People Analytics as a service
In today's fast-paced business world, organizations are constantly looking for ways to gain a competitive advantage. One area that has received a lot of attention is People Analytics. By harnessing the power of data and analytics, organizations can make more informed decisions about their workforce, leading to improved performance, productivity and employee experience. However, when it comes to implementing People Analytics, organizations are faced with a crucial decision: should they develop People Analytics capabilities internally (build), purchase People Analytics as a managed service or settle for a hybrid model?
The most commonly heard challenges when building People Analytics muscle
Becoming data driven in HR is no easy feat. It requires a deep understanding of data collection, analysis, and interpretation, as well as matters like Privacy and Ethics. One of the most common challenges organizations face when building People Analytics capabilities is a suboptimal data infrastructure.
Organizations often find themselves struggling with systems and processes that are ill-equipped to handle the volume and complexity of people data. HR systems were primarily designed to execute HR processes and lack the necessary capabilities to effectively collect, store, visualize and analyze the vast amount of data that is now available.
Furthermore, obtaining the required skill sets can be a significant challenge. Individuals with expertise in data analytics are in high demand, and the competition for talent is fierce. Organizations often find themselves in a race against time to attract and retain top data analytics professionals who can help build and strengthen their People Analytics capabilities.
Even if an organization manages to overcome the hurdles of data infrastructure, talent acquisition and talent retention, they still face another obstacle - resistance to change. Implementing new ways of working and leveraging data-driven insights requires a cultural shift within the organization. Many employees may be resistant to change, clinging to traditional methods and sceptical of the value that People Analytics can bring. This especially the case in HR where many people went into the trade because of their focus on interaction with individuals not data driven insights.
Change management becomes crucial in this scenario, as organizations need to effectively communicate the benefits of People Analytics and address any concerns or fears that employees may have. It is essential to create a supportive environment that encourages experimentation and learning, where employees feel empowered to embrace data-driven decision-making.
In addition to these challenges, organizations must also navigate the ethical considerations that come with collecting and analyzing people data. Privacy concerns and the potential for bias in data analysis are important factors that need to be carefully addressed and managed.
Despite the challenges, building People Analytics muscle can be a game-changer for organizations. It enables them to make more informed and strategic decisions about their workforce, leading to improved employee engagement, productivity, and overall business performance.
By investing in the right data infrastructure, attracting and retaining People Analytics talent, and fostering a culture of data-driven decision-making, organizations can unlock the full potential of People Analytics.
Why every organization should make a conscious People Analytics buy or build decision
Effectively building People Analytics muscle can bring great benefits to an organization. In addition, it is important to consider People Analytics is not a one-time project; it is an ongoing process that requires continuous monitoring, analysis, and improvement.
Because of the immense value that can be unlocked a People Analytics transformation must succeed and organizations should evaluate whether they have the resources and capabilities to sustain and evolve their People Analytics capabilities over time.
Within this frame one of the crucial considerations to make before commencing a People Analytics transformation is whether to Buy or Build People Analytics capability.
By making a conscious People Analytics sourcing decision, organizations can ensure that they are investing in a model that meets their unique needs, aligns with their overall business strategy, can be sustained over a longer period of time and is ultimately going to take them further faster.
Building People Analytics capability in-house requires subject matter expertise both on a functional and technical level, a significant investment of time, resources and money, as well as serious stamina. Some companies can fill in all these prerequisites, for instance large tech companies like Google. They have deep pockets, substantial size and their workforce naturally relates to data and data driven insights. Unfortunately, many organizations do not tick these boxes.
Buying People Analytics capability can be a fitting option for organizations that don’t have time/patience to build a full blown People Analytics team, technology stack and data driven culture from scratch, don’t want a full blown People Analytics team on the payroll, and need to go through a cultural shift, but do want to remain flexible and have the size and budgets to make a pivot towards data driven HR.
The decision to buy or build People Analytics capability is not a one-size-fits-all approach. It depends on the specific needs, resources, maturity and goals of each organization. Organizations must carefully evaluate their options and consider the long-term implications before making a decision.
The pros of buying versus building People Analytics muscle
The cons of buying versus building People Analytics muscle
The various People Analytics buy and build models
When it comes to buying or building People Analytics capability, organizations have a couple of consideration to make.
The first consideration is how People Analytics can be broken down. Different approaches can be taken. For instance looking at roles, looking at activities and/or looking through a technology lense. Below is an example of a high-level activity based break down of Analytics.
- Strategic Direction
- Portfolio Management
- Data Engineering
- Data Science
- Business Intelligence
- Employee Research & Psychometrics
- Insight implementation/adoption
The second consideration is which of these elements could be considered for outsourcing. The result of this consideration should be based on a careful consideration of factors like strategic importance, flexibility required, available knowledge and bandwidth available, ability to build substantial bandwidth and expertise internally, availability of managed partners that can offer the required scope. The result of this consideration could look like the visual below.
Each set-up has its own set of advantages and disadvantages, and organizations must carefully evaluate their “lenses” and options before making a strategic sourcing decision. Moreover, a strategic sourcing decision should be periodically calibrated and can change over time.
Case Examples of People Analytics as a Service
FMCG
Financial Services
Retail
Healthcare
The promise of People Analytics
In conclusion, People Analytics holds tremendous promise for organizations looking to optimize their workforce and gain a competitive advantage. Whether an organization chooses to buy or build People Analytics capabilities, it is crucial to make a conscious decision that aligns with its strategic objectives. While both approaches have their pros and cons, organizations must carefully evaluate their options, considering factors such as data infrastructure, skill sets, customization needs, and available resources. By investing in People Analytics, organizations can unlock insights that will enable them to make more informed decisions, leading to improved performance and productivity.
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