Executive Summary

People analytics is fast becoming one of the most important areas of Human Resources (HR). Yet until now, there has been very little research into how people analytics can deliver the most value. Models have thus far focused on maturity, the idea being that an analytics function develops in stages, with proficiency in ‘younger’ or earlier stages such as HR reporting necessary before a function can reach more complicated, ‘mature’ stages, such as predictive analytics. In our opinion, this approach does not deliver analytics at scale quickly enough for the function to reach its full potential.

This report suggests a new operating model for people analytics, focused on delivering value at scale. This model is essential to Chief Human Resources Officers (CHROs) and business executives who want to use people data to deliver value to their businesses. The focus of this model is on creating business value – not just HR value – and scaling people analytics solutions across the enterprise.

In leading organisations, the CHRO is treading a similar path to the Chief Marketing Officer (CMO). During the 2010s, the marketing function transformed into a digitally responsive and active team focused on the customer journey and measuring everything possible so that the C-Suite could invest in the most important markets with accuracy provided by data. Managing increased expectations required marketing functions to focus on core areas: defining and delivering ROI, transforming to be more agile, working in partnership with stakeholders and building new and specific skills in the team.i

Forward-thinking CHROs can learn from this by working with stakeholders and structuring their people analytics functions to focus on business challenges.

The insights discussed in this report are drawn from research undertaken between March and July 2020 to understand how HR was responding to the COVID-19 pandemic and economic uncertainty. The quantitative analysis includes data from 60 global organisations, which are collectively responsible for almost five million employees, operating in over 150 countries.

Our key findings are:

1

People analytics is growing 2 Analytics technology investment is increasing 3 Advanced people analytics teams are evolving to focus on complex business challenges

People analytics is growing

Of the companies surveyed, 55% indicate that their people analytics team has grown in size in absolute terms over the last 12 months – and 60% of companies surveyed intend to grow their people analytics team with new experts relative to the rest of HR in the coming 18-24 months.

2Analytics technology investment is increasing

54% of companies surveyed expect their people analytics technology investment to increase in the next 18-24 months. Furthermore, more than 80% of companies surveyed are using (37%) or planning to use (44%) advanced people analytics technology to conduct projects, in what we call a ‘Third Wave’ of more specialised analytics technology adoption.

More than half (52%) of companies surveyed expect to increase the number of internal analytics consultants, and almost two-thirds (57%) expect to increase the number of data scientists – but only around a quarter (28%) expect to increase the number of dashboard developers. This shift in role allocations allows HR to focus on business-relevant people analytics projects with a more complex scientific approach.

These findings are clear evidence that companies are investing in People Analytics and teams are growing, even in – or possibly in response to – the complex business environment of 2020. The question remains, how best to utilise the investment?

Our research supports a new way of operating for People Analytics, focused on business demand, value and outcomes. We refer to this as the People Analytics Value Chain, which starts with client drivers as inputs and ends with analytics products delivering business outcomes at scale.

The value chain can be operationalised through a new model, the Insight222 Operating Model for People Analytics, which delivers value at scale through three engines:

• A Demand Engine – of consultants to work directly with business executives to provide a funnel of the most important business (not just

HR) challenges and opportunities

• A Solution Engine – of expert analysts, data scientists, behavioural scientists and stewards to deliver insights and recommendations

• A Product Engine – of designers, product engineers and change managers to build and implement valuable analytics products at scale

We believe that people analytics has the power to unleash more value from the workforce and drive tangible business impact for the organisation.

The new Operating Model for People Analytics presented in this report will enable that to happen.

Jonathan Ferrar, Caroline Styr and Anastasia Ktena Insight222 24 November 2020