How people data empowers today’s CHRO

There’s no denying that the HR function looks very different today than it did 10 – or even five – years ago. Gone are the days of HR acting simply as a support function; today’s CHRO is a strategic partner working alongside other C-suite leaders to shape the way organisations do business.

“I don’t think there’s ever been a more exciting time to work in HR,” says David Green, Director at Insight222 and co-author of the book ‘Excellence in People Analytics’. “HR is on a journey from being a support function in the business to being a strategic partner.”

The role of the CHRO will continue to evolve as drivers such as talent shortages and AI alter the way we work. According to the latest Future of Jobs report from the World Economic Forum, 23 percent of jobs will materially change over the next five years.

To evolve into genuine strategic partners, CHROs need to surface insights that inform both people practices and business operations decision-making – and they need the power of people data analytics to help them. 

Strengthening an effective data foundation  

Green doesn’t mince his words when describing today’s rapidly shifting business landscape: “It's gone from periodical business transformation to continuous business transformation. That’s a real challenge for organisations – things are moving fast.”

Across industries, common themes of transformation and people data emerge. For instance, many organisations are shifting from job-centric to skill-centric approaches, allowing for greater fluidity and mobility within their workforce. However, this shift also demands a shift within the CHRO role. “That changes the way we deliver our HR programmes – from recruiting to learning through to talent mobility,” Green says. “You need data for that. You can’t be a skills-based organisation if you don’t have skills data as the foundation.”

Another shift that requires a strong data foundation is changing employee expectations. “Employees want personalised experiences at work. We’re seeing lots of drive around inclusion, culture and purpose,” he says. “Again, you need good data to be able to do that. And companies need to listen to what their employees are saying if they’re going to deliver those personalised experiences and deliver the inclusive culture they want.”

Increased governance and regulation requirements are also driving the need for more and better data. Regulation is increasing in more areas than just governing AI. For instance, the Corporate Sustainability Reporting Directive (CSRD) now requires most EU companies with over 250 employees to report more information related to human capital.

Establishing or improving their organisations’ people data analytics practice is clearly a top concern for CHROs in the near future. Indeed, companies that activate the growth combination of data, technology and people stand to gain a premium of up to 11 percent on top-line productivity, compared to only four percent when unlocking data and technology alone, according to a recent Accenture study.  

Leveraging people analytics to improve business outcomes

Organisations that harness the full potential of their people data understand that it serves a dual purpose: not only providing insights into their talent but also playing a pivotal role in driving business outcomes.

For instance, an organisation can combine engagement and other people data with customer and revenue data to understand whether and how effective leaders and engaged employees affect profitability. The company might start with a hypothesis, Green says: “Good leadership, high employee engagement and the right team all working together can drive higher customer satisfaction.” 

But to test that hypothesis, leaders need to make use of robust people data – which is precisely what happened in a case study in Green’s book. What did that organisation find? “In company locations with the highest employee engagement, the customer satisfaction was twice as high,” Green says.

“That team found that, if you replaced a bad leader with a good leader, you’d start to see engagement scores go up and attrition fall,” Green says. “And then you would see a positive impact on customer satisfaction scores and profitability because they were selling more products to their customer base.” According to Green, the team learned the opposite was also true: when a good leader was replaced with an ineffective leader, it negatively affected customer satisfaction scores and profitability.

People analytics can quantify human capital’s impact on the bottom line. “People analytics is not just about solving HR problems. It’s very much about how we can help address some big business challenges and questions in the organisation too,” Green says.

Creating a data-focused culture

As data becomes a more critical cornerstone in the decision-making process, the HR function will need to make it a larger priority. In a study conducted by Insight222 of 271 global organisations, 88 percent of CHROs saw data analytics as an essential part of HR strategy, but only 55 percent reported that their company has a data-driven culture for people data and analytics. Though the latter percentage has increased in the two years since the study was conducted, there’s still a clear disconnect between expectations and reality when it comes to company culture and data.

As this research indicates, the HR profession must upskill to scale up its data literacy. The findings have pinpointed several best practices to achieve this:

• The CHRO and the HR leadership team must serve as role models: “It’s not just a case of CHROs saying, ‘We’re going to build a data-driven HR function.’ They and the HR leadership team actually need to model that and, if necessary, upskill themselves.” Green says.

• The people analytics leader must be at the helm of any upskilling initiative: As Green notes, “We find that, when the people analytics leader is responsible for the upskilling effort of HR around data literacy, HR professionals are two and a half times more likely to be given training in this area. This isn't about people analytics leaders doing it themselves. It’s very much about partnering with learning, with their expertise in delivering upskilling programs.”

• Training should focus on soft skills: “These skills are more about behaviours: consulting stakeholders, being able to interpret data and being able to build recommendations from insights and storytelling.” Green says.

And of course, like any training, upskilling for data literacy can’t be a one-and-done endeavour. While upskilling will require an investment, it will likely be worth it – as your people data can tell you.