How To Develop A HR Data Strategy: Here Are 6 Simple Steps
2 July 2021
Data-driven HR is an exciting, fast-developing field that can transform every aspect of human resources. But, in order to get the most out of data, it’s vital every HR team maps out a clear data strategy that links to wider operational objectives and demonstrates how HR will contribute to those objectives.
Why every HR team needs a data strategy
Data-driven HR isn’t about capturing data on everything in the organisation that lives, breathes and moves. It’s about using data in the smartest possible ways. It’s about using the insights that you glean from data to continually improve decisions, better understand your employees, optimise operations, and add value to the company.
To pull this off, you need to be very clear about what it is you want to achieve and what data you need to reach those goals. Counterintuitively, it’s not about gathering tons of data. In fact, you should aim to collect, store and analyse the smallest amount of data possible to achieve your goals. Keeping your data as small as possible means you’re maintaining a tight focus on where you want to go and what data will help you get there.
Besides, from a people perspective, it’s never a good idea to start collecting huge amounts of data that you don’t really need – and this is especially true with a lot of HR data, because it’s so personal in nature. Collecting people-related data with no clear business reason or benefit can lead to serious morale problems. No one wants to feel like Big Brother is watching them!
In this way, creating a robust HR data strategy helps you develop and maintain a laser-like focus on what data is best for you.
Linking your HR objectives to wider organisational objectives
The best kind of HR data strategy is directly linked to the organisation’s wider objectives. In effect, it should cascade down from those corporate objectives to create HR-specific goals that will help fulfil those corporate aims. Therefore, a good place to start isn’t with HR at all, but the company-wide strategic plan.
Only once you understand the company’s strategic priorities can you begin to create your own HR objectives that link to those strategic priorities. Therefore, your HR data strategy is about identifying what you need to achieve in order to contribute to the company’s success.
I cannot stress enough that you must keep this objectives phase simple. You don’t want to end up with a 100-point list, so focus only on core objectives. You need to be crystal clear on what exactly you need to achieve and, in turn, what areas or activities you need to focus on to achieve those aims. This is the smartest way of delivering value through data.
Creating your data strategy is about asking the right questions
Having identified your objectives, you can begin to translate those objectives into a data strategy. Any HR data strategy can be easily broken down into six simple steps or questions.
Answer all six questions in the order set out below, rather than skipping over various sections:
- What questions do we need to answer?
A common data strategy error is to start with the data itself. But it’s actually far better to start by returning to your strategic objectives. After all, why bother collecting data that won’t help you achieve your goals?
So, start by pinning down the big unanswered questions you need to answer if you’re going to deliver your stated objectives. Defining these questions helps you identify exactly what it is you need to know. Again, make sure these questions are strategically important by checking that they link to the company’s priorities.
- What data will help us answer those questions?
Look at each question you identified in step 1 and then think about what data you need to answer those questions. Much of that data will come from within the company itself, but you may also need to partner with external data providers.
Establish what data you already have access to, and what you don’t yet have access to. For the data you don’t have access to, do you need to partner with an external provider or can you set up new data collection methods to gather the data internally?
- How will we analyse that data?
Having pinned down your information needs and the data you require, next you need to look at your analytics requirements. In other words, how will you analyse that data and turn it into valuable insights that help you answer your questions and achieve your goals?
- How will we report and present insights from the data?
A vital part of data-driven HR is making sure key insights are delivered to the right people in the right way at the right time, so that the right actions can be taken. Options for reporting and presenting insights vary from fancy dashboards with real-time access to data through to simple reports with key insights presented as visuals.
At this stage, you need to define who the audience is for your data and work out how best to get them the information they need. The HR team itself may be the largest audience, but no doubt you’ll also need to present insights to others elsewhere in the organisation. It’s important you consider this now because your method(s) for presenting data may have critical implications for your data infrastructure requirements. Which brings me to…
- What are the infrastructure implications?
Having defined what data is needed, how it will be turned into value, and how it will be communicated, the logical next step is working out the infrastructure implications of these decisions. Essentially this comes down to defining the software and hardware that will enable you to capture, store, analyse and communicate insights from the data you have identified.
- What action needs to be taken?
Having answered the five questions above, you’re now ready to define an action plan that turns your HR data strategy into reality. Like any action plan, this will include key milestones, actions, and owners of those actions. As part of this step, you’ll also need to identify training and development needs to help you put this plan into action, and pinpoint where you might need external, expert help (perhaps from a data consultant).
Having a robust strategy is absolutely essential if you’re going to use data successfully. As businesses continue to create unprecedented volumes of data, having a clear strategy will become more important than ever for the HR teams of the future.
Read more about how to create and implement a successful HR data strategy in my book Data-Driven HR. It’s packed with real-life examples and practical ways HR teams can deliver maximum value in our increasingly data-driven world.
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