Korn Ferry: Measuring up: HR's New Need For Leaders in Data Analytics

A new data-driven role for HR.

As organizations increasingly find themselves data driven and metric insistent, human resources (HR) departments no longer can approach CEOs, boards, and C-suites with piecemeal views of talent based on data scattered across the enterprise. Chief human resources officers (CHROs), in particular, find they must provide salient, timely information on what works and what doesn’t across the spectrum in talent recruitment, retention, and development, as well as detailed portraits of who does what and how well it is done within organizations. This need, many companies find, demands new leadership in the HR analytics field. Organizations seek wizards who can whip into shape conflicting systems, hardware, and software, all while executing in complex organizations and relationships, Korn Ferry research shows.

The urgency for organizations to bolster their decision making across the enterprise, and particularly with talent, has grown markedly in recent years, especially due to technology’s relentless advances. In human capital terms, the needs are great and confidence in current approaches is uncertain: 83% of CHROs responding to a recent Korn Ferry survey with more than 7,000 executive respondents overall expressed concern that their organizations lacked the talent needed to deliver on strategic priorities. Another survey found that three out of four non-HR leaders in organizations rated the performance of HR functions as adequate, getting by, or underperforming. The frustration has reached the point, at least for some, that the Harvard Business Review—in a provocative, perhaps extreme expression—recently published a cover illustrated with a bomb and lit fuse under the headline “It’s Time to Blow Up HR (and Build Something New).” The corresponding package of HBR articles carried titles and subtitles such as “Rethinking Human Resources,” “Why We Love to Hate HR,” and “A New Role for the CHRO.”

At the same time, organizations are making significant investments in HR and HR technology. More than half of 200-plus companies responding to a recent poll said they planned to advance their HR data analytics capacities significantly in the next few years. A growing body of research underscores why: Top-performing organizations employ analytics five times more than lower performing organizations do, according to a recent survey of more than 3,000 business executives, managers, and analysts with companies worldwide. Further, companies with talent management reporting and analytics capacities were found in one study to achieve an increase of 11% or more in profits and a 6% improvement in per-employee revenue. But with organizations planning or making new technology investments in the billions of dollars in the HR area alone, Korn Ferry finds that elite talent at the top can be a key driver to favorable outcomes in the HR analytics area. The firm recently boosted its expertise on HR data analytics, in part through its talent support for one of the world’s leading financial services companies. This paper shares Korn Ferry’s experience-based knowledge as well as burgeoning research on a pivotal and rapidly evolving area for CHROs across all industry verticals. Leadership talent, we contend, can make the difference in whether organizations reap the optimum benefits from what may be big investments of time, money, and resources in HR data analytics, or new technology-based initiatives fall short.

What are data analytics?

Korn Ferry has found a varied sophistication in companies’ HR data analytics capabilities, from early-stage efforts in HR information systems (HRIS) areas to full-fledged departments offering world-class predictive modeling that incorporates social media. In brief, HR data analytics help organizations more effectively align their workforce and talent-planning activities to execute their business strategy. Historically, most organizations approach workforce planning as an annual exercise focused on cost, with little insight as to whether the employees can achieve their performance and revenue goals. This often occurs largely because companies lack accurate information as well as proactive modeling capabilities to plan better. HR departments face big hurdles in gathering and analyzing critical information to benefit their organizations.

A recent survey of organizations detailed the common obstacles to better, more rigorous HR data analysis, including inaccurate or inconsistent information scattered across the enterprise and requiring considerable (manual) manipulation to be useful; lack of analytic ability and capacity among HR staff; and inadequate investment in technology in the HR function. Further, most organizations said they largely produce only “as needed” information in spreadsheets and address a single topic; although most hoped to improve their HR data analytics, few could produce predictive materials with displays, visualizations, or other more user-friendly applications. Without sound leadership, organizations can find their obstacles forbidding (do we gather up all our data first, then figure how we can analyze it, or…?) and their advances slim (a new spreadsheet or two is all that this extensive effort produced?), further hindering their efforts to build robust HR data analytics.

To read the full report, click here.