Evolution of HR analytics: Perspectives from Singapore, Hong Kong and Malaysia

29 September 2015
Published: September 2015
 
This is the first CIPD survey exploring HR analytics in Singapore, Hong Kong and Malaysia. The growth of HR capability in general is now calling out for greater insights into the people aspects of organisations. This is where people measurement, or HR analytics, may be able to add significant value.
 
To further understand how HR professionals in Singapore, Hong Kong and Malaysia are developing and applying HR analytics, the CIPD conducted interviews with HR professionals from nine organisations across a broad selection of sectors. We complemented this in-depth analysis with data from an online survey.
 
The case study organisations include:
  • HKIHRM, Hong Kong
  • KPMG, Malaysia
  • Maybank, Malaysia
  • Nestlé, Malaysia
  • AXA Insurance, Hong Kong
  • Shell, Singapore
  • Experian, Singapore
  • Richemont Asia Pacific, Hong Kong
  • Knorr Bremse, Hong Kong
  • Johnson & Johnson, Singapore.
Following the global economic downturn of 2008, Asia has consistently been known as the global economic powerhouse, driving productivity and growth, while other economies floundered and, in some cases, collapsed. Across the region variations in GDP are considerable, highlighting the diversity of economic development, competitiveness and quality of life for the populations. Internationalisation of economies across all regions within this study illustrate how much market potential there is for organisations in the region, where exports and trade grew considerably between 2000 and 2012.1 Organisations within the region are growing at such a rapid pace that there is now a real need for people management practices which drive sustainable long-term performance, while maintaining ethical and professional people practice. The growth of HR capability in general is now calling out for greater insights into the people aspects of organisations. This is where people measurement, or HR analytics, may be able to add significant value.
 
Utilising people insights can be a powerful way through which HR professionals can drive productivity and performance. At both the strategic and operational level, HR analytics is believed to be a transformative capability when implemented successfully. Multinational organisations have been the first to embrace the value of HR analytics, given the often significant resource commitment required to set up the activity. However, the competitive and highly entrepreneurial Asian market of medium-sized organisations has been slower to take up and invest in analytics processes. Nevertheless, this market does pose some interesting possibilities for the implementation of strategic HR analytics activities. As with other global markets, the application of HR analytics is fragmented, not just within sectors, but within organisations too. There is, then, significant opportunity for organisations in the region to utilise people data and understand more deeply how people in their organisations are helping to drive performance.
 
To further understand how HR professionals in the region are developing and applying HR analytics, the CIPD conducted interviews with HR professionals from nine organisations across a broad selection of sectors. We complemented this in-depth analysis with data from an online survey.

Key findings

We found through our research that while analytics has the potential to be transformative, HR professionals are finding it difficult to implement activity at the strategic and operational levels. Constraints such as investment, leadership understanding and overall HR maturity are holding back development at the strategic level, while at the operational level technology and the analytics skills gap are holding back development of the function.
- embedding people analytics within the organisation
  • Organisations with clear links between analytics in the HR strategy and organisation strategy appear to be leveraging the value of analytics more successfully and appear to be more mature in the application of people insights.
  • Business-focused insights are valuable to HR functions and are adding value to both HR and business functions.
  • Investment by HR leaders into HR analytics is expected to continue to increase over the next 12 months, illustrating growing interest in the capability amongst HR professionals.
- where people data is ‘shining a light’ on real business issues
  • Diverse issues are being investigated using HR analytics techniques, with the main focus of insights being towards the development of evidence to inform strategic decision making.
  • The region is utilising mainly one-dimensional data. Few organisations are using multidimensional data sets and are not able to combine two sets of data to explore specific issues.
  • The majority of data used is in the form of lagging indicators. Few organisations are able to use leading indicators for developing forecast data.
- defining and reporting HR data: from measurement to insight, the journey to insightful measures
  • Standardisation is a significant challenge – HR professionals are unsure whether to develop context-specific measures for their organisation or standard measures for benchmarking purposes.
  • HR professionals across the region are developing HR balanced scorecards to illustrate the strategic value of human capital and HR data, and are communicating insights via scorecard reports and key performance indicators. Organisations in the study believe that scorecards are the most powerful tool for sharing numerous high-level insights with senior business leaders.
- skills, technology and the race for predictive analytics
  • Technology is acting as an enabler for some organisations and a preventative force in others. Different IT systems and programs mean that simple, repeatable analytics is difficult.
  • Individual analytical skills are not readily in the market for HR functions to access. HR professionals believe that local talent is not entering the profession as HR analytics is not widely advertised as a capability within the HR profession.
  • Predictive analytics is beyond the capability of all organisations interviewed in the qualitative sample. Both capability and resource issues (cost and time) are impacting on how HR leaders are developing capability.

Recommendations

Organisations in the region can do a number of things to develop their analytical capability and maximise the value that they create, both for HR and the rest of the business.
HR functions in the region should look to attract new talent into the profession from across a broad selection of functions and backgrounds, including finance, marketing and operations. New graduates to the profession should come from highly numerical or statistical disciplines, such as psychology, sociology or engineering. With new disciplines entering the profession, mentoring and cross-functional relationships should be brokered between HR and business partners, to build new knowledge and develop a strong understanding of HR in new recruits. Additional career routes through HR should be fostered, such as ‘zig-zag’ careers in and out of HR, whereby HR professionals can gain experience and skills working in analytical roles outside of the discipline.
Professionals operating in the region should look to partner within their organisations with creators and users of HR data to develop standard measures and define high-value metrics. Particular attention should be paid to the mix of context-specific and standardised indicators. Measures should be reviewed on a regular basis and updated when necessary. Finally, organisations should look to network and benchmark metrics and establish good practice communities for HR analytics.
HR leaders should look to include HR analytics as a core part of all projects and proposals coming from and including HR, and in particular should focus on landing high-value projects for the rest of the business. Communicating through consistent and robust reports to senior leaders should be viewed as a vital objective of future HR analytics activity, and HR directors in particular should become well versed in explaining the many different types of data and quality outputs that can arise from HR analytics processes.
HR professionals should learn and be able to apply analytical skills at every level in their career. Junior-level professionals should be provided with mentors and senior managers inside and outside of the function to understand HR analytics and the value of HR data to the organisation. HR business partners in particular should develop their understanding of business and people data and look to foster strong relationships between the HR analytics function and business units.
Improvements in culture and performance are both referenced by case studies in our research, and while the majority of organisations believe that they are behind their peers in terms of maturity, all of those interviewed are looking to invest in future capacity and can see real potential in HR analytics as a core part of their function’s future capability. HR professionals that focus on small, discrete but high business-value projects are the ones which are gaining most traction, with investment following the production of robust evidence and insights.
 
As with our other research in the Middle East, organisations continue to focus their attention of engagement and data around cultural aspects of the firm as their main sources of people data. Far less is being measured and reported with regards to other strategic activities in the firm, such as productivity and performance. Capabilities including technology and skills are both areas which are in need of increased investment in organisations. The absence of any resource commitment to people, or IT systems and processes, which are able to do analytics will continue to be a significant barrier to the use of data and improved evidence-based practice by HR managers.
 
This research shows that standardisation is expected to be one of the most important concepts to hit HR analytics, and HR in general, over the coming years. The application of standard measures and context-specific measures is something which HR professionals throughout the study consistently spoke about when considering barriers and opportunities for the profession. Establishing robust standards will enable less sophisticated and resource-rich organisations to invest strategically in analytics activity and will enable organisations with embedded HR analytics activity to benchmark data, which will itself drive up performance and transparency of human capital data. Without the mix of standard measures and context-specific indicators, HR professionals in the region believe that they will be unable to maximise the value generated through HR analytics.
 
What is apparent from this study is that there is significant potential for HR analytics to add value across the region. Medium to large-sized organisations in the study are interested in developing new HR analytics systems which match or lead their Western counterparts. This thirst for high-quality analytics in some organisations is driving up capability where investment is present – however, those HR professionals in organisations unable to invest are finding it difficult to build interest in HR analytics and develop insights for their business stakeholders given the complexity of large organisations and the high resource requirements needed to establish HR analytics processes. HR professionals who are able to secure investment are likely to gain the most from early high-value insights for their businesses, and in a competitive economic environment such as south-east Asia, those organisations able to move first are often the most likely to make considerable gains against the competition.
 
Final thoughts
HR analytics is at the forefront of mind for many HR leaders in the region, but many have acknowledged that there is still a long way to go to realise the full potential of what HR analytics can do for their organisation. We hope this current work and the discussions and debate that can arise from our findings will help drive practice in the area and stimulate thinking. We know that there isn’t one analytics strategy that will suit all organisations, but it’s clear from our research that there are common challenges and we believe cross-organisation learning is a key way of advancing HR capability in this area.
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