Data is becoming more important than ever in the HR department. In 2019, 48% of CHROs said that their recruitment process depended on data analytics. In 2024, that figure has risen to 78%.
The rise of AI creates an even greater urgency to gather and organize HR data. Companies with strong data-driven HR teams will have a clear advantage over their rivals. But how do you become a data-driven team?
It’s not as easy as installing some new software. In fact, you won't get far by approaching this as a purely IT problem. Instead, you’ll need a root-and-branch review of all aspects of your HR department, including your policies, processes, and people.
The 7-step plan for data-driven HR
First of all, don’t worry if you’re not a tech expert. Your IT team (or trusted HRIS consultants) can manage the digital side of things.
Strategy is what’s most important—and the reason that so many digital transformations fail. When companies implement a new data strategy, leaders need to ask high-level questions like:
- What is the purpose or end goal?
- How does this align with our goals?
- Will we see a return on investment?
- How long will it take to see the return on investment?
- What do these changes mean for our team?
- Who is responsible for mapping new processes?
- What is the timeline?
- What are the regulatory and ethical implications of these changes?
Here’s how to implement a data strategy while staying focused on what matters most.
1. Assess the current HR data situation
Your organization may have data in several different locations. These could include your Human Resources Information Systems (HRIS), Applicant Tracking System (ATS), Enterprise Resource Planning (ERP), Payroll software, and employee self-service portals. The HR team might also have data stored in Excel spreadsheets or other electronic or physical files.
Action items:
- Make a data inventory: Make a list of all data sources containing information about employees or candidates.
- Review data processes: It’s also important to understand how data is recorded now. Is it captured automatically? Or does your HR team need to log details in a system?
- Compare against guidelines: Assess what information is necessary to keep for compliance with federal or company retention guidelines.
- Make a plan for data integration: Your tech experts will need to discuss ways to organize and consolidate everything into a single data repository. This might have knock-on effects. For example, you might need to upgrade some of your HR software.
2. Define objectives and goals
Data can get overwhelming, especially when you have a lot of different data sources and data points. It’s important to step back and talk about your high-level business objectives. For example, if your biggest goal is to reduce time-to-hire, you might want to focus on recruitment data. A goal-driven approach can help you focus on what’s important and identify the most relevant data sources.
Action items:
- Talk to stakeholders: Speak to other leaders about ways that HR data can help them. Consider sharing a use case with them, some leaders may not know how the data can ultimately help them.
- Set priorities: Becoming a data-driven HR team takes time. It’s good to start with high-impact, low-effort goals and work from there.
- Be aware of the broader IT strategy: The HR data strategy should always reflect what’s happening elsewhere in the company. This is especially important when dealing with platforms that are shared across multiple teams, such as ERPs.
3. Choose the right tools
To become data-driven, you need three kinds of software: tools that gather data, tools that store data, and tools that can turn your data into useful reports. It’s important to choose secure, reliable tools with the features you need. Also, make sure that these tools support your current processes. If not, you at least need to know what process changes need to occur to leverage the tools you are adopting.
Action items:
- Review data-gathering tools: This can include all HRIS software including your ATS. It might also include other tools, such as eLearning platforms and Employee Engagement Survey tools.
- Review data storage tools: You’ll need IT expertise to set up a reliable data repository. If you don’t have in-house IT experts, speak to a consultant with a background in HRIS.
- Review data analytics tools: These are the tools that turn your data into useful reports. Popular options here include Tableau, Visier, and CorralData. Before committing to a new tool, understand how the systems integrate data to make reporting easier.
4. Craft suitable data policies
HR data is valuable to your company—and even more valuable to cybercriminals. Every organization needs a robust policy framework that lays out the rules for the correct handling of Personally Identifiable Information (PII). This framework should also reflect regulatory requirements and be flexible enough to adapt to future rule changes.
Action items:
- Develop a data policy: Work with IT security leaders and compliance experts to develop an appropriate rules framework.
- Define data access roles: Employees should not have access to PII unless their role requires it. Define clear rules about who can access what.
- Establish a data privacy team: Data policies may need to change over time. It’s a good idea to create a team that is tasked with discussing any issues and implementing new policies.
5. Upskill the team
Your people will be the most important part of this new data-driven approach. They will be the ones who gather data, and they will take action based on data insights. It’s essential that they have the right skills to help them succeed.
Action items:
- Explain the strategy: First of all, be sure to explain why things are changing. Focus on how data can make life better and help the company reach its targets.
- Offer training and guidance: Make sure teams have mandatory training, such as learning new cybersecurity practices. Employees might also want to learn new skills, such as analytics or working with AI to tell data stories.
- Provide ongoing tech support: If your people are using new tools, it’s important that they have the right support. Provide a helpdesk to answer any questions, especially in the weeks after a new software deployment.
6. Deploy dashboards and reports
This is how data can really change your business—by giving people access to timely insights and analytics. In some cases, this might mean generating a regular report. You might also provide live dashboards with the latest HR data results.
Action items:
- Ask teams about their needs: Focus on delivering dashboards that will help people in their day-to-day job. Avoid producing yet another report that they don’t need.
- Offer education sessions: People might not immediately see how to read a report or use a dashboard. Training sessions and seminars can help them get the most value from these new tools.
- Gather feedback: Listen to users about their experience. Are they seeing a benefit from the new reports? Is there a way to deliver more value?
7. Promote a data-first culture
Finally, to make the most of data, you’ll need the right culture. This means encouraging your people to log data, use data-capturing tools, and follow data security best practices. It also means getting your team to use data analytics as a tool to help them perform better in their normal routine. When your people are thinking about data, your whole culture will soon become data-driven.
Action items:
- Educate: Talk to people about the importance of capturing data. Let them know how reports are skewed if some data is missing.
- Empower: Provide reports and other data tools that make life easier for your team.
- Engage: Learn from your team about where data is making a difference, and where there’s room for improvement.
Activate your data-driven HR strategy
As you can see, technology is only one small part of a data strategy. To become truly data-driven, you'll need to rethink your entire culture from the ground up.
It's a lot of work, and it's easier when you've got help. Expert consultants can offer an objective overview of your current processes. They'll work closely with you to develop a new approach that helps your HR team turn data into action.
Want to talk to an expert HR consultant? Book a call today and let's talk about your data-driven strategy.
