I recently met up with David Swanson, SPHR SHRM-SCP, EVP Human Resources, SAP Americas. With over 25 years of human resources management experience, David Swanson is currently the executive vice president of human resources for SAP. He is a panelist and keynote speaker on the Future of HR focusing on how HR can make an impact in the business through analytics and big data, not just activity reporting. David is also an adjunct lecturer with the University of California, Santa Cruz Extension, and works with the Society of Human Resources Management (SHRM) and the Northern California Human Resources Association (NCHRA) as both a presenter and facilitator. Some of you might have attended David's HR West 2016 session, "Key Differentiators of High-Growth Companies." So in keeping with our HR West theme, "HR in the most innovative place on earth," David has offered and continues to offer (as you will read below) some exciting insight into how HR leaders can implement data-driven initiatives in order play an even more important role in the overall success of their organizations.
How is the role of the CHRO changing in today’s business environment?
In my role, I have the opportunity to talk to a number of CHROs across many markets both public and private, large and small. One of the common themes I hear is that, for many heads of HR, the expectation of the executive team is for HR to be able to measure the impact of the HR programs -- not just the activity. Meaning, HR must now get more comfortable with using analytics in order to show how a leadership program or a new hiring training will improve productivity, retention and customer satisfaction. The days of just reporting on number of people hired or how many managers were trained are behind us. HR must now be able, like our marketing and finance colleagues, to predict outcomes!
For example, at my company SAP SuccessFactors, we are measuring the hiring effectiveness of our people managers. We want to know who consistently hires people who get productive faster and promoted sooner, are identified as top talent, where we can measure (such as a call center), have higher net promoter scores from our customers. Then we want to know what they do differently from average hiring managers and try to incorporate those skills into all of our hiring managers. The expectation is that we will see an increase in retention as employees who are engaged and successful are less likely to leave their organizations, as well as provide an increase in customer satisfaction. The data we are using is not perfect, but it can tell a story.
If we don’t get comfortable with this approach to HR programs and strategies a troubling trend could increase! That trend is that more and more CHROs coming from outside of HR, to include finance, operations, or sales-- because they understand how what they do impacts the organization’s bottom line!
We continue to read more and more articles on big data and analytics. Why is this so important for HR to understand?
The new currency in business today is data. Those who figure out how to use their data for a competitive advantage will survive, but those that don’t will get acquired or disappear. In HR, we generate phenomenal amounts of data yet we rarely take the time to use that data effectively. Disparate systems, dirty data, and lack of data analytics capabilities in many organizations are roadblocks to success. The reality is that the data will never be perfect, there are systems that can connect disparate data fairly easily and there are experts in data analytics that can help out to jump start a data driven HR organization.
Organizations that I have worked with have started small, taking a well-defined pain point and using data to seek trends or hot spots. Recruiting is a good place to start. Many organizations would like to improve the quality of candidates or focus their marketing in those areas that have shown results. Unfortunately, many organizations keep going to the same sources for potential talent hoping for a different outcome.
Taking the time to understand the effectiveness of sources of hire can help HR focus efforts and potentially provide a higher quality candidate pool. Doing this could seem cumbersome, but there are simple ways including using both HCM software or just good old manual data crunching. I tell people to first pick a role that you hire for consistently, that way you should have more data to review. Then ask managers who their best people are, or review the last calibration data and identify top performers. Now go back and find out where those top performers were sourced from. Was it through internal referrals, job boards, or some other identifiable source? You will likely find that there are one or two sources that consistently produce the best talent. You might also find that some of the sources you are spending a significant amount of money on are not producing candidates who stay and outperform their peers!
So how can organizations start on a data-driven HR journey?
I have mentioned a few ideas already. The key is start small and build on success. There is a great quote I learned from a consultant, Peter Lee (out of Vancouver, B.C.) that I have carried with me for many years, “Sometimes you have to slow down to speed up.” All too often, in our desire to have immediate results, I have seen HR organizations launch a company-wide data initiative. Often the initial euphoria leads quickly to frustration. i.e.“The data is no good or too hard to obtain!” or “How can we get the business to engage?” There is also a propensity to want to buy a systems solution before one really understands what the business pains are.
Successful data-driven HR organizations begin with some idea of what they are trying to solve. This is where close partnership with the business is essential. Going to a sales manager and telling them that you want to dig into the data on the performance of sales people will often elicit a quick: “get out of my business until you fix your recruiting machine!” or some other less than helpful response! Instead, what if you asked them,“If we could identify the key causes of sales turnover and could reduce it by 5% would you be interesting in playing?” The response is likely to be very different!
Any data-driven project must begin with a clear business need AND one that can show some correlation to business performance, profitability or customer satisfaction.
I often tell colleagues that if you don’t know where to start go ask your marketing head or a marketing person that you know. Marketing has been using data analytics for years to predict buying behavior, customer retention, and effectiveness. They can often be a great partner to help you get you program off the ground.
Start small and celebrate early wins! Don’t shoot for fundamental change, but strive for incremental change. The data is out there waiting for you to inquire. Take the bold step an enter the world of data driven HR, the door is wide open and your organization needs you to step through.
Follow me on Twitter: @GregJMorton
Follow David on Twitter: @DavidSwansonHR
You can also connect with David Swanson on Linkedin