Wharton@Work

September 2022 | Leadership

HR as Strategic Partner: Data Literacy Is Key

Managing talent has become one of the greatest challenges facing organizations today. The so-called “turnover tsunami” isn’t just creating more work for human resources — one Wharton study showed in addition to acquisition costs and wage hikes, high resignation rates affect product quality and customer satisfaction. So-called answers (Offer them remote work! Stop micro-managing them! Bring them back to the office! Hold more team-bonding events!) are everywhere, but the number of solutions seems matched only by their ineffectiveness.

Wharton professor Matthew Bidwell, a human resource management expert, says instead that the answers may be much closer than you expected: hiding in data you are already collecting. “Analytics can help you move beyond anecdotes or simple conclusions about the last few people who left,” he explains. “We are facing a serious challenge, and data literacy has become a core skill that HR needs to meet it.”

The Analytics Imperative

The need for HR analytics is being acknowledged by businesses large and small, across industries. In a recent McKinsey survey focused on data-driven culture, 90 percent of respondents said their CHROs have acknowledged people analytics is a core component of HR strategy — but only 42 percent said their companies have the necessary capabilities.

The good news, says Bidwell, co-academic director of People Analytics: HR Transformation Through Data, is that bridging the divide isn’t as onerous as it sounds. “Improving data literacy in HR can feel complicated and overwhelming in ways that it isn’t necessarily. Some analytics teams use language that can put others off. And while the sky is the limit in terms of sophisticated tools and techniques, some of the greatest value can come from reasonably simple analytics.”

Taught by two of the directors of Wharton People Analytics, where academic research is translated into practical insights, the program offers a cutting-edge, deep dive into the interaction of HR management and data analytics. As Bidwell notes, “The current situation has forced everyone to raise their game. If you are not making the best use of your data to figure out who your best talent is, understand why people are leaving, and who is at the greatest risk of quitting, you are leaving money on the table.”

From Intuition to Data-Based Decisions

The pandemic might have put HR in the spotlight, but the continued tight labor market and massive uncertainty are keeping it there. Bidwell explains, “It’s a great time for the function, but the bar for individuals has been raised dramatically. The spotlight that brings attention also shines on its deficiencies. Where in the past HR might have carried some folks who were pleasant or good order takers or good caretakers, it now requires being numerate, understanding the value tree, and knowing how to use analytics.”

“What we are seeing,” he continues, “is it is easier to find a job than ever. But who is taking that opportunity to leave, and why, varies from one organization to another. That means the levers you should pull to address resignations should be different. Analytics allows you to stop making decisions based on intuition, anecdotes, and simple conclusions about the last few people who left. It helps you to understand the problem at a much deeper level, and discover where you need to focus your efforts.”

Avoiding Analytics Pitfalls

The need for analytics goes hand-in-hand with knowledge of appropriate uses and misuses. Stories highlighted in a recent New York Times article show how easy it is to get it wrong. The use of AI in hiring, for example, can perpetuate bias and is being regulated in some states. And productivity tracking software can provide insights while also alienating and demoralizing workers, interpreted as a Big Brother-style lack of trust. “Most people do really well remotely,” says Bidwell. “But there will always be pockets of people whose productivity is low or falls off when they’re feeling they are out of sight and out of mind. Expecting that the solution is to monitor them, though, is a serious problem. It is corrosive, and causes more issues than it solves.”

The People Analytics program explores the good and the bad, both in terms of collection methods and applications. Participants learn methods for avoiding decision biases, including employing machine-based algorithms, and understand how better to create a more diverse workforce. They also learn from best-practice approaches from companies that are at the forefront of HR analytics and from fellow participants in a post-program webinar. This final session offers an opportunity to see how key insights and tools are implemented in real time.

Bidwell says the need for the program is critical. “It’s the right time to bring your best game, demonstrating not only that you are critical to the organization but also that you are a sophisticated partner on the cutting edge of the discipline. To meet that challenge, you need the tools. The dirty little secret is that the technology doesn’t have to be as complicated as you might think. There is tremendous value in really simple tools and analytics that most organizations are not doing.”