Proving the value of HR analytics

There are many reasons why data-driven interventions do not always improve sales margins. How can HR plead its case?

The implementation and utilisation of HR analytics in a business is only worthwhile if it achieves the intended results and sales targets.

But as Sarajit Poddar, Head of Workforce Planning and Analytics at Ericsson, shared at the HRM Asia Workforce and HR Analytics Congress, there are many angles that businesses do not consider or are not aware of.

It is the job of HR, and the workforce planning and analytics team, to set the expectations of leaders, and educate them on why results are not always so clear-cut.

Poddar explained how sometimes, even if a data-driven intervention had improved the workforce dimension, sales margins might not have followed suit. In such cases, the business may be of the opinion that the use of analytics did not actually lead to the desired results.

This is then where HR steps in to explain the angles that may have been overlooked.

One reason could be that while sales margins did not increase, costs overall were lowered during a time when sales also happened to be down. Another reason could be that HR overlooked having a wider review of business partners and their effectiveness.

“Real business problems are not only HR’s problems,” said Poddar.

Where verbal explanations fail to convince leadership, preparing a thoughtful presentation with scenario simulations and analysis would be the next best bet.

Sometimes when building financial targets, leadership can make assumptions that are not totally accurate.

It is during this stage that the analytics team should employ “what if” scenarios, evaluating which targets are feasible and which are not. The team should also assume legal constraints that might make certain plans difficult to execute.

“Coming up with three to four scenarios is good to show management different possibilities and issues, and how to overcome those constraints,” said Poddar.

But he added that it was important to not just present scenarios in isolation. HR should also make recommendations alongside a given action plan.

Ericsson’s own analytics journey started four years ago and Poddar says that today, all the business units are dependent on his department for insights and recommendations.

“But don’t expect full buy-in from day one,” he cautions. “You need to build credibility first as you embark on your analytics journey.”

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