When I talk to a typical prospect, i.e., an HR leader who is interested to start the journey to data-driven HR, our conversation always starts with an important distinction: Are we talking about “People Analytics” or “HR Analytics”. These two terms are confounding, but they are certainly not synonyms. Understanding the differences between the two terms is a key to successful discussion and plan of our joint mission.
People Analytics vs. HR Analytics
People Analytics refers to the exploration of employee data patterns, and communication of significant results to business leaders, in order to support decisions related to people in the organization and improve business performance. HR Analytics, which sometimes is presented as a dashboard, is not aimed to improve business performance directly, but rather to serve the efficiency of HR functions.
The distinction between “People Analytics” and “HR Analytics” is clearly explained by Guenole, Ferrar and Feinzig, in their book “The Power of People: How Successful Organizations Use Workforce Analytics to Improve Business Performance”. The authors define People Analytics as “the approach of measuring behaviors in organizations and knowing how to knit them together to improve business performance. The approach is similar to that taken with customer behavior, but this one concerns employee behaviors”. Their definition of HR Analytics is “the functioning of the HR team itself—for example, analyzing HR key performance indicators (KPIs) such as time to hire. Such analytics are about holding the HR team accountable”.
Why do you need both?
Practically, both People Analytics and dashboards of HR Analytics deal with Performance. However, each practice has a different approach: Dashboards enable to present different KPIs, and to answer questions such as: Did we reach our goals? How far are we from achieving our goals? However, by using dashboards, we actually can’t answer the question: Why? For that purpose, we need People Analytics, which enable to understand the factors that drive those KPIs that we presented on our dashboards. We can do so with different levels of Analytics: Descriptive, Diagnostic, Predictive and Prescriptive. (See illustration: Gartner analytics ascendancy model). In other words, the company needs both dashboards and People Analytics practices because it must be aware of its KPIs, and it also needs to understand how to improve those exact KPIs.
Let’s take an example, to demonstrate how dashboards and People Analytics are complementary. Many organizations deal with the challenge of employee retention. Suppose that we have a dashboard that contains a yearly employee attrition rate. A presentation of this KPI separates different kinds of voluntary and involuntary turnover, includes some comparisons between employee sectors, displays metrics trends, and even points to outliers. A People Analytics solution for the employee attrition challenge may be a predictive model that enables to point to certain characteristics of employees that are prone to leave or stay in the organization. Such insight may lead to different approaches toward different employees, which will eventually result in better outcomes in the long run.
HR leaders prefer Dashboards first
When my prospects understand the distinction between dashboards and People Analytics they usually express enormous curiosity about the second. For example, many of them are fascinated when I describe how to predict employee attrition. However, when we get to the more practical ground, in order to start a project, we go back to discuss dashboards. Although HR leaders are very interested to get insights by People Analytics, their immediate need is usually a tool that integrates data from multiple sources and displays it uniformly and clearly, in order to monitor and control their operations. After all, dashboards have become an important part of other business departments, and HR should not be different in that sense.
An effective HR Dashboard
HR dashboards are just like any other BI dashboards. When they are well designed they can tell a whole story at a glance. They connect data and analysis that are most needed to specific business questions, i.e., KPIs, in a simple and clear way. Their layout and data visualizations enable the users to access the data they need to get answers from and get exactly those answers — correctly and completely.
However, the HR dashboards are distinctive. They are not created only for HR leaders, but rather for business leaders in the organization. Business leaders and HR leaders should cooperate to define the right KPIs, and monitor the right data, aligned with the company strategy and goals. Effective HR dashboards provide a concise and clear display of those workforce KPIs, which are relevant for the business performance, and assist in decision making. They rely on meaningful data, which can be linked to future actions. This challenges HR to fit a dashboard to each line of business. HR must understand the unique workforce needs of every unit, and then determine what metrics to present. For example, if a dashboard shows that top performers in one sector are found via LinkedIn, and at job fairs in another sector, recruitment can be planned, executed and measured accordingly.
In my future articles, I’ll review the best practice of building and publishing HR dashboards. But to conclude this discussion, let’s remember, that since business questions always evolve, HR dashboards are, and will always be, developing tools. It is important to make sure, once in a while, that the HR dashboard still provides actionable information.