Labor is the biggest corporate expense for most organizations. The cost of labor for an average company typically represents around 30% of revenue (this percentage can be a lot higher for service-based businesses). Since people are literally a company’s biggest asset (and cost), why wouldn’t we want to use all available people data to improve the business? While most people analytics teams can crunch the numbers, many often fail to put their company’s people data in context and tie it to the bottom line or the strategic vision for growth, leading to disjointed decision-making, slashed budgets and a chaotic work environment.
People analytics teams must become the strategic advisors their companies need.
People analytics should be key advisors, not just data reporters
More often than not, people analytics teams get stuck in the reporting phase. They focus too much on the “what” when they should be thinking of the “so what.”
For example, let’s say a people analytics leader shares their data dashboard with their executive team to discuss improving diversity, equity, inclusion and belonging (DEIB) within their company. The people analytics leader can show the executive team what percentage of their workforce are women, what percentage are people of color, how many are over the age of 50, and so on. They can also share similar data for all the candidates currently in the company's hiring process.
“Great!” says the CEO. “Now what should I do with this information?”
This is where too many people analytics teams falter. They can report on their company’s people data all day long, but they struggle with connecting that data to actionable next steps. In other words, the “so what.”
A successful people analytics leader should be a strategic advisor to their company’s leadership team. They should be the ones to help translate the data into a plan that delivers viable results.
To expand upon the example above, the people analytics leader should be prepared to not only show the data but to also put it in context. Are the DEIB numbers improving? How do they compare to where we were last year? How do they compare to our competitors? If we’re behind our competitors, how can we go about changing that? If we’re ahead, how do we keep that momentum?
Regardless of the results, people analytics professionals should encourage their executive team to be transparent with their DEIB reporting. Amid a sea of companies unwilling to disclose more than the minimum requirement, any company that errs on the side of transparency will stand out among investors, shareholders, customers and candidates.
People analytics needs to tie itself to the bottom line
After years of building momentum, people analytics is finally starting to get a seat at the table. According to a recent Insight222 study, “people analytics leaders are gaining more influence across the top of organizations, with 21% of leaders reporting directly to the CHRO, compared to 13% in 2021.”
This is great news. However, it also means the stakes are higher. People analytics leaders must be able to tie their data to their company’s bottom line. They need to focus on providing data, with context, that can help executives make future decisions, like:
- What should our product roadmap look like?
- What are our competitors doing that we’re not doing?
- How can we train our employees better?
- How do our employees compare to our competitors’?
- How can we hire top talent?
- What trends (internal or external) could impact retention?
- How are our competitors retaining their top talent?
For example, let’s say a people analytics leader shows their CEO or CHRO data that reveal competitors are hiring the same talent in the same region, faster. The people analytics leader should be prepared to offer suggestions for the next steps and improvement based on what they’re seeing in the data—particularly as it relates to competitors.
What salaries and benefits are competitors offering? What do their job descriptions look like? Are they offering remote or hybrid work options? With the help of real-time labor market data, the people analytics leader could answer those exact questions and propose informed solutions.
It’s not enough to point out the problems. To continue being relevant, people analytics teams must show up with solutions.
The bottom line
While the executive team has the expertise to lead the company and grow the business, the people analytics leader is the authority on people and performance data. By tying that data to the company’s bottom line and acting as strategic advisors, people analytics professionals will earn the respect of leadership and cement themselves as key partners in future growth.
This article was originally published on the Forbes Technology Council website.