Is HR using data as well as it could?

January 2022

Overview

Over the past 24 months, working structures have undergone perhaps the most pivotal change since the industrial revolution. However, even before the pandemic struck, the working world was on a slow but definite path of development and modernisation. One of the key outcomes of this change has been a drastic change in where, and when and how, people actually conduct their roles.

Hybrid working and remote working are now central pillars of the modern workplace, and with them comes the necessity to develop cutting-edge technological advances, to ensure that all the benefits of working in-person are replicated as effectively as possible. This, of course, also puts a great emphasis on the efficient use of the right analytics tools, not only to bridge the gap in monitoring employee performance (no longer will you necessarily be able to physically see an employee struggling to fulfil their duties), but to actually take the procurement of information you need to increase wellbeing, productivity, skills development and a myriad of other helpful data points, to the next level.

Luckily, a host of companies have stepped in to fill the need for such software. The market is full of quality options to fulfil the requirements of any and all businesses. But, are companies actually using them effectively? To find out, myGrapevine+ has collated insights from studies and publications, as well as speaking to leaders in business and HR, to find out what how data can truly influence the future of work. This report includes insight from:

  • Elaine Vaile, Group Head of Leadership & Talent at NatWest Group
  • Audrey Williams, Employment Law Specialist at Keystone Law
  • Nick Beighton, business leader & ex-CEO at ASOS

Within this exclusive report myGrapevine+, key trends will be analysed, and opportunities and challenges will be presented as we explore the topic of HR technology and its abilities.

Elaine Vaile,
Group Head of Leadership & Talent at NatWest Group

Audrey Williams,
Employment Law Specialist at Keystone Law

Nick Beighton,
Business Leader & ex-CEO , ASOS

People analytics have arguably always been a core part of the human resources function, defined by the CIPD as the utilisation of ‘people data’ captured in HR and business systems to inform the development of improvements and interventions, from workforce planning to the demonstration of the impact of HR policies and processes on workforce and organisational performance, that lead to enhanced HR and business outcomes.

However, the people profession has in the past been underpinned by a ‘people and therefore qualitative first’ mentality, an ‘I work with people, not numbers’ focus that has often failed to appreciate the opportunities the marriage of people and data – people as data – presents. In short, as some researchers outline, HR practitioners can “lack a data mindset”.

As the CIPD puts it, “The people profession has a long history of under-development of numerical and statistical skills, as well as low attraction of statistical or numerical disciplines to the profession”.

This is, though, slowly changing. In 2018 the centralisation of data capability as a core HR skill was formalised by the organisation, which updated its ‘Profession Map’ to include people analytics as one of the specialist knowledge areas for the first time, stating that “individuals in organisations with strong people analytics cultures also report strong business outcomes”, and that “people analytics cultures are also positively related to perceptions of HR strategy, demonstrating their importance in organisations wishing to improve overall outcomes”.

As the role of data in driving HR’s strategic goals is increasingly reported on and understood, it’s perhaps never been more vital for people professionals to have a handle on their organisations’ data; how to gather it, how to handle it and how to harness it with business aims in mind.

Moreover, with the advent of compulsory gender pay gap reporting in 2017 and the much anticipated though not yet mandated reporting of ethnicity pay gaps, and GDPR rules to ensure information is used fairly, lawfully and transparently, gathering data and knowing how to use it has potential legal ramifications for employers too.

So there are challenges as well as opportunities, but how far has the HR function come when it comes to data, and how far does it yet have to go?

According to the PricewaterhouseCoopers (PwC) CEO survey, 77% of CEOs believe the biggest threat to their business is the lack of availability of key skills. Listed among the key skills that are essential to the workplace of the future are, in addition to technical business expertise, adaptability, problem-solving, creativity, and leadership.

Trying to recruit very specific people with such hard-to-define skills is an issue that many CEOs face. They’re therefore increasingly turning to insights, with 50% of CEOs saying they’re using data analytics to find and keep the right people.

Literature / Case Study Review

Unfortunately, the CIPD has found that the people profession is low in skills and capability when it comes to data, with gaps in data science and statistical and numerical skills.

The absence of these skills, the organisation states, is preventing advanced analytical capability from being developed.

According to its 2018 research People analytics: driving business performance with people data, only 21% of UK HR professionals state they are confident with advanced techniques like predictive analytics, while only 36% of finance professionals agree that HR has demonstrable numerical and statistical skills. Ultimately, only 37% of those surveyed thought their HR function demonstrated expertise in people data.

The authors of the report state that although “data and technology are at the very forefront of innovation in HR as they are in so many parts of business today”, (echoing Deloitte’s Enabling Business Results with HR ‘Measures that Matter’ report: “Metrics have become a vital component of HR and HR service delivery”), “low levels of capability highlight that across the board there are areas in which HR functions can improve their capability.”

Deloitte’s research findings mirror that of the CIPD, with only 15% of surveyed organisations giving themselves high marks on HR data accuracy, and likewise, another study published in The International Journal of Human Resource Management, An evidence-based review of HR Analytics, found that “despite evidence linking the adoption of HR Analytics to organisational performance, adoption of HR Analytics is very low.”

 

According to Bersin by Deloitte’s 2017 High-Impact People Analytics research, 69% of organisations with 10,000 employees or more now have a people analytics team.

 
The Dark sides of people analytics: reviewing the perils for organisations and employees

Research suggests there’s some controversy, too, around the increase in the use of analytics and algorithm-based decision-making, with a paper published in the European Journal of Information Systems entitled The dark sides of people analytics: reviewing the perils for organisations and employees warning that people analytics builds on the belief that digital data can accurately represent reality and objectively quantify the full scope of workforce activities and employees’ traits, experiences and skills; that it can lead to estimated predictions and self-fulfilling prophecies and reduce employees’ autonomy.

The authors state: “technological advancements and the nascent introduction of learning algorithms and AI in the field of people analytics have the potential to enlarge and aggravate the risks of people analytics and their potential profound negative impacts on organisations and employees,” adding that while the opportunities for organisations increase with each stage of development due to the progress of the underlying technologies, at the same time the impact of the perils on organisations and employees may be escalating.

This suggests that a higher level of HR data competency within organisations is necessary not only to unleash the opportunities presented by analytics but also so the risks can be perceived and accounted for.

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Research suggests that by 2025, HR analytics will have become an established discipline, will have a proven impact on business outcomes, and will have a strong influence in operational and strategic decision making.

Case studies
Natwest’s data-driven workforce strategy

Elaine Vaile, Group Head of Leadership & Talent at NatWest Group tells HR Grapevine that the ambition at Natwest is to become a data-driven, relationship bank for a digital world.

However, she says “we need to develop the skills, behaviours and culture to excel in data and analytics if we’re to satisfy this ambition.“

That’s why the bank has been working with Faethm AI, a predictive analytics provider for businesses, to implement a strategic workforce planning programme designed to help the HR team understand how roles at Natwest need to change to be fit for the future.

Vaile explains: “The programme allows us to analyse our existing workforce and identify how certain data-oriented roles we have today, including data engineers and data scientists, will be impacted by augmenting and automating technologies.

 

More than two thirds, 65%, of those who said they work in an organisation with a strong people analytics culture said that their business performance was strong when compared with competitors, but only 32% of those in weak analytics cultures report strong business performance, representing a 33-point difference.

 

“[It] has already been impactful because it’s given us direct insights into which capabilities and skills will be instrumental for our future growth, and where we have skills gaps that need addressing. What makes it so exciting is that it is fundamentally changing how we view skills and jobs as a business.”

For example, the bank now develops learning interventions which are specifically designed to upskill, reskill and ‘cross-skill’ existing employees so they can expand their skill sets and incorporate skills required in the future.

“We’re also refining our hiring programme and tailoring our employee value proposition so we retain existing, valued employees while onboarding talent with the additional skills we need to satisfy our ambitions,” she continues. “Adding that data-driven element to workforce planning and decision-making has been invaluable for us. We can now future proof our workforce so we’re equipped with the right talent to achieve our goals, and most importantly, deliver day in, day out for our customers, both today and tomorrow.”

HR professionals in the UK lack the confidence to conduct advanced people analytics: just over one-fifth (21%) of UK HR professionals are confident conducting advanced analytics, compared with 46% in SE Asia, representing a 25-point difference.

ASOS: Voluntary Ethnicity Pay reporting

Another way forward-thinking organisations are harnessing data is as part of their diversity and inclusion efforts.

Currently, according to official figures from the CIPD, just 13 of the UK’s top 100 listed companies report their Ethnicity Pay Gap, prompting the leading HR body to call for mandatory reporting by 2023. According to Chief Executive Peter Cheese: “Ethnicity pay reporting is an important lever for businesses and their stakeholders to assess if and where inequality based on ethnicity exists in their workforce.

“That’s why we believe it is so important that businesses both capture and learn from this data. Mandatory reporting of data, and the associated narrative that shows understanding of the data and the actions being taken to improve, for both ethnicity and gender pay, will help create fairer workplaces and societies and kickstart real change.”

Firms leading the charge of voluntary reporting include Deloitte, which has been reporting on its ethnicity pay figures since 2017, and in October last year, ASOS, the global online fashion retailer, followed suit, reporting its figures for the first time.

 

21% of UK HR professionals say they are confident or very confident with the more advanced techniques, such as structural equation modelling, but only 6% of UK HR professionals say they use these in their day-to-day role, suggesting many HR professionals do not have the opportunity to use their skills in their role.

 

It found that ASOS’ overall ethnicity pay gap had improved by 21.2%, to –5.9% in 2021 from 15.3% in 2020, but that he business still has pay gaps between different ethnic groups – with a median pay gap of 13.4% for Black / Black British ASOSers, and 14.1% for Mixed / Multiple Ethnic Groups in comparison to their White counterparts.

The data was published following the release of ASOS’ diversity targets set within its new 2030 Fashion with Integrity goals, part of ASOS’ long running corporate responsibility programme aimed at minimising the business’s impact on the planet and delivering positive benefits for people.

Through the Be Diverse goal within the programme, the company aims to reach over 15% ethnic minority representation across its combined leadership team by 2023, alongside 50% female representation, reflecting UK demographics.

On why he took the strategic decision to do so, former CEO Nick Beighton (who stood down from his role late last year) explains: “We’re publishing our ethnicity pay gap alongside our gender pay gap because we believe it’s a vital step towards understanding and improving ethnic minority representation within ASOS and the wider industry.

“While we have made some significant improvements in some areas over the last 12 months, we know we still have a long way to go. We are using this data to help us lay the foundations of a truly inclusive culture and create a people experience that is like no other.

“It is our belief that our goals and progress should be made public in this way so we can be held accountable. We hope that other businesses commit to doing the same to encourage change across our industry.”

Only 29% of HR personnel say they are good or very good at making positive changes based on people analytics, while another 35% rate themselves as “moderate” in this area, leaving roughly a third who are poor or very poor at making positive changes based on people analytics.

Employment law expert at Keystone Law and advisor on sensitive HR and recruitment issues, Audrey Williams, confidently tells HR Grapevine: “There is no doubt that the use of people analytics has increased in recent years and will continue to do so.”

She says that the opportunities to gain insights into specific issues such as retention challenges as a way of supporting and improving decision making are undeniable, and increasingly vital to making the business case for and analysing returns on investment.

“In addition to complying with reporting obligations such as gender pay reporting, or, in the case of listed entities, corporate and governance reporting and ESG, data is also useful to test for compliance and risks, and to support good practice,” she continues.

“For example, making use of equality impact assessments when introducing new systems and processes, can alert an employer to unknown bias. Another area is the rollout of compliance or other training, to demonstrate an organisation’s commitment, as well as reduce risks and, in some cases, help to defend legal claims.”

Almost half (49%) find data integration fairly or very difficult; just over two-fifths (42%) find data clean-up fairly or very difficult and just under two-fifths (38%) find analytics visualisation fairly or very difficult.

Williams predicts that in the UK there will be increased measures around workforce reporting in the future, saying that while employers have yet to get confirmation that ethnicity pay reporting will be introduced, it seems to be “only a matter of time” before that will become law for large employers of over 250 employees.

Moreover, in December 2021, the government published a consultation about disability reporting in the UK workplace, again for large employers, “so this may become mandatory.”

Even without mandatory obligations, though, she says the power of data and the analysis of such data has increasingly become part of HR’s role and that “harnessing data is key to being transparent and accountable.”

“As technology itself is increasingly being used to gather data, legal obligations connected with the use of such data will increase (for example, consulting with unions, works councils etc),” she tells myGrapevine+ in an exclusive interview.

“There is also an ongoing discussion about the use of data and monitoring.

HR will be tasked with harnessing the power of data and balancing this with meeting best practice to protect against legal challenge and reputational risks.”

Analytics-leader firms are ten times more likely to be very effective at providing insights to top leaders, eight times more likely to make at least moderate use of predictive analytics, seven times more likely to often or always integrate non-HR data with HR data and more than five times more likely to often or always integrate non-HR data with HR data.

Conclusion

Ultimately, as Hayfa Mohdzaini, Senior Research Adviser, data, tech and AI at the CIPD tells HR Grapevine, there’s still room for improvement and potential for greater use of people's data and analytics to gain insights, as research has shown. Capability is still not yet fully there. However, she adds, there are many reasons to be optimistic.

“The people profession is getting better at learning how to apply analytics as the tools that are available to them become easier to use - vendors and people professionals are meeting halfway in terms of meeting the need for evidence-based decisions.

People professionals in organisations of all sizes are using data and analytics to tackle a range of problems, from ensuring fair pay and tackling pay gaps to understanding employee engagement and enhancing employee wellbeing. Embracing evidence-based practice will drive meaningful change and help an organisation to meet its goals.”

Trailblazing companies like Natwest and ASOS are among those setting the bar when it comes to using data well, and companies which currently lag behind risk failing to rise to the challenge, and opportunity, of the data-driven digital future of work. As Williams says, people analytics are only becoming more central to the HR function.

This Report is only available to you until 1st June 2022.

There are a huge variety of Reports created by our expert team available to myGrapevine+ users.

1 year of membership available for just £150 before 1st June 2022.*


Billed via Credit/Debit card as £150 for first 12 months, then £249 per annum. One time use only. Your membership renews automatically. Cancel anytime.