12 Reasons why outsourcing HR analytics is good for HR
During the past months, we got a lot of requests to explain how HR teams could outsource predictive HR analytics to speed up the process. Up till now, we weren’t very keen on publishing about this, as it may seem too commercially focused (and we don’t like that at all). But given the fact that so many people keep asking about this topic, we decided to summarize a few things for our readers. Having worked as external analytics experts in the HR domain for several leading enterprises in Europe in the past, we can confirm that in all of our client organisations outsourcing predictive HR analytics has become a core component of their day-to-day HR strategy.
To summarize, there are numerous reasons why companies turn to outsourcing, depending on their vision and purpose. It’s a hotly debated topic of course, with pros and cons, but let’s summarize for you, as reflected by our client companies (it’s a blend of their own opinions!), their top-12 reasons to outsource.
Speed of analysis
Organisations often have a short-term need for quick people analyses to support the decisions they make (e.g. at budgeting time, during assessment processes, re-organisations, etc.), without them wanting to worry much about building internal HR analytics competence. At such moments, the presence of an external expert can provide considerable added value. But speed also often has to do with the ability to develop maximum competitive benefits quickly, which was also a reason to outsource for a number of our clients.
Building analytical capability takes a long time
Quite a lot of our client organisations are working on building up their internal analytical capabilities. However, this takes reasonably long (even excluding the issue of finding the right candidates, see point 7 in this article) and in the meantime they call on external experts for HR analytics pilots in order to make progress, gather important experience, get to know their data better, etc. For all learnings that clients acquire during such pilots, see point #5 in our previous blog post.
The challenge of managing analytical people
Because HR’s analytical expertise is usually limited, it isn’t easy (and sometimes not even possible) for them to guide, follow up, support and develop analytical experts in their work (things which good data scientists will definitely be after). Most HR teams lack this bridging role and this can’t be solved in the short term. This is why some turn to outsourcing.
Testing and trialling
To get good analytical outcomes, data scientists mostly use multiple modelling techniques or approaches. They can do this relatively quickly because of their experience and can test and develop new techniques and methods (from the scientific research domain, for instance) on a continuous basis. Due to (too) short project deadlines, internal HR analysts won’t always get the opportunity to do this, if there is already enough time/budget to keep track of all these evolutions at all.
Software availability for doing HR analytics
HR departments do not have the ability (or budget) to follow up the incredibly fast evolutions on the analytical software market. Almost every day, disruptive start-ups from all over the world create new analytical solutions. This is what outsourced experts are doing for their living: becoming faster, more efficient and more accurate by testing the latest analytical evolutions on the tech market. Organisations who have outsourced definitely benefit from this without any upfront investment.
Experts can explain difficult HR analytics to the business/MT better
We have noticed in many projects of ours that HR suffers from quite a lot of stage fright when it comes to explaining (sometimes admittedly quite complex) analyses to project teams or the management. Because of this lack of experience, we have seen (often excellent) analytical outcomes lose a significant amount of credibility with the management or the business. HR can avoid this by having a proper external analytical expert, one who makes a living doing this, present these outcomes.
Difficulty to attract data science people to HR
The employment market faces a great shortage of data science experts. Many positions remain unfilled for a long time and experts fresh from school get instantly very attractive jobs with great salaries. Alas, because of HR’s deficient analytical track record, HR isn’t really at the top of the job list for these highly sought-after people unfortunately. We have seen several client companies of ours stop their search altogether or change and/or convert to an outsourcing budget.
Complex data integration in case of multiple data sources
Important analytical projects mean extra complexity for HR, because they need multiple data sources to be integrated, and HR isn’t experienced in this. Data integration is just part of the job where experienced data scientists are concerned and it is no obstacle for them at all. So by calling upon this expertise, HR can make fast progress in an area totally alien to them.
Independence from IT (with their long waiting lists and – mostly – lower priority for HR)
HR departments no longer want to be dependent on IT to be able to carry out quick analyses and do the necessary preparatory data integration for them. IT often has long waiting lists and HR definitely doesn’t always feature on top of IT’s critical priority list. This kills off any quick and effective analysis for HR from the start. So HR can avoid the problem by calling on external experts.
Learn from HR analytics experiences in other projects/companies
One great advantage which a number of our clients is seeing, is that they can learn from the experiences we as external experts constantly gather with a very broad spectrum of analytical projects in diverse organisations. Companies like the ability to tap into and leverage a broad knowledge base, having access to a blend of excellent capabilities. Gaining access to resources not available internally, is an important benefit of outsourcing, say several of our clients. By the way, here’s a list of our learnings from 2014.
Building separate HR analytical capability can’t really be justified for a number of smaller organisations. The cost of it would be much too high in comparison with the output. A flexible shell in terms of HR analytics is therefore an ideal solution for these organisations.
Focus on core HR processes
Companies also choose to outsource analytical projects so they can continue focusing on their core HR processes – attracting, developing and retaining – while delegating time-consuming analytical processes to external experts. However, as in any outsourcing set-up, there should still be at least one in-house expert or an HR professional to ensure that the function being outsourced will remain integrated with the rest of the organization.
Guess what you can’t outsource?
You can partner externally on doing predictive analytics, but – like it or not – you will always need a solid understanding of business processes, the ability to work cross-functionally, to have the necessary in-house network to get access to key data sources, to possess the ability to develop key business questions and, last but not least, to manage and own the key analytical outcomes. Outsourcing analytical execution is one thing, but taking internal ownership of outcomes and the optimization or change management process thereafter will be the key to HR success.
Interested in using predictive HR analytics as a key component in your HR strategy? Get in touch with CEO and co-founder Luk Smeyers for more information ([email protected] or via Google+). Or follow iNostix on Twitter and/or Facebook for exciting international articles on HR analytics. And don’t forget to register for this blog!