Your HR data is extremely valuable—how to do more with it

Your HR data is extremely valuable—how to do more with it

Too often in HR, we think our data has less value than other business data. In our minds, it isn’t clean enough, broad enough or it’s simply the wrong kind of data. The truth is, data isn’t good or bad—it is just data. Yes, it may need a clean-up, but that doesn’t happen unless the data is visible and issues can be identified. It might need more context, but we’ll never figure that out if it isn’t being discussed. Business leaders may need something else, but we won’t know what that is if we don’t bring what we have to the table.

Data serves as the best tool we have to prepare our organization for what lies ahead. The new year is here, and uncertainty and continuous change are now chronic challenges for HR leaders around the world. One of the benefits of Sapient Insights Group’s 25 years of past and current data is that we can face tomorrow with a few lessons from the past and, more importantly, a realistic view of what tomorrow may hold. Because regardless of economic conditions or what the markets are currently doing, people data is the key to predicting tomorrow’s possibilities.

Caution over cost-cutting
About 15 years ago, we faced one of the greatest global financial crises in a generation and, in 2009, when we conducted our Annual HR Systems Survey, most organizations were reducing HR technology spending altogether. If investments were increasing, the focus was on reducing the overall cost of delivering employee services, such as through automation and centralized support tools. (On average, large multi-national organizations can count on a 20%-25% reduction in HR administration staff costs when they move to self-service applications augmented with help desk technology.) In addition, the HR function was asked to execute across-the-board workforce cuts upwards of 20%-30%, often without input on skills or the impact on future growth expectations.

It took us four years to see an increase in overall HR technology spending following that downturn, and even longer to rebuild the skilled workforce and our capability for innovation and growth. So, in 2023, focusing solely on cost-cutting initiatives would be extremely short-sighted—and HR has the data to prove it. With the knowledge of how long it took us to bounce back from the last major round of workforce reductions—and insights into the persistent talent shortages we continue to face today—we should be using the data from the last few years to inform cautious workforce changes in 2023.

Consider the amount of data captured from the challenges we’ve faced in the last two years alone:

• How much did the lack of a skilled workforce cost us in productivity or sales in 2022?
• What was the actual cost of shutting down a retail location or manufacturing line for a limited time due to the lack of available workforces?
• What is the actual labor cost of developing a new employee from entry-level to fully productive in our fastest-growing business unit?
• If demand drops today, how long does it take to bring an entire division back into full production if demand increases rapidly?
• What are our greatest competitive risks? And which skill sets are tied to innovations that could mitigate those risks?
There is no doubt these have been difficult times, but the information gathered during the hardships is invaluable in helping organizations think about long-term outcomes. The lack of talent is no longer a theoretical business model; it’s a reality we all lived and—like any personal or professional challenge—this kind of insight can help us avoid the trap of cost-cutting our organizations into a corner where recovery is not possible.

Forward-thinking data
Another major mistake we often see HR leaders make when it comes to HR data is making assumptions about which HR data our business leaders actually want. Sapient Insight Group’s 2022-2023 Annual HR Systems Survey White Paper, 25th Edition, published in December, found that the only four HR metrics 40% or more of respondents shared at least monthly with executive leadership are:

• Employee turnover rates (voluntary or involuntary)
• Recruiting metrics on open requisitions
• Compensation data in aggregate and by levels
• Employee demographics
Most of these metrics are required at some level by regulatory bodies for public companies—and are looking backwards versus forwards. If this is the primary HR data our leaders are seeing regularly, is it any wonder that, when things get difficult, the first things executives focus on are hiring freezes and reducing workforce numbers?

It’s easy to start 2023 off by prioritizing all of the interesting best practices or technology we want, but a first stop on our planning journey should be to discuss data with our business leaders. Heading into business-led planning sessions armed with data we know our business leaders requested is not only empowering but takes a critical first step towards building a strategic partnership.

What is the business of HR?
It has never been more important for HR functions to balance the needs of both organizations and employees. The business of HR is always about achieving outcomes, but how we achieve those outcomes makes all the difference.

With the latest HR and workforce technology, organizations are evolving from focusing on HR efficiencies and gathering employee data to recognizing employees as individuals. Furthermore, HR leaders are now able to flex their strategic skills and change the perception of HR from a cost center to a value creator. Value now comes in the form of definable outcomes necessary to achieve organizational goals. An outcome-focused approach to HR shifts the focus from reaction, policy and processes to a discernable vision of the future.

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Outcomes are definable, measurable, expectations of what the customer, employee and stakeholders achieve from the work an organization performs. Exactly how an organization achieves those outcomes is the business of HR—and to achieve that goal, we must start by understanding the value of our own HR data.

Connecting business and HR data
Many HR professionals struggle with where to make that magic link between HR data and business outcomes, and in a perfect world, that magic should reside in our performance management processes; however, this requires a process that actually assesses employee productivity, operational goals, aligned development and real business outcomes. Even with all the emphasis we’ve placed on performance management processes over the last few years, it is often still a stand-in for an annual conversation on employee compensation discussions.

Sapient Insights Group’s 2022-2023 Annual HR Systems Survey of over 2,500 organizations found that over half of organizations feel they have an effective performance management process, but only 11% (an increase from 7% in 2021) feel they have a transformative performance management process. This is defined as one that stands above others, is unique, contributes competitive advantage and creates an employer of choice for an organization.

Does a performance management process really need to be unique and go beyond simply being effective? Our data found that organizations with a transformative process were 10% more likely to achieve higher levels of profitability and competitive advantage in 2022 than an organization with simply an effective process. And they were 30% more likely to achieve those heights than an organization with no performance management process at all.

The challenge many organizations have with performance management data is that it isn’t uniquely connected to their business language, metrics and real-time productivity. Older, more traditional software solutions were designed to focus on annual employee performance goals that cascaded from enterprise goals, assess employee progress towards those goals, and document manager or peer reviews of the circumstances that had an impact on those goas. But this effort quickly became separate from tracking our actual business metrics, and employees rarely saw daily connections.

The primary audiences for these applications are managers and employees. Often, once or twice a year, HR will conduct a performance review that rolls individual performance data into an enterprise view for senior leadership. Annual performance management data is most often used in calculating employee raises, bonuses and maybe some discussions about development and career progression. These applications are rarely designed to meet the needs of operations or executives in assessing the overall health and stability of an organization’s business on a weekly or monthly basis, nor the risks that might be over the horizon.

Newer applications focus on providing continuous feedback and engagement with employees while allowing managers to conduct project assessments, peer reviews and customer reviews—but still culminating in annual compensation reviews and executive-level rollups.

We are also seeing a growing trend toward environmental data being used to assess employee performance: video monitoring, workforce productivity tools (Microsoft, Google), wearables, activity trackers and environmental sensors. Because the use of this data is very new, and currently these applications tend to focus on suggested performance improvements, it is expected that this area of performance management will grow and require new levels of oversight and ethics.

Transformative performance management processes also have a focus on the output of those processes, and whether they can inform future workloads, critical work groups, talent sharing or business investments. HR has a responsibility to connect the performance management dots for their teams and their business leaders.

Organizations with transformational performance management processes are:

• 13% more likely to have an employee data strategy
• Twice as likely to use predictive analytics, machine learning and robotic process automation tools in their HR processes
• Twice as likely to also feel they have transformative approaches in supporting employee physical, mental and financial wellness needs
There is more research needed in this area to assess the ongoing connection between transformative performance management processes and company and employee outcomes, but HR functions that focus on providing consistent and contextualized data for business leaders are more likely to provide a full picture of employee workloads, necessary skills and leadership gaps. This, in turn, is likely to produce more focus on removing roadblocks to employee performance.

According to a 2022 Gallup poll, over 50% of the U.S. workforce is disengaged—doing the minimum required and psychologically detached from their jobs. If we want to perpetuate the stereotypes, we’d say they are “quiet quitting,” but if we look closer at the Gallup study, we find that engagement levels are tightly related to clear expectations, opportunities to learn and grow, feeling cared about and a connection to the organization’s mission or purpose. Our performance management processes might seem like just another HR initiative, but the process and data they produce are critical to connecting employee efforts to business outcomes.

Focus on fluency
Over 40% of organizations in Sapient Insights’ annual survey this year stated that the driving force for increasing spending on HR technology in 2023 was to improve HR data quality, and we applaud the intent. But a system alone won’t fix everything. HR will never have the perfect data environment—no function does—but nothing is improved without constant focus and attention.

This is an area where sharing what you have, even if it is embarrassingly light or riddled with errors, is a critical first step in building a trusted relationship with your business partners. Data fluency, much like being fluent in a language, enables people to discuss data with a shared language, and it is a skill every HR professional should be developing. Know your business and know your data. provide guidance on the variances and assumptions business leaders should build into their views of the data just as they do on their other business data sets. Come prepared with a roadmap on how the data quality can be improved, but never apologize for the data you are bringing to the table. At any level, it is valuable business data that leaders need to make critical business decisions.

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