C-suite looking for greater insights from HR leaders

WHEN it comes to business operations, are HR and the C-suite aligned? Yes and no, according to a recent survey, which suggests HR could be providing more insights on the people data side.

“There’s alignment in terms of what needs to happen within the companies,” says Steve Ryujin, interim managing director and vice president of the small business segment at Sage Canada in Vancouver.

“The challenge is there’s a bit of a disconnect between taking advantage and really getting the true power of the HR team and the HR professionals to better the company, from a people perspective.”

Overall, the two groups are aligned when it comes to their organization’s top priorities. Both groups rank financial performance as number one, closely followed by a focus on leadership. Business operations and digital transformation also feature in the top four, finds a survey by Sage of more than 500 senior HR and business leaders in Canada, the U.S., U.K. and Australia.

In addition, 81 per cent of CEOs, CFOs, CIOs and CTOs feel HR’s priorities are aligned to that of the overall business.

However, 59 per cent don’t feel that HR is playing a leading role across business priorities. And more than half of the C-suite say HR is not playing a leading role in operational excellence (62 per cent), skilling and upskilling (55 per cent) and company culture (54 per cent).

Surprisingly, many HR leaders appear to agree, at 65 per cent, 52 per cent and 53 per cent, respectively.

Part of the challenge is HR is so busy with issues such as retention and acquiring employees, says Ryujin.

“From a business perspective, we get pulled back into some more of the tactical pieces on a daily basis.”

Plus, with the pandemic, business leaders and the C-suite are becoming even more aware of those issues, he says.

“HR leaders and professionals, generally, have always understood the importance of that. But I think through this pandemic, even more so, the business leaders are becoming more attuned to the importance of having the right information, such as the data.”

There’s fault on both sides of the equation, says Rafael Gomez, director of the Centre for Industrial Relations and Human Relations at the University of Toronto.

“In one sense, you have to be invited at some point to the table in order to be part of it. But there’s also been, I think, historically, a unifocal view of HR as simply linked to people and psychology. And I think that has prevented the economic considerations of a business to also become part of HR’s focus.”

But if you’re not building a company on a sound foundation of good HR policies, you’re going to be in a heap of trouble, he says.

“Pretty soon, because your product and your service can only take you so far, there’ll be a competitor very quickly that might copy you. And it’s at that point that your people become — it’s a cliche — your most valuable asset. So you need people who understand organizational behaviour… to be cognizant of what matters to the whole of the organization, which is financial success and market share and so on.”

“It’s beholden to the HR function to understand what the economic drivers are and, at the same time, it’s important for company leaders to not keep HR at the sideline.”

The disconnect is not necessarily HR’s fault, says Emily Field, associate partner at McKinsey & Associates in Seattle.

“They are being asked to digitize, to automate in order to increase self-service, while simultaneously cutting costs and developing deeper insights — while at the same time, they haven’t stopped doing the more customer service-oriented tasks to the business. And so, if we think about this idea of ‘HR must transform itself first,’ it’s actually about saying, ‘What do we have to also stop doing? What do we need to start doing? And what are the capabilities that HR needs to have in order to be able to do it?’”

There is also a big shift underway, in part spurred by the pandemic, where the future of HR is really about employee experience, she says.

“As part of that, it’s really saying, ‘How do we become like human capitalists? How do we put humans at the centre of all of this and what is the role of HR across the employee experience?’ versus thinking about it in traditional silos of HR operations, HR analytics, talent management.”

People data in spotlight

While 94 per cent of business leaders have access to some form of people data from HR, 60 per cent are not using HR data to drive any kind of decision making and 68 per cent are not heavily reliant on HR data, finds the Sage survey. A further 56 per cent are not using any people data to help inform culture and experience decisions.

As further indication of the disconnect, 90 per cent of the C-suite would find new hire failure rate data useful, yet only 14 per cent say HR is providing this data. Similarly, 86 per cent of the C-suite say employee net promoter scores would be invaluable — but only 13 per cent get this information. And for employee engagement, 93 per cent of the C-suite would find it helpful, but only 25 per cent are being given access to it by HR.

A further 62 per cent of HR leaders said they’re not able to use the data to spot trends and make business-related predictions, according to the Sage report HR in the Moment: Impact through Insights.

The opportunity is with having the right technology stack and having the right information, says Ryujin.

“That really could help the HR professionals realize that vision or opportunity to become more strategic,” he says. “HR professionals are really still focused on more the executionary areas.”

But there’s definitely a skill piece involved to drive those conversations within the organization, he says.

“There is some work to be done in terms of how do you best interpret and how do you triangulate on the most important kind of people metrics, ensure that it’s accurate, and then drive those discussions to have a people-first strategy?”

But HR can’t solve it alone — it also needs to work with the business owner and data scientist, says Field.

“At its core, HR and the business leader need to partner together to say, ‘What is the people problem I’m solving?’ And then HR can work closely with the data science team to say, ‘How do we use data to solve this problem?’ with HR really being the translator, taking those insights from the data scientist and working with the business leader to say, ‘What does this mean for the business?’”

As data becomes more available, HR needs to quickly automate those internal analyses, the descriptive analytics of retention, hiring rates, promotion rates, and then say, ‘What else? What next? And what is the data that that we need to bring to bear?’” she says.

But HR should not let a desire for perfect data get in the way of progress, says Field.

“What we often say is 80 per cent of the data exists; that’s good enough. And then also, go to where the need is greatest, pick the use cases for HR — it might be around diversity, equity and inclusion; it might be around reskilling; it might be around increasing performance — [then] go to where the business need is the greatest and use that as an opportunity to create a proof point. Create an experiment for HR to show the value of data and how they can help the business get to a better answer faster, powered by data.”

Many people are enamored with any answer that’s provided by technology or a mathematical model, says Rafael.

“They’re relying a lot on canned AI programs that just look at data, find correlations and then tell you what’s coalescing together,” he says. “There isn’t that deep knowledge of how organizations work, how they function… the bedrock principles of good, well-functioning organizations. Those haven’t changed and don’t require AI.”

It’s about empowering people, giving them a purpose for which to work for, and giving them some autonomy, he says.

“It’s beholden to the HR function to understand what the economic drivers are and, at the same time, it’s important for company leaders to not keep HR at the sideline.” 

“If you have that foundation, then sure, you can tinker and say, ‘Let’s try this.’ And then we can collect data and see if it works. Or ‘Let’s do it in this part of our organization, let’s not do it in this other,’ and then check before and after. Do these sort of control trials, which really determine the efficacy of any policy. Then you can start doing that technical stuff. But if it isn’t built on that foundation, it’s not going to get you very far.”