HR analytics: 6 lessons from the C-suite on how HR are using insights to drive impact

How many of your high performers are a flight risk?

By how much do you need to increase your hiring plans next year to grow in line with your business projections? How many potential successors have you identified for key roles?

Without actionable insights from HR and People data, companies are flying blind.

However, just 40% of C-suite leaders say their organization uses HR data to make business decisions, according to our recent research report, HR in the moment: Impact through insights.

Worryingly, despite 94% of C-suite leaders having access to some form of People data, 68% said they’re not heavily reliant on it.

Impact through insights: About our research

We polled 500 HR and C-suite leaders from across the UK, US, Canada, and Australia to find out more about how HR analytics are being used in organizations today.

Respondents were drawn from two groups:

• Senior HR roles, including chief people officers and HR directors
• C-suite executive positions, including chief executives, chief financial officers, chief information officers and chief technology officers.

Respondents were also from mid-size global companies, in traditionally high-growth, high-skill sectors such as technology, business services and not-for-profit.

The results were fascinating. Below we cover what we learned:

1. HR are aligned to business priorities – but aren’t leading them enough

2. There’s an abundance of HR data – but not enough insights

3. Leading and lagging metrics: There’s a lack of future-focused data provided by HR

4. C-suite leaders know what HR data they want

5. HR and C-suite leaders aren’t using HR analytics to drive business decision-making

6. The role of technology has accelerated

Find out more about how HR leaders are driving impact through insights

1. HR are aligned to business priorities – but aren’t leading them enough

The good news is that an overwhelming majority (81%) of the C-suite feel HR’s priorities are aligned to those of the overall business.

Top priorities cited by both HR and C-suite leaders include financial performance, a focus on leadership, business operations and digital transformation.

There are some important distinctions, however, when it comes to who’s actually leading the way.

More than half (59%) of the C-suite feel HR is failing to play a leading role in delivering business priorities, even in key HR areas such as skilling and upskilling, operational excellence, and company culture.

What’s perhaps even more surprising is that HR leaders themselves agree they could be doing more to lead in these areas.

It seems C-suite leaders expect HR to lead, more than HR do themselves.

2. There’s an abundance of HR data – but not enough insights

An impressive 90% of business leaders say they do have access to some form of People data from HR.

What’s not so great, though, is that this information isn’t turning into actionable insights.

In fact, 60% of C-suite aren’t using HR data to drive any kind of decision making, and 68% subsequently say they’re not heavily reliant on it.

Meanwhile, 60% of the C-suite are not using People data to help determine financial objectives and 63% aren’t using it to make recommendations.

Perhaps most surprisingly, 56% aren’t using any People data to help inform culture and experience decisions.

So why isn’t data being used to drive impact?

Looking closer, we discovered the type of HR data the C-suite is receiving is typically weighted towards more ‘lagging’ metrics, than ‘leading’ metrics.

In other words, the data is backwards- rather than forwards-looking.

3. Leading and lagging metrics: There’s a lack of future-focused data provided by HR

Lagging metrics are outputs from events, with data showing what’s already happened.

They’re useful if you want to understand if certain intended results have been achieved, but not so useful for predicting future trends.

For example, lagging metrics include metrics such as revenue earned and vacation days taken.

Leading metrics, on the other hand, include data points such as employee engagement and satisfaction levels.

This data can be much more useful for business leaders because it acts like a warning system, allowing organisations to take preventative action and course correct in real time to meet business objectives.

With 70% of HR leaders acknowledging they don’t provide leading metrics to the C-suite, HR is missing a big opportunity to make a measurable impact on the success of the wider organization.

4. C-suite leaders know what HR data they want

When we asked C-suite leaders objectively about what information they would find most valuable for informing their decisions, the responses clearly backed up the usefulness of leading metrics.

It also demonstrates the gap between what data C-suite executives want from HR and the data they’re getting.

For example, 90% of the C-suite would find new hire failure rate data useful, yet only 14% report HR providing this data.

Similarly, 86% of the C-suite say employee net promoter scores (NPS) would be invaluable – but only 13% currently get this information.

Even when it comes to more foundational leading metrics, such as employee engagement, 93% of the C-suite would find it helpful – but only 25% are being given access to it by HR and People teams.

The top data points C-suite leaders said they would find useful are:

1. Headcount
2. Employee productivity rate
3. Cost per hire
4. HR to full-time employee (FTE) ratio
5. Training rates
6. Employee engagement
7. Revenue per full-time employee
8. Turnover rates
9. Labor costs per full-time employee
10. Cost per employee

Metrics such as these give the leadership team the power to identify problems before they happen.

For example, if employee satisfaction rates are low, productivity is likely to be low too, which is a signal ahead of time that there’s a potential risk of lowered employee retention and higher staff turnover.

5. HR and C-suite leaders aren’t using HR analytics to drive business decision-making

Of course, raw data by itself isn’t much use – there must be a level of understanding to interpret the information in meaningful ways that create actionable insights.

More than half (59%) of HR leaders told us they don’t have the ability to spot trends that help make future people-related decisions.

Meanwhile, 38% of the C-suite say they’re not fully satisfied with HR’s ability to provide insights and make business-related recommendations, either.

This indicates a need for investment in training and education to help HR to develop critical insights and provide valuable recommendations to inform strategic decision making.

6. The role of technology has accelerated

Accelerated digital transformation has been a major driving force behind increasingly sophisticated applications of People data.

Our research backs this up, with 90% of C-suite leaders saying HR tech has been helpful for achieving a broad range of business priorities.

The global pandemic has been a huge test of just how robustness organizations’ HR tech really is.

We found 81% of HR agree they wouldn’t have been able to operate effectively during the pandemic without cloud HR.

Find out more about how HR leaders are driving impact through insights

Recognizing the remarkable value HR data can provide, now and in future, as well as acknowledging areas that need strengthening in the short term, is vitally important for organizations today.

More training for HR, and careful investment in future-proof HR tech will help businesses become more resilient – and maintain this resilience, in the face of great uncertainty.