Learn about McKesson’s data-driven approach that informs and drives HR strategy.
By Jorge Figueredo
Organizations today are leveraging data analytics in several different ways, from determining what product developments to prioritize to deciding which customers to target. But fewer companies employ a data-driven strategy throughout their entire organization. Evidence-based decision-making is equally as important for internally-focused departments -like HR -as it is for externally-focused departments.
The ability for an HR organization to make well-informed decisions is becoming a competitive differentiator for the company’s bottom line and also in today’s tight talent market. Through smart analytics, HR departments can better understand the investment their company is making in its people and better align their people initiatives with business objectives.
During McKesson’s journey to create an analytics-centric team and HR strategy, the organization is learning important lessons and already beginning to realize the value of a data-driven approach. But remember: It’s not just about having the data. Organizations need a team that understands analytics to help decipher the story the data is telling. Armed with this information, HR leaders can share insights with business leaders and team members.
Determining the Right Data
One of the primary goals of improved HR analytics is the ability to help leaders make faster, more informed people decisions. To do this, organizations need the right data and a strong governance model for data management. The old adage of “garbage in is garbage out” is true. So in addition to collecting data, McKesson assesses it to ensure the analyzed data is clean and trusted.
What type of data should be collected? To determine this, McKesson went through a series of questions:
• Is McKesson recruiting the right talent?
• Is McKesson offering the right mix of benefits, training, and development to retain talent?
• Do leadership development programs improve performance?
• Does leadership training lead to a stronger bench of promotable talent?
In the past, anecdotal evidence was relied on to answer those questions. Now, it is looked at from a business perspective to understand the investment in people and the return on that investment. Then the organization can target areas for improvement and find ways to maximize investment.
Understanding Data and Analytics
Anecdotes are ready-made stories that are easy to share with business leaders. With data, there are only numbers, often in bits and pieces. But those numbers and pieces may be interesting and compelling. HR needs to understand what they mean.
Moving from data collection to analytics and storytelling requires skills that aren’t necessarily akin to HR. Although the end goal was for everyone in HR to have some working knowledge of data analytics, McKesson needed to hire data scientists to analyze the information and make it actionable. For this position, candidates needed a strong history of data analysis in the fields of engineering and finance and careers in data-driven industries rather than the people-first world of HR. These types of candidates also needed significant experience working with numbers and have training in seeing patterns in data. This would allow them to develop insights based on those patterns. McKesson looked for candidates with consultative business acumen and solid communication skills in order to easily relay the insights.
Data as a Storyteller
To fully round out the approach, an easy-to-use workforce analytics tool was implemented. The HR team leverages the technology to create dashboards and presentations. Bringing raw data to the executive table doesn’t make an impact; analyzed insights complete the story. Pairing an analytics model and tool with trainings that include storytelling with data enables HR to bring tables and charts to life.
Part of the process requires looking at separate pieces of data -generation, role, and turnover rate as an example -and pulling it all together to determine if there’s a retention problem with a certain type of role and for a particular generation. If the data says yes, then HR can dig a little deeper to see if there are similar trends for other generations. There’s also the opportunity to look into additional data to see if there are different things happening that may affect turnover rate (in this case). Then HR has a full picture and then can communicate what is happening and build an action plan to address it.
Take, for example, diversity and inclusion (D&I). There has been significant progress in large part thanks to the ability to understand data. McKesson holds itself accountable to several D&I goals; with improved data analytics, the organization is now able to see trends and triggers and better partner with leaders to ensure the workforce represents surrounding communities. The ability to see data in real-time and early allows McKesson to take action faster and in a way that couldn’t be done before.
As most CEOs will happily admit, employees are an organization’s greatest asset. Without a strong foundation of people, successful companies cannot maintain their success and competitive edge. Hiring an employee is an investment, and HR needs to ensure that each hire is immediately valuable to the company, and will continue to be valuable two years from now. That means that HR departments need to be using the same cutting-edge methods and tools that other areas of the business are utilizing, including data analysis, to make better-informed hiring and retention decisions.
Analytics can, at first, seem overwhelming to traditional HR professionals. Remember that there are already people out there who are specializing in this field, so hiring them and applying their analytics insight to assess, inform, and drive HR strategy is a solid starting point. Finally, always keep the end goal in mind: using the insights gained to influence executive decisions regarding people. Translate the data into business-aligned objectives so that decision-makers can easily understand how the HR recommendations will pay dividends. In the end, the entire organization will benefit from a data-driven HR approach.
Jorge Figueredo is executive vice president and CHRO of McKesson.