The Data Dilemma: Navigating Challenges to Becoming a Data-Driven HR Function

By Linda Brenner | June 19, 2023

The Challenge of Obtaining Data:

One of the primary challenges HR teams encounter is the collection and management of accurate and reliable data. Unlike other departments that have well-established systems and processes for data collection, HR often faces a complex web of fragmented systems, outdated technologies, and manual processes. As a result, obtaining comprehensive and up-to-date data becomes a time-consuming, often manual and cumbersome task. HR teams must navigate multiple data sources, such as recruitment and CRM databases, HR and payroll systems, performance evaluations, contractor databases, training programs, etc., to create a holistic view of the workforce.

Why Data is Difficult for HR Teams:

Several factors contribute to the difficulties HR teams face in obtaining and managing data effectively:

Lack of Defined and Rigorous Processes: HR processes (such as hiring, performance management, engagement, etc.) often adapt to the preferences of the users (typically people leaders but also other stakeholders such as senior leaders, recruiters, etc.) in an attempt to build support for the initiatives. This creates inconsistent activities underlying HR processes, and makes the use of technology and data entry difficult if not impossible.
Siloed Systems and Data Fragmentation: HR data is typically spread across various systems and platforms, such as applicant tracking systems, payroll systems, learning management systems, and performance management tools. Often, other types of "talent" sits entirely outside of these systems - such as contractors and temps. Integration between these systems is often limited, leading to fragmented and inconsistent data.
Data Privacy and Security Concerns: HR deals with sensitive employee information, such as personal details, performance evaluations, and salary data. Ensuring compliance with privacy regulations while managing and analyzing this data adds another layer of complexity.
Lack of Data Literacy: HR professionals are often selected for reasons other than analysis or business acumen. In turn, they often lack the necessary skills or resources to analyze and interpret data effectively. Without a data-driven culture or the ability to understand and draw insights from data, the true potential of data-driven HR remains untapped.

The Conflict between "Customer-Focused" and Data-Driven Approaches:

HR teams often strive to be customer-focused, supporting people leaders through consultative and collaborative approaches. While this is important for building relationships and understanding individual needs, it can conflict with the objective of being data-driven. HR professionals may find themselves torn between relying on subjective opinions and experiences versus process rigor, disciplined use of technology, and the leveraging of data to make evidence-based decisions.

To bridge this conflict, HR teams should strive for a balanced approach. By promoting process discipline and subsequently, the consistent and effective use of technology and data input guidelines, data-driven insights will be available to lend HR to truly consultative roles. Only then can HR professionals provide people leaders with objective information and recommendations. This will foster a culture of fact-based decision-making while maintaining a customer-focused approach.

The Struggle to Analyze Data and Drive Outcomes:

Obtaining data is only the first step; the true value lies in analyzing the data to extract meaningful insights that drive outcomes supporting critical aspects of business operations. However, many HR teams struggle to go beyond presenting data and metrics and fail to unlock the potential for strategic workforce planning.

In order to make this happen, HR teams must avoid simply presenting data without describing what it means and, more importantly, suggesting what actions should be taken in order to improve results. HR teams must therefore invest in data analytics capabilities such data analysis training, techniques and tools. Additionally, collaborating with peers in finance, process improvement, data science or analytics can help extract deeper insights from HR data and translate them into actionable strategies.

What It All Means:

HR has the potential to revolutionize the way talent activities and investments drive data-based insights that enhance business outcomes. However, several challenges hinder the effective utilization of data within HR teams. Overcoming these challenges requires a holistic approach that addresses data collection, systems integration, privacy concerns, and data literacy.

By balancing a customer-focused approach with data-driven insights, HR teams can unlock the true potential of data in shaping strategic workforce planning and decision-making. Overcoming the challenges of data fragmentation, privacy concerns, and the conflict between subjective opinions and data-driven insights is crucial for HR teams to drive outcomes that support the most critical aspects of business operations.

To embrace a data-driven HR culture, organizations must invest in modern HR technology infrastructure that integrates and streamlines data sources. Additionally, providing ongoing training and development opportunities for HR professionals to enhance their data literacy skills will empower them to effectively analyze and interpret data, ultimately driving more impactful HR strategies and initiatives.

As we move toward the half century, it is imperative for CHROs to recognize the significance (and necessity) of data-driven HR and its role in driving organizational success. By harnessing the power of data and analytics, HR teams can make informed decisions, optimize talent management practices, enhance employee engagement, and drive overall performance. Embracing data-driven HR not only leads to better workforce outcomes but also strengthens HR's position as a strategic partner within the organization.

While the challenges of obtaining and analyzing data in HR may be significant, they can be overcome with a strategic focus on data integration, privacy, and skills development. By embracing data-driven practices, HR teams can elevate their impact, drive more effective decision-making, and position their organizations for success in an increasingly competitive business landscape.