Big Data in HRThe big questions being asked

Big Data in HR2

Everyone’s talking about big data — but what does it mean for HR and for

HR professionals?

• How can HR harness big data insights to help make better informed

business decisions?

• How useful is big data to the HR function in anticipating and

predicting workforce trends?

• Can big data help HR professionals (HRPs) establish themselves as

strategic partners in their organisations?

Executive Summary

HR big data — like big data in any other field of business — is all

about offering businesses insight about their operations. But

ultimately, the value of an HR big data initiative depends on the

usefulness of the insights it creates.

Embracing big data and HR analytics will allow HRPs to engage

more knowledgeably as strategic partners to the business.

HRPs need to be more ‘data fluent’. Big Data presents a challenge

to the HR profession’s adoption of HR analytics - and more and

more HRPs are acquiring the necessary mindset and skills.

Traditionally, HR data has been disorganised: distributed across

multiple functions within an organisation and often across multiple

databases or systems. Cleansing and structuring data is the first

step to adopting HR analytics — and this is a major challenge.

But data is not the whole story. HR’s relationships (networks) and

experience will continue to play central roles in shaping the future

of organisations.

The value of an HRbig data initiativedepends on theusefulness of theinsights it creates.

The big questions being asked

Big Data in HR 3

In April 2014, ADP brought together some of Europe’s leading HR thinkers

and practitioners to consider these questions and suggest some answers.

The HR Question Time panel

Maria Black, President of ADP TotalSource

Dr. Max Blumberg, Research Fellow at Goldsmiths, University of London; and Founder, Blumberg Partnership

Dr. Anthony Hesketh, Senior Lecturer and Associate Professor, Lancaster University Management School

Matt Stripe, Group HR Director UK & Ireland, Nestlé

Trevor Townsend, Product Director, ADP UK

Chair: Jackie Murphy, Managing Director, Flagship Consulting

This ADP Perspective paper captures the main points of a thought-

provoking and fast-paced discussion. It catalogues the chief topics

addressed by the ADP HR Question Time panel, and offers some key

insights to take the debate forward.

There was consensus on issues such as the value of big data in helping

HRPs and their peers gain a clearer view on key people factors like talent

management. Everyone could agree on the need for HRPs to become

‘data fluent’: to understand the language of big data and be comfortable

speaking it. But there was also a lively diversity in views, particularly on

whether the adoption of big data could enhance the status of HRPs within

their organisations.

Big Data Question Timepanellists (left to right):

Max Blumberg, Maria Black, Matt Stripe, Anthony Hesketh

and Trevor Townsend

Finding answers to the big questions

Big Data in HR4

Big data defined – it’s all about value

Big data is clearly on the business agenda, and impressive claims are

made about its potential to “transform every aspect of the organisation”1.

But what does big data mean in the context of HR — and is everyone

talking about the same thing?

Steering away from technical definitions, the panel preferred to talk about

big data in terms of outcomes. For Dr. Max Blumberg, HR big data means

“using all the data available to you to improve the performance of your

workforce.” Agreeing that “big data equals better outcomes”, Trevor

Townsend added that achieving those outcomes depends on how

effectively the organisation deploys big data insights.

For Maria Black and Matt Stripe, big data’s role is in helping leaders make

better decisions and providing the evidence they need to support those

decisions. As Maria Black said, it is about actually “doing something” with

big data.

Dr. Anthony Hesketh challenges the textbook “Three V’s definition of big

data: Volume (there’s a lot of it), Velocity (it moves fast) and Variety (it

comes from multiple sources)”. Instead he offered his own modified trio

of: “Volume, Veracity (i.e. can you trust this information?) and Value (i.e.

what is the Return on Insight, how does it help you value your people?)” as

the pillars of HR big data.

Transparency and globalisation driveHR data onto the business agenda

Why is big data so topical right now? For Maria Black, globalisation is the

explanation. Competitive pressure compels companies to anchor resource

and investment decisions in big data insights to gain competitive edge.

For Matt Stripe, a growing need for transparency is pushing HR big data

up the agenda. Websites like glassdoor.com — “the TripAdvisor for job

search” — mean outsiders, such as prospective employees and

competitors, can see deep inside a company. HR big data could prepare

companies for transparency, helping them make sense of a complex

interconnected world and giving them insights to drive the appropriate

people strategy.

Steering away fromtechnical definitions,the panel preferredto talk about bigdata in terms ofoutcomes.

"HR big data couldprepare companiesfor transparency [...] giving theminsights to drive theappropriate peoplestrategy."

Matt Stripe

Big Data in HR 5

The other panellists looked to events within the HR function. Dr. Max

Blumberg believes the experience of outsourcing is forcing HR to become

more organised in its handling of data, and therefore more aware of its

value. Dr. Anthony Hesketh detects a growing willingness to allow HR data

outside the organisation but within the boundaries of adequate data

security. Previously, this information has been seen as too sensitive to share.

Meanwhile, some of the panellists warned against being seduced by the

hype around big data, with Matt Stripe stressing that big data is

fundamentally an “evolution” of HR reporting, and Dr. Anthony Hesketh

arguing that many commentators are in danger of overplaying its potential

through what he called “big data, no theory”.

Understanding data can lead to betterdecision-making

The panel agreed that it would be great if HR big data could help business

leaders predict and shape the future. But there were differences of

opinion on the ability of big data to fulfil this promise.

Matt Stripe is sceptical. Big data provides useful insights into the business

today — what Matt refers to as the ‘Reveal’ dimension. It can also drive

forward-looking initiatives like Strategic Workforce Planning - the

‘Enhance’ dimension. But it has limited use in the predictive or ‘Model’

dimension because there are too many questionable assumptions.

Dr. Anthony Hesketh also doubts the benefit of big data in modelling the

future. Business leaders should rely on their insight and experience —

what Anthony terms ’executive craft’. HR analytics cannot substitute for

that. “Smart executives don’t need analytics. Their experience allows

them to see value that others don’t.”

Dr. Max Blumberg, however, believes HR big data can shape business

outcomes, citing the example of a company which used HR big data to

build a demographic profile for recruiting sales teams. Revenues

reportedly increased by over 30 per cent in countries that had used the

model.

“Smart executivesdon’t need analytics.Their experienceallows them to seevalue that othersdon’t.”

Dr. Anthony Hesketh

Big Data in HR6

Making sense of the numbers: are HRprofessionals ‘fluent in big data’?

A 2013 research project by the CEB2 revealed that the majority of HRPs do

not know how they could use big data or HR analytics to support their

work. The panel considered to what extent HRPs possess the numerical

and analytical skills to deal with big data.

Dr. Anthony Hesketh believes HR tends to “talk in PowerPoint”, while

other functional departments “talk in Excel”. Besides creating

communication issues, he warned that unfamiliarity with numbers could

make it difficult for HRPs to make informed decisions about where and

how to deploy HR analytics.

According to Matt Stripe, HR has not traditionally harnessed metrics

effectively. He describes many HR measures as ‘so what?’ measures,

offering up basic numbers about absence and attendance that do not help

leaders make better decisions. Instead, he argued that HRPs need to

provide meaningful strategic insights and ask the right questions, so as to

understand what is going on in the business and help shape future growth.

Reinforcing HR’s place in the boardroom

The status of the HR professional is a recurring theme in the debate on

big data. So can big data finally hand HR the key to a permanent position

in the boardroom?

Matt Stripe disagrees with the premise of the question: “The argument

about why HR is not in the room is 10 years old. If you’re not in the room,

you need to ask yourself why”. He believes the debate needs to move on.

“The future demands that HR thinks beyond transactions to encompass

strategy, transparency and flexibility.”

Dr. Anthony Hesketh also detects an evolution in the attitude of HRPs.

“There’s an appetite now among HRPs to be part of the business. And

[they] are coming from more diverse backgrounds — a lot of HR Directors

these days are accountants.”

In contrast, Dr. Max Blumberg believes HR still struggles to get a place at

“the big table”, but argues that people insights, which are grounded in big

data, could allow HRPs to become a regular part of C-suite conversations.

“HRPs need toprovide meaningfulstrategic insightsand ask the rightquestions, so as tounderstand what isgoing on in thebusiness and helpshape futuregrowth.“

Matt Stripe

Big Data in HR 7

Putting a price on people inputs: HRprofessionals and the City

Linked to the discussion about the status of HR, and the role of the HR

professional as a strategic partner, could the adoption of HR analytics

affect a firm’s equity valuation?

While Dr. Anthony Hesketh is not convinced - “The City is driven by KPIs,

not PIs” - he does believe HR is “part of the conversation”. With equity

analysts primarily interested in “optimisation not maximisation”; human

capital is “nestled in the middle of enabling that”, he argued.

Dr. Max Blumberg went further, stating that “the new generation of HRDs

are going to have to walk around the city justifying why the company is

spending money on human capital management”.

Specialist support is crucial

The panel turned to the practical steps HRPs can take to introduce HR

analytics. Assembling and structuring HR data is widely acknowledged as

an issue: research by the CEB3 reveals that fewer than one in five

companies are satisfied with the ability of their current data management

systems.

Trevor Townsend sums up the challenge: “The data is all over the place on

different business systems — and a lot is locked away in people’s heads”.

Matt Stripe advises companies intent on deploying HR big data to not

underestimate the challenge of finding and organising diffuse information.

“Cleansing data to make it useful is hard.” With the relevant data-sets

distributed across different systems it took Matt’s team at Nestlé some

time to organise the data and put it into a useable format.

To make it happen, Nestlé created an analytics team composed of big data

specialists with no HR background. “We ‘protect’ the team from HR people

who want to ‘HR’ them.” By preserving this functional separation the big

data team is free to focus on the numbers and ask the difficult questions.”

Maria Black underlined the importance of creating a functional divide.

Ring-fencing the analytics specialists allows them to focus on the

numbers and “removes the subjective”.

“The new generationof HRDs are going tohave to walk aroundthe city justifyingwhy the company isspending money onhuman capitalmanagement.”

Dr. Max Blumberg

“The data is all overthe place ondifferent businesssystems – and a lotis locked away inpeople’s heads.”

Trevor Townsend

Big Data in HR8

Integration is the Holy Grail

Obstacles to the adoption of big data — within HR and the wider

organisation — is a recurring topic in the big data debate.

Numeracy is a key challenge. A survey for HR Review4 found that 78 per

cent of HRPs do not feel they are very effective at HR analytics (the

interpretation of HR big data). Dr. Max Blumberg agrees that HRPs must

get more comfortable with numbers: “You need to be numerate, to sniff

out the snake oil and understand the correlations”.

Among the panel, there was consensus that the HR profession is rising to

the challenge of data fluency. For example, CIPD training for HRPs now

links big data to strategy, while Matt Stripe has seen signs that new

entrants to HR within Nestlé are more confident dealing with data: “We’re

seeing this ability in new entrants to the company, and that wasn’t there

four years ago.”

The panel was also keen to stress the importance of integrating HR data

with the rest of the business. As Dr. Max Blumberg explained: “Not

everything is HR. Analytics belongs to the organisation as an integrated

whole”. The HR department must therefore make sure it works with other

departments to gain a holistic view of business performance.

There is also an issue of transparency and a need for HR to feel

comfortable making its data available to others in their organisation. Dr.

Anthony Hesketh made the point that the figures may not show what the

HRD would hope and, as a result, collaboration with other areas of the

business is all the more important.

Despite the challenges, the panel agreed that progress is being made,

with Maria Black noting a shift: “At ADP, we are having very different

conversations today with our clients. HR professionals have changed”.

Trevor Townsend added that HR consulting and services providers such as

ADP are now on hand to help HR professionals put big data to work in

their organisations.

“At ADP, we arehaving very differentconversations todaywith our clients. HRprofessionals havechanged”

Maria Black

Big Data in HR 9

The ADP Perspective on HR Big Data

Steve Hardy - VP Global Brand Strategy

In most businesses, there are multiple systems which hold various

employee information, ranging from spreadsheets to bespoke

databases and disparate HR or payroll legacy systems. The

challenge of multiple silos gets more problematic as a business

grows - a recent ADP Research Institute survey found the average

multinational business had more than 22 HR systems — many of

which were deployed over two decades ago. But as ADP has a

holistic integrated view of Human Capital Management, which

includes technology, as well as addressing people and process

aspects of business, we’ve definitely found that alignment of people,

process and technology helps drive a more cohesive culture, all

focused on the needs of our 625,000 clients.

I truly believe Human Capital Management analytics tools will have

a major impact on HR. Analysing big data will allow simple

questions like ‘how many people do we employ?’ to be answered in

an instant, allowing HR to focus on more strategic business issues.

Using big data analytics will enable HR professionals to better

anticipate changes in their organisations and to provide leadership

teams with real strategic insights. Big Data can also support HR

teams in increasing employees’ performance, while the introduction

of analytics may also create new professions within the HR function.

Panellist Biography

Maria Black

Maria is the President of ADP TotalSource and was previously the General

Manager ADP UK and brings a C-suite perspective to the subject of Big

Data. Maria has been with ADP since 1996 and held several roles before

taking on a senior leadership position in Client Services in 2005, where

she led a major launch in California. Maria was promoted to General

Manager of TotalSource's Western Region in 2008 and expanded this role

by combining West and Central regions in 2010 generating revenues of

$150million ($685million across 26 offices in 15 states).

“ADP has a holisticintegrated view ofHuman CapitalManagement, whichincludes technology,as well asaddressing peopleand process aspectsof business.”

Steve Hardy

Big Data in HR10

Human Resources is a key area for Maria who is committed to developing

people and fostering leadership opportunities while sharing talent across

the organization. Maria has a Bachelor’s degree in Political Science and

International Affairs from the University of Colorado-Boulder.

Dr. Max Blumberg

Max is a Research Fellow at Goldsmiths, University of London and founder

of the Blumberg Partnership, a group of corporate psychologists who

develop human capital analytics techniques by linking HR and business

strategies. Some of their clients include the BBC, Rentokil Initial, Barclays

Bank, and Friends Provident. In his academic capacity, Max is responsible

for developing the CIPD’s Human Capital Analytics training programmes.

Max is also a regular contributor to the media, and prior to the Blumberg

Partnership, he worked as a management consultant at Accenture and

founded a technology start-up, before successfully exiting in order to

pursue his PhD.

Dr. Anthony Hesketh

Anthony is the Senior Lecturer/Associate Professor at Lancaster

University Management School where he focuses on the impact of human

capital and strategy on organizational performance. He has written a

number of books about talent and leadership and is the recipient of

numerous prizes for his academic work, including the US Academy of

Management. More recently he contributed to the Hutton Review of Fair

Pay and last year was appointed as an advisor to the Deloitte Analytics

Institute. Anthony is currently leading the Valuing Your Talent research

project for the CIPD, CIMA and UK government, exploring the financial

capitalisation of human resources — so HCM.

Matt Stripe

Matt is the Group Human Resources Director for Nestlé UK & Ireland, and

started his career in the defence industry, designing manufacturing

facilities for missile systems. He then moved to Human Resources and

progressed in a number of roles before joining BAE Systems as Head

of Human Resources and Employee Relations for the Hawk Aircraft.

During that time Matt spent two years working with Dave Ulrich, Wayne

Brockbank and CK Prahalad from the University of Michigan on the future

role of Human Resources.

In 2003 he joined Nestlé and was promoted three years later to the role of

Director of Human Resources for the Nestlé Rowntree Division.

Big Data in HR 11

Matt spent two years in Switzerland as Assistant Vice President Human

Resources before returning to the UK in August 2010 to take up the role of

Group HRD Nestlé UK & Ireland. Matt has a Masters in organisational

design and development and is the Chair of the Centre for Performance

Led HR at Lancaster University.

Trevor Townsend

Trevor is ADP’s Product Director. Having worked in HR software

development for many years, both at ADP and elsewhere, Trevor is

regularly sought and widely quoted in the media on self -service,

outsourcing, flexible working and other issues facing HR and payroll

professionals.

Watch the HR Question Time event

This debate was filmed before a live studio audience at the Hospital Club,

London, on April 2nd 2014 and is available to view at http://bit.ly/bigdataADP

References1 Price Waterhouse Coopers, Capitalizing on the Promise of Big Data, 2013

2 CEB 2013 Global Assessment Trends Report. Alpharetta: CEB.

http://bit.ly/GATR2013

3 HRReview (October 25th, 2013). 78% of HR managers do not feel they are

very effective at workforce analytics. Retrieved March 2, 2014, from

HRReview: http://bit.ly/HRRAnalytics

4 HRReview (October, 2013). Global survey of 1,300 HR, finance and IT

managers, commissioned by SuccessFactors and conducted by the

international research firm, Vanson Bourne.

http://bit.ly/bigdataADP

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