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Sunday, October 19, 2014

Is HR Tech Overshooting HR Capabilities?

Human resources management is a hot area for new technology, at least based on the number of new vendor offerings. But why isn’t there greater adoption of among HR practitioners? In this post, I outline three reasons that interest is high but actual adoption is slow, and what business leaders should do about it.

But first, a quick summary about the leading conference on HR technology. 

HR Tech Conference, a Must-Attend Event

At the urging of several associates, I attended my first HR Technology® Conference (HR Tech) earlier this month in Las Vegas. If you are interested at all in HR technology, this annual event belongs on your calendar. Here's why:
  • Thought leadership. Anyone and everyone associated with HR technology  is at this conference--vendors, service providers, and HR professionals. This allows the conference organizers to select the best speakers and hold them to topics of high interest to attendees. Speakers go beyond traditional themes such as HR administration and compliance. Even cloud computing is old news to this crowd, as nearly all the leading HCM solutions these days are delivered as a service. This year, analytics was a hot topic, including predictive analytics, big data, machine learning, and employee sentiment analysis. Social business was another focus, as HR applications have turned out to be an excellent use case for social tools in recruiting, learning, and collaboration. The latest thinking around talent management was also on display.
     
  • Peer networking. HR Tech is an HR vendor expo as well as a conference for HR professionals, so of course there is a large exhibit hall and plenty of sponsor logos plastered everywhere. But end users form a high percentage of the attendees. This creates excellent opportunities for peer networking, more so than I see in most single vendor conferences. At many events, I have to work hard to arrange customer interviews. But at HR Tech, they came to me unsolicited, while queued up for receptions, sitting at meals, or before sessions.

  • Customer stories. Although vendors pay to exhibit, it doesn't buy them speaker slots, unlike many conferences. And, when they do speak, it has to be with a customer, never alone. As a result, many sessions are devoted to case studies, and there are lots of customer panels. This year there were presentations and panel discussions by HR practitioners from a diverse collection of organizations, from traditional companies such as ConAgra, Monsanto, Bristol-Myers Squibb, Unilever, Siemens, Lockheed Martin, and HP, to digital businesses such as Facebook, Google, LinkedIn, and Hootsuite. 
HR is fertile ground for new technologies, from social recruiting to sentiment analysis to wearables. But can HR organizations even begin to consume it all? This is where there is a gap between what is possible  and what is currently realized in practice. 

Workforce Analytics Illustrates the Problem

The adoption rate for workforce analytics is a good example. In one session, Brian Kelly, a former practice leader at Mercer, gave a presentation on strategic workforce planning. It is a hot topic, as it enables organizations to address the critical gaps between the current workforce characteristics and future workforce needs. In some industries, this is a critical process, as future workforce needs are changing with evolving business models and new products and services. High tech and healthcare are two sectors that come to mind. The good news, according to Kelly, is that most organizations already have the raw data needed to do strategic workforce planning, such as basic employee census data, high level job families and critical jobs, reporting hierarchy, rewards data, and employee demographics.

But as Bill Kutik, as the former HR Tech co-chair, points out in his excellent post-conference wrap up,  HR consultants, analysts, and marketers have been saying as far back as 2001 that workforce analytics will be the next big thing. “Certainly interest is very high now in workforce analytics, but still without widespread adoption,” Bill writes. “So I find it ironic (but typical) that vendors are so focused on predicting the future when their customers don’t yet have a firm handle on measuring the past.”

So, we have to ask, if technologies such as workforce analytics are critical to the mission of HR organizations, why is there not greater adoption?

From my consulting work with clients over 20 years, I see three basic problems.
  • HR viewed as a support role. Despite claims that “our people are our strategic advantage,” most companies do not view HR as a strategic function. In practice, it is a support role, focused around the basic day-to-day activities of hiring and on-boarding new employees, paying them, administering their benefits, maintaining accurate records, and keeping the organization in compliance with labor law and myriad other regulations. If the senior HR leader is in the room for strategic planning sessions, it is often as a token gesture, to keep him or her informed of corporate strategy, not as a co-equal partner with functions such as product development, marketing, operations, finance, or sales. In doing strategic planning over the past 15 years I've seen notable exceptions. But too often, HR in many organizations is like the typical IT function—it’s there to support the strategy, not to help formulate it.
     
  • Inadequate staff levels. Second, if HR is viewed as a support function, it is a ripe target for staff reductions. With the thinning of management ranks over the past twenty years, and especially since the 2008 recession, HR professional are spread thin. When there are not enough hours in the day to deliver both the strategic and the tactical, the tactical always win. Failing to think strategically is seldom a career-ending move, but falling out of compliance with labor law can give you a quick escort out the door. 
     
  • Lacking necessary skills. Finally, most HR professionals do not have the quantitative skills to make use of new technologies such as workforce analytics. As Kelly points out, simple tools such as Excel may be sufficient for planning headcount by job function and geography. But more sophisticated analytical tools are needed to correlate projections of workforce skills, attrition rates, pay growth, diversity analytics, and external labor market data. Unfortunately,  most HR professionals lack the skills to make use of these tools. HR has always been a career that is more attractive to liberal arts graduates, such as those majoring in psychology, sociology, and communications, rather than those with science and math degrees where they develop the quantitative analytical skills needed to make use of these tools.
I had a hallway conversion with my colleague Brian Sommer on this point, and Brian has now put his thoughts into a blog post, The Problem is HR, Not HR Technology. He writes, “
HR departments are chock full of great HR transaction folks. Likewise, they have great recruiters, compliance people and more in these groups. However, is there anyone who understands data analysis, external/Big Data, etc.?
Where are the quants in HR? Where are the statistics and math majors? Where are the social scientists who understand human behavior? Seriously, giving powerful analytic tools to many HR folks today (who lack awareness or skills in these technologies and disciplines) is like giving a chainsaw to a 4-year old. If they ever got it running, you’d have a bloody mess on your hands. If you don’t know the difference between causality and correlation, you have no business playing with analytics.
A rebalancing of the talent within HR organizations is needed today. New skills, capabilities and insights are needed to make HR more relevant and able to exploit today’s new HR technologies.
Ironically, then, HR has its own talent management problem.

HR Organizational Readiness Is the Key Need

If an organization’s people are indeed its strategic advantage, then HR technology should have a prominent position in any organization’s IT strategy. But, as we discussed, most HR groups are not ready to adopt the latest HR technologies. Business leaders, therefore, should focus on developing their HR organizations as well as implementing HR technology.

For some organizations, this means changing their view of HR, from a support function to a co-equal role in business strategy. It also means reversing some of the staff cutbacks that were put in place during the last recession. Finally, it means doing something about the skills gap in HR. In many cases this will mean reaching outside of the traditional candidate pool to find new talent with the quantitative skills needed to effectively use emerging solutions for workforce analytics and other new HR technologies.

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by Frank Scavo, 10/19/2014 11:15:00 AM | permalink | e-mail this!

 Reader Comments:

Good dichotomy between HRs transactional support function and the strategic people side.

Perhaps points at a solid opportunity for a software company to build out far easier to use workforce analytics.

Any HR application that I have used, even online SaaS, just makes my face hurt.
 
Thanks, Clive. But I'm wondering if it is really just a matter of making the software easier to use, or if workforce analytics is simply a complex application. I've never been in a position to actually use these applications, I'd need feedback from some HR practitioners on this.
 
Hi Frank,

Vendors sometimes offer more functionality than is actually useful, even when the skill of HR staff is up to the task. And appropriately qualified staff need to be added to the mix given HR teams often run pretty lean (as you point out).

Sophisticated analysis functionality is built for the needs of other departments and is consequently available in other systems such as HCM. This functionality is also designed to dazzle senior executives who are removed from the hands on work, but who have a big say in software selection.

I'll also suggest that this problem is bigger than just the HR department.

Sales and marketing folk often display numerical naivety and ignorance of supply chain dynamics. And forecasting and inventory planning systems are infamous for overly complex solutions that all to often produce disastrous results.

Big data analytics is seeing similar problems arise (Google Flu Trends comes to mind).

Maybe the HR people are smarter than we think...
 
All good points, Matt. I think it points to the reality that adoption of analytics applications in particular must be more than software. HR departments (and others, as you point out) really need a skills upgrade and in many cases an people upgrade.
 
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