Convince your Leadership: 6 steps towards data-driven decisions in HR

Regardless of the industry, most HR professionals face similar challenges, including: 

• Not having a seat on the board, 
• Having no means to report on facts, 
• And difficulties in demonstrating initiatives' return on investment (ROI). 

Organisations expect HR professionals to increasingly undertake levels of analysis that are not technically possible with the tools they currently have at their disposal. 

Let’s change this, shall we?

In this blog post, we cover the following: 

• What HR usually reports on (and why it's not enough)
• What HR should report on (and is increasingly asked to report on)
• How can HR make more data-driven decisions (hint, there is much more to it than reporting!)

What should HR report to their leadership?

What HR usually reports on

If you work in HR, you’re probably familiar with some of the typical data the board of directors expect to see in human resources reports:  

• Hiring numbers 
• Time to hire new team members
• Employee engagement
• Absences
• Employee turnover and retention

(To name but a few.)

Increasingly, organisations’ leadership are also interested in understanding employee engagement levels, as most - if not all - studies on the topic connect it to employee retention, performance and business outcomes. 

Depending on the demographics of your staff, leaders may also ask you to provide details about the number of employees eligible for retirement in the next five years to help inform success planning or identify talent pathways.

What’s more, if your organisation has over 250 employees, you’ll also need to report gender pay gap figures annually.

The real value of HR vs. the perceived value of HR

Leadership is also inherently interested in costs.

Therefore, they may ask you to report any expenses linked to employment, such as cost to hire, pay budgets, training costs, the impact of leave on the bottom line and how much different employee benefits cost. 

The issue with this approach is that HR is mainly perceived as a cost centre by leadership.

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Of course, human resources (and, therefore, labour) often come as the main source of cost for most organisations, but this is only the visible part of the iceberg.

What HR should report on to create more value

Communication and clarity are paramount to generating excitement.

In other words, to get their board of directors’ buy-in, HR professionals must communicate the importance of HR initiatives and programmes and show their potential to positively contribute to the entire organisation's growth and performance in the long term. 

Show the ROI of HR initiatives.

To demonstrate value, HR people need to identify the ROI of programmes and initiatives by providing data to support their claims. 

Data doesn't lie. It can show initiatives' impact on costs, performance, company culture, employee job satisfaction and engagement levels. Data also allows you to analyse trends and make the right decisions ahead of the curve; being proactive instead of reactive.

Show the impact of diversity and inclusion.

Diversity and inclusion (D&I) is not only the right thing to do; it’s a strategic investment for many organisations.

For instance, McKinsey publishes various studies exploring the potential link between D&I and high performing organisations.

Reporting on D&I using relevant data insights can help your board understand representation, tenure and pay blindspots, standing in the way of your organisation and the opportunities available for your organisation to create a more diverse and inclusive workplace. 

Become a forerunner. Create a better world of work for everyone.

While gender pay gap reporting is mandatory, no one knows when or if ethnicity pay gap reporting will become mandatory. And although there has been consultation regarding disability pay gaps, the government has not formally announced anything.

By proactively reporting and benchmarking pay gaps and other key D&I metrics, HR teams can understand how they're currently performing, analyse what they can do better, develop action plans and implement initiatives that positively impact all employees.

It's also a great way to understand how you're faring against other organisations, either within your industry or in other areas, to assess risks of employee churn and proactively address these to keep top talent.

How to make more data-driven decisions in HR

Unfortunately, there’s no silver bullet or magical one-size-fits-all plan for making more data-driven decisions in HR. However, there are a few things that organisations can do to move in the right direction:

1. Create a data-driven culture

A data-driven culture encourages employees to share personal information that can help HR make informed decisions that benefit all employees.

Of course, explaining why you’re asking for your employee data and how you will use it is essential, along with making it easy for employees to submit data and updating it regularly when their circumstances change to ensure your data is up to date and relevant. Analysing your data and storing it securely for privacy is also essential. 

Finally, transparency is critical when managing data and analytics in HR. 

Don’t be afraid to share your data insights with employees. On the contrary, be open about why you’re making decisions and explain how those decisions are based on facts to drive the right outcomes for everyone.  

2. Encourage open communication 

Encouraging communication and collaboration among team members enable everyone to share their opinions and ideas. This openness helps to create a culture based on inclusivity that values everyone’s perspectives.

3. Make sure that all decisions include data and facts.

One of the benefits of HR analytics is that there’s a lot less room for decisions based on personal biases or emotions. 

HR data helps to tell your organisation's story by using facts, allowing you to make better-informed decisions that positively impact your organisation and employees. 

Using analytics enables you to review policies, compensation, benefits and more to see what needs to improve and which strategies are more likely to work. 

4. Use technology

Using the right technology can help you evaluate your overall HR performance and measure the full impact of almost everything you do. 

Digestible data = Actionable data

What’s more, using data visualisation tools, like HR dashboards, can help make data more digestible and easier to understand at all levels of your organisation, regardless of data literacy. 

Such tools can be helpful when presenting data to others in the company or when trying to make sense of large data sets (HR DataHub is one of them, wink wink).

5. Document and keep track of everything

Most leaders want to make informed decisions based on evidence. That’s why it’s essential to document and track everything, so you can reference facts and data to support your actions and get a seat at the table.

Investing in people analytics is essential for creating a data-driven HR strategy. People analytics relate to the data-led analysis of anything about your people, including D&I, reward, engagement, absences and HR operations.  

Equally, ensuring all of your team has data literacy skills is critical. But thankfully, with the right tools, you don’t have to be a data scientist to manage HR data. 

6. Continuously review your actions.

To ensure your actions are efficient and effective over time, it’s essential to continually review, analyse and adapt your activities. 

Using data, assessing, improving and acting on insights all help to raise the essential role of HR in decision-making. 

One step at a time

There you have it, a 6-step plan to make more data-driven decisions and show the real value and impact of your hard work to your leadership.

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