It is not insight that data is in the focus from the HR function. However, rethinking data and using it to gain crucial insights in the HR area, and above all for the success of the company, is. A short article on why big data and analytics will be an indispensable part of HR in the future.
One thing is clear today: progress in the form of new technologies, digitization and automation, emerging competition for limited resources such as skilled workers, but also establishing employee engagement as well as New Work due to demographic change are by no means meaningless movements for HR. While Big Data and analytics emerging from global megatrends have long been taken into account in other areas of business, their recognition and active encounter are only the latest developments to be seen as crucial drivers in HR as well. But what does this mean exactly? It is actually quite simple: to use the availability and accessibility of Big Data that is prevalent today with regard to HR-related topics or issues and, in addition, to link and analyse it with the human factor – or in short: to create HR contexts based on data and derive decisions for the future from them (cf. ZukunftsInstitut 2022).
Currently, these very connections and decisions are not yet fully brought forth in practice, although this does not imply that affected companies are skipping the necessary change. Thus, from a data-oriented perspective, the HR function is going through various stages of development marked by challenges. For this reason, many companies are still on their way from an operational to a strategic and even more data-driven HR function. The first stage is experience-based HR, which hardly allows well-founded HR-related decisions in view of an orientation towards experience-based knowledge, e.g. based on surveys. With regard to the next stage of development – HR reporting – conclusions regarding conceivable (mis)developments can be drawn from HR data in the course of past-oriented key figures. In view of the fact that the International Data Corporation assumes an increase in spending on big data and business analytics by European companies of 11% over the next five years, starting from 50 billion US dollars in 2021, it can be assumed that a large number of companies have now reached at least the development stage of HR controlling (cf. International Data Corporation 2021). In addition to a data focus, which undoubtedly exceeds personnel data and includes more far-reaching company data such as turnover or customer satisfaction in the HR area, primarily actual plan developments of the HR function form the focus of consideration.
Even if Big Data is gradually incorporated into HR decisions on the basis of the aforementioned development stages, the resulting insights are primarily limited to the result of past and present performance within companies. For example, successful recruiting channels or departments with high turnover rates can be identified. What is missing: future orientation of the data! And as a result: Future-oriented alignment and positioning of HR as well as the company going forward. People analytics takes the place of the next stage in the development of HR transformation, in which not only quantitative and qualitative data, but also external data originating from, for example, social media, macroeconomics, or industrial benchmarking are analysed, and prognoses are derived on this basis (cf. Angrave et al. 2016).
But how can the use and analysis of Big Data ultimately be managed with regard to future decisions and developments of HR and companies in the form of people analytics? From modern data analytics tools and statistical methods to algorithms and artificial intelligence, there are no limits to the approach. For example, people analytics can be used to make informed HR decisions for corporate recruiting. Through numerous evaluations and simulations, for example, it is possible to establish a more efficient hiring process that is based on recruiting channels that are critical to success and particularly suitable employees or employee qualifications. Large corporations such as Google often go one step further and implement algorithms as part of the application process. The goal is to recognize patterns and to automatically assess candidates based on qualifications and requirements (cf. Marler & Boudreau 2017).
Based on our expertise in the areas of business intelligence and strategy consulting, we at Vindelici are working with our clients to change the HR function and set ourselves the goal of building a data-driven, but above all future-oriented HR decision-making basis. To this end, we work together with our clients to, in a first step, identify optimization potentials in the HR area and, building on this, to define problems in concrete terms. In doing so, we follow a consistent data strategy and align it with overarching corporate goals. The next step is to identify and analyse relevant data. The basis for this is provided by business intelligence solutions (cf. Rasmussen & Ulrich 2015).
People analytics ultimately makes action potentials transparent and the resulting recommendations visible. However, it is crucial that the result is more of a decision support than a decision automation:
„People Analytics wasn’t going to be in the business of developing algorithms to substitute for or replace human decision makers. Instead, what we were going to be all about was to arm these people with much better relevant information so that they can be capable of making better decisions (cf. Prasad Setty 2014).”
Angrave, D. et al. (2016). HR and analytics: why HR is set to fail the big data challenge. Human Resource Management Journal, 26(1), 1-11.
International Data Corporation (2021): European Big Data Spending Will Reach $50 Billion This Year, as Companies Focus on Analytics-Enabled Hyper-Automation. URL: https://www.idc.com/getdoc.jsp?containerId=prEUR148275921, (abgerufen am 08.02.2022).
Marler, J. H., & Boudreau, J. W. (2017). An evidence-based review of HR Analytics. The International Journal of Human Resource Management, 28(1), 3-26.
Prasad Setty, Vice President of Analytics, Benefits and Compensation at Re:Work Editors (2014).
Rasmussen, T. & Ulrich, D. (2015). Learning from practice: how HR analytics avoids being a management fad. Organizational Dynamics, 44(3), 236-242.
ZukunftsInstitut (2022): Die Megatrends. URL: www.zukunftsinstitut.de/dossier/megatrends/, (abgerufen am 08.02.2022).
