Define the Business Challenge

Chapter Snapshot

Questions we will answer:

• What are HR analytics?

• Why are they important?

• Why should I read this book and what can I expect?

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Meet Jen. She's the HR director of a 1,200-person company. What started as rumblings of an issue has become a full-blown problem. A few vocal managers have been complaining that her company is struggling with turnover. She doesn't know how serious the issue is. She does know that the HR department can't be perceived as unresponsive.

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HR has a tough job. It has to serve employees; protect the business; keep up with ever-changing laws and regulations at local, state, and federal levels; and figure out how to do more with less, faster. These demands leave HR professionals with big questions: How can we make better decisions about where to invest our limited resources? How can we deliver solutions that make employees happy? How can we convince the C-suite to invest in people initiatives? How can we make sure HR helps the organization achieve business outcomes?

HR analytics can help with all of these things and more. It's not a silver bullet, but it is a powerful tool for elevating the credibility of the HR function.

I know — I've described only the tip of the iceberg of what makes your job hard. Now I'm saying you need to learn something that might be new. It may also be intimidating. You might have even gone into HR to avoid having to take extra math classes. But hang in there. I'm going to make this as painless as possible.

In this book, I'll use an example of a common, real-life business challenge to teach you basic concepts. This example will help you understand how to

• identify where analytics can help,

• differentiate types of metrics and analytics,

• use different types of metrics and analytics, and

• maximize their impact.

This book provides an approachable introduction to HR analytics. I won't get into the technical details of building databases or cleaning and analyzing data. Instead, I'll give you enough information to know what to request from an analyst and what to do with those results. But don't worry — if you want to dig deeper, I'll direct you to other resources to get you started.

Throughout this book, you'll notice some icons that keep popping up. These indicate opportunities to get into something extra. Anytime you see "Take a Deeper Dive," I have curated outside resources, giving you the option to go more in-depth. As an HR professional, you know that "telling ain't training." To that end, I've built in reflection questions and activities throughout to make sure you're absorbing everything. Wherever you see "Reflection," it'll be your turn to assess the situation and share your thoughts. There's also a whole workbook in the appendices to help you apply the content back at the office. Lastly, each chapter ends with insights from the SHRM Research Lab. Consider this optional information if you'd really like to dive into a certain topic.

There you'll see research findings from the behavioral sciences to explain why things happen. Now that you know how to use this book, let's dig in!

Reflection

Let's return to Jen's situation. Her plate is full. How might she go about deciding how big of a priority the managers' complaints are?

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Jen knows these managers are usually pretty quick to complain. However, she wants to be responsive. She decides to take a look at some metrics. She asks an analyst to pull the last year's turnover numbers. They indicate turnover increased about a percentage point over the last four quarters. Jen doesn't see a problem, so she writes a polite email to the managers and moves onto the next item on her list.

The next day Jen is called into an emergency meeting. She walks into the room and sees her boss sitting there along with Mark, the director of the managers who complained to her yesterday. No one looks happy. She senses that she's in the hot seat.

Mark asks Jen to explain what happened. Suddenly she's getting peppered with questions. How is it possible that turnover isn't a problem? All of Mark's direct reports claim to be losing their best people. What is the company's turnover rate? Is that high or low? What if only the best performers are leaving?

Ultimately, Mark says he doesn't care what the numbers say. They can't meet their objectives without the necessary talent and that is her problem to fix.

After the meeting, Jen's boss sticks around to talk to her. She starts by asking Jen to reflect.

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Reflection

What went wrong in Jen's situation? How might this all have been avoided?

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In the past, HR professionals typically relied on their understanding of HR processes and the organization to make decisions and serve their stakeholders. Hard data were limited. Any data that were captured were done so manually or were housed in different systems that didn't talk to each other.

Luckily, the world is changing. Thanks to advancing technology, data and information are everywhere, which means they're easily and quickly accessible. Most organizations have human resource information systems (HRISs) to record basic transactions, such as hiring date, compensation, promotions, and performance ratings. Increasingly, organizations are also collecting information about the learning and development of their employees. This includes proficiency levels of various skills and aptitudes, as well as training and development engagements and outcomes, such as end-of-training scores.

Despite having access to more data and analytic power than ever...