter Workforce Institute to investigate the workforce analytics readiness of organisations in and outside Europe. Of 347 participants, 177 (51%) reported working for companies headquartered in Europe.
The results, which I will be presenting at HR Tech World, were telling in that they indicated that practitioners working for European headquartered companies feel significantly less prepared than their peers working for organisations headquartered elsewhere in the world. This is despite HR practitioners in Europe facing similar demand to use analytics and enjoying similar support from the CHRO and business stakeholders.
The research was based on the foundational steps required to successfully bring analytics to the HR function. These steps are outlined in the book, The Power of People: Learn How Successful Organizations Use Workforce Analytics To Improve Business Performance. The book, written by Nigel Guenole, Jonathan Ferrar and Sheri Feinzig, is a must-read for CHROs as well as anyone working or interested in the field of workforce analytics.
The authors’ advice on how to establish, develop and then sustain analytical capability in HR, broadly fall into the three categories below, with the sub-headings being the specific areas covered in the HR Tech World/IBM Smarter Workforce Institute study:
1) Getting started
2) Building your analytics capability
3) Establishing an analytics culture
In all but the three asterisked (*) areas in the ‘Getting started’ category above, the research revealed that practitioners working for European headquartered companies rated themselves at least five percentage points lower in each area than their peers in the rest of the world. Indeed, in eight of the fifteen areas covered by the research, Europe was at least ten percentage points behind the rest of the world.
Not surprisingly and irrespective of geography, the state of readiness of practitioners reduces for each foundational step. For “Getting started’ I used the data in the white paper to calculate that the overall global readiness is 59% (Europe 57%, rest of the world 61%). This tallies with my experience of speaking to practitioners and attending conferences around the globe – the conversation has moved on from the ‘what’ and the ‘why’ to the ‘how’ – at long last!
However, the state of readiness lessens significantly in the second two categories, with the gap between Europe and the rest of the world widening. For ‘Building your analytics capability’ the global readiness is 39% (Europe 31%, rest of the world 46%), whilst for ‘Establishing an analytics culture’ the global readiness level is 30% (Europe 23%, rest of the world 36%).
Organisations that have successfully established an analytics culture, whereby decisions with respect to people are habitually data driven, are the companies that are able to sustain momentum and provide regular insights that lead to better business and employee outcomes. This represents a cultural change in most organisations, both within HR and also in how the function is perceived by the rest of the business. As such, it is perhaps the biggest challenge (along with ethics and privacy) facing the discipline in the coming years.
The reasons why Europe is behind the rest of the world are not clear from the research, but we can speculate. Undoubtedly, the relative maturity of workforce analytics in European headquartered companies is behind that of those headquartered in North America. The delta between Europe and the rest of the world can in part (though not wholly), be explained by the volume of North American firms in the rest of the world sample.
The level of uncertainty currently in Europe is also perhaps higher in light of Brexit and the pending EU General Data Protection Regulations. Legislation and attitudes to data privacy are also more stringent in Europe, which means that many organisations will pilot and perfect workforce analytics projects elsewhere in the world before they consider implementing them in Europe.
Further possible reasons for the relative differences between Europe and the rest of the world are described in the white paper, which you can download here.
While this research presents a generalised picture of a lack of European readiness, there are some clear examples of excellence that should act as inspiration to other European firms. Four of these – Shell, ABN AMRO, ING and EY – are speaking in the Smart Data track at HR Tech World in Amsterdam this week.
Download the white paper HR analytics readiness: How does Europe compare to the rest of the world? for full results and commentary on the research.
A second white paper from the study will examine the topic of Ethics, Privacy and Emerging sources of data in the people analytics. Watch this space for further details.