According to a report from Mercer, 98 percent of organizations have started down the road toward digital transformation of HR — and not a moment too soon.

From the platforms they use to get work done to those they use to engage with their employers, technology pervades the life of the modern worker. For organizations, the proliferation of workplace tech means more access to more employee data than ever before. This data has the potential to open doors for HR practitioners, enabling them to closely track key HR metrics and costs and create environments that really meet the needs of their people.

However, before that happens, HR teams need to collect the right data — and cultivate the right data skills.

Becoming a Strategic Partner

As business leaders have come to prioritize people as their greatest assets, they’ve looked to their HR teams to help them unlock the workforce’s full potential. To meet this need, HR teams have had to become more strategic. Around the world, HR teams are now expected to report on their operations using data-driven insights, following the lead of key departments like marketing and finance.

To its credit, the HR function has made decisive steps toward becoming more strategic over the last few years, and there are indications this evolution is accelerating. In a 2018 survey from Thomsons Online Benefits, “attracting and retaining talent” was by far the most pressing goal for HR leaders, prioritized by 82 percent of respondents. When asked the same question for this year’s “Innovation Generation: The Big HR Tech Disconnect” report, however, HR leaders prioritized “attracting and retaining talent” equally with “enhancing employee engagement.” This change in priorities is indicative of HR’s new mandate to add strategic value by keeping employees happy, committed, and productive.

As part of its more strategic focus, HR is paying more attention to employee well-being. While research linking improved well-being with improved productivity has been around for many years, the conversation about this vital link has become impossible to ignore in recent times. According to the World Health Organization, depression and anxiety cost the global economy $1 trillion dollars per year in lost productivity, indicating that failure to address well-being at an organizational level can have significant financial implications. Employee well-being, then, represents a significant opportunity for HR to support strategic business success.

However, despite the evidence for the relationship between well-being and the bottom line, HR departments must often prove to the C-suite that this is an area worth investing in. For HR to make its case, it needs convincing data insights.

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Shifting Focus From Initial Investment to Achieving Insight

As HR teams have raced to build infrastructures that can both deliver a great employee experience and generate data insights to feed back to company leaders, we’ve seen significant investments in HR technology. HR is shaking off its long-held image as a conservative department when it comes to tech adoption, and just 7 percent of global HR leaders now classify themselves as “conservative” in this area, according to the “Innovation Generation” report. Meanwhile, almost two-thirds of HR leaders classify themselves as “innovators” or “early adopters.”

However, the report also suggests that HR professionals are still struggling to generate the people data insights needed to support and influence HR and organizational strategy. A concerning 48 percent of employers do not use people analytics to report on benefits take-up, radically diminishing their ability to accurately gauge return on benefits investment. Data literacy within teams is cited as the primary barrier preventing organizations from using employee data to report on business operations. The need to address this shortcoming will only become more urgent as HR teams forge ahead with their ambitious plans for technology adoption.

According to the Thomsons report, only 39 percent of companies around the world currently collect data generated from building sensors, such as time spent at desk or employee footfalls. By 2022, 83 percent plan to do so. Similarly, only 33 percent of global employers collect data from wearables, but this is set to soar to 81 percent within the next three years. But simply collecting data is not enough: HR teams need to have the people analytics skills necessary to derive meaningful insights from these additional data points.

Building People Analytics Skill Sets Internally

Against the backdrop of global tech talent shortages, hiring talent with people analytics skills may not be a feasible solution to HR’s data insights problems. However, that doesn’t mean the situation is hopeless. Rather, HR departments should recognize the versatility of their teams and upskill existing employees to build people analytics skills internally. There may be a bit of a learning curve, but this also represents an incredibly positive move toward realizing the full potential of HR.

In many ways, what’s happening in HR mirrors what’s happening in departments throughout the organization. Digital transformation is driving the demand for skilled employees with the creativity and the technical know-how to apply digital technologies effectively. HR is headed in the same direction, but its arrival is perhaps more pressing. Seventy-one percent of companies believe people analytics is an urgent priority, and HR departments need to be at the frontier of technology adoption if organizations are to get the most from their greatest assets: their people.

Matthew Jackson is vice president of client solutions at Thomsons Online Benefits.

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