“Maturity models are developed to provide an understanding of the organisation’s capacity and characteristics throughout the HR Analytics journey. Such models can benchmark an organisation’s current level of sophistication of practices currently implemented.
“This model consists of 4 levels ranging from level 1 (Transactional Reporting) to level 4 (Predictive Analytics).
Figure 1. Data maturity levels.
Level 1: Fragmented and Unsupported
“Level 1 of the HR Analytics Maturity is defined by transactional and reactive descriptive reporting. The metrics analysed from the data would only reflect the current state within the organisation. An example of HR metrics at this level would be measuring employee turnover or average monthly staff costs. This level provides the executives with relatively low value or strategic insight. Should the most basic HR reporting at this stage remain fragmented and messy this will have an adverse effect on the credibility of HR. Should an end-to-end Human Resources Information System (HRIS) or central data warehouse be in place, it would typically provide such reporting to the HR managers. This level places a lot of importance on data hygiene to ensure the accuracy of reporting before moving to more advanced analytics.
Level 2: Consolidating and Building
“HR departments at level 2 have the capability to generate advanced reporting that is relevant to support strategic decision making. Reporting at this stage is usually multi-dimensional and delivered to management and executives through clear dashboards. The same data is relied upon with level 1 however with the addition of tracking trends and progress towards goals over time. The drawback is that these measures of reporting remain applicable to the historical and current situation. The key characteristic of this level is being proactive and tracking progress over time.
Level 3: Accessible and Utilised
“Levels 3 is characterised by a strong advanced analytics component. Advanced analytics refers to analysing HR data to develop models for better decision making with a measure of statistical significance and accuracy. At this level, the organisation would be able to identify patterns, trends, successes, and failures and forecast results more accurately. It also requires the integration of multiple data sources that may not be classified as HR data. One may require demographic, performance, hiring, financial and operational data which is housed on multiple databases. As indicated in level 1 and 2 it is therefore key to combine data from multiple sources into an up to date HR data repository. Level 3 provides HR executives with evidence-based solutions that provides more tangible value in proactively identifying HR issues.
Level 4: Institutionalised and Business Integrated
“Level 4 is characterised by predictive modelling and incorporates the results into business and workforce planning. From the data combined in the lower maturity levels, predictive models and machine learning algorithms can simulate different scenarios and discover the best solution for the hypothesis proposed. This enables the executives to be fully informed about multiple scenarios and potential risks when conducting workforce planning. From a risk and governance perspective, predictive modelling allows the executives to mitigate risks more effectively. Should an organisation reach level 4, it will be able to determine how the workforce develops, where future skills shortages may be and what positions would need to be filled in the future, as examples. Predictive modelling therefore allows for a range of possible scenarios for the consideration of managers and the HR executive team.
“In Africa, few organisations from our experience have been able to reach level 4. In particular, automating predictive modelling is not prevalent. A common issue with the automation of predictive modelling is the lack of database mapping and data hygiene. Due to this commonly experienced difficulty, a good point to start developing predictive models is to focus on a specific business case, for example, predicting employee turnover. Once the predictive model has been validated one can then focus on the real time implementation of the model. With these types of statistical models, an organisation would be able to gauge the accuracy of its predication based on the validity of the data and inferences made by the developer of the model.
“Reaching full maturity in the HR journey will provide the HR executives with a high degree of credibility. Level 4 organisations will likely have the HR Director in all strategic discussions to manage the most expensive asset of the company, its Human Capital.
“Developing a strategy for the development of HR Analytics capability will be frustrating and slow initially, however, once the proper information technology infrastructure is in place and the organisation understands the important questions to be asked, the development to advanced analytics accelerates dramatically. It is an exponential learning curve and significant effort will be required. Therefore, an organisation will need to expend a lot of effort and human capital to lay a strong foundation which will translate into a high return on investment financially and strategically. There is no question that it is a worthwhile investment!”
ENDS
Author: Jaén Beelders, Executive Director and Head of 21st Century Analytics
,About 21st Century:
,21st Century, a level 2 BBBEE company, is one of the largest Remuneration and HR consultancies in Africa, with a team of more than 60 skilled specialists, servicing over 1700 clients – including non-profit organisations, unlisted companies, government, parastatals and over two-thirds of the companies listed on the JSE. 21st Century offers bespoke business and strategy planning services, operating model and organisational design, creative reward practice modelling, change, stakeholder and culture management, training courses and comprehensive human capital and talent plans. These are all underpinned by our analytic and survey capability tailored to the African environment. 21st Century continues to offer solutions via a combination of virtual channels and on-site presence.
21st Century has expanded its services to offer a full turnkey sustainable business and remuneration service. Beyond remuneration and reward consulting, 21st Century offers local analytics for business advantage; remuneration and HR training; change management services; talent and people solutions; and end-to-end organisational design and development.
