About a decade ago, it was common for large organisations to be unaware of the total number of people working for them. The mentions of the benefits of “people analytics” would have provoked blank stares. Today, companies can efficiently collect data on performance, skills, turnover, personalities, etc., to manage talent and make fact-based decisions.
Organisations have understood the value of HR data. McKinsey finds that the majority of large organisations have people analytics teams, 70 per cent of company executives cite people analytics as a top priority. People analytics has clearly elevated HR to the ranks of other data-driven functions. However, people analytics’s goal is not just to improve the HR function. The discovered insights have the potential to dramatically improve the bottom line, drive overall organisational success and help meet business goals.
However, not all data is worth measuring. People analytics teams face the challenge of turning insights into meaningful metrics and delivering information that can enable a transformative impact on business processes. One organisation that mastered the science of people analytics that influenced their top line is Swarovski. We will examine their case study below.
People analytics makes you a champion
An example of how people analytics can have a massive impact on teams performance is in sports. In fact, the most studied teams in people analytics are baseball teams. They were analysed as early as the ‘80s and ‘90s to optimise their matches, related Oliver Kasper, Former Head of Corporate People Analytics, Digital HR & Portfolio Strategy at Swarovski.
More recently, people analytics moved to soccer teams. More than 1000 data points per second are collected in just one soccer game, which are used by analytics teams to identify skill level, risk of injury, and other data of individual players to identify top performers. People analytics played a key role in securing Liverpool’s’ UEFA Championship two years ago. So, if it helps soccer teams win championships, why don’t companies use people analytics to improve business performance?” asked Oliver Kasper.
To provide a practical, step-by-step solution to building up people analytics with a business impact, he guided us through the process of setting up the functions and the dimensions that make up their people analytics strategy at Swarovski, at the Nordic People Analytics Summit 2020.
How Swarovski uses predictive and prescriptive analytics in HR
Swarovski’s people analytics is founded in their digital HR transformation journey, which started in 2015, but their people analytics initiatives began mid-2017. “When we digitalised our global processes, we were left with so many data points. So we asked ourselves ‘What do we do with all this data?’” described Oliver.
From a corporate and business impact perspective, their focus is on predictive analytics, instead of only reporting. Their vision with people analytics is that all people decisions in Swarovski are informed by data and analytics, states Oliver, and their mission is to foster a data culture in the HR function, but in the business function as well, to make better and objective workforce data-informed decisions.
A vital component of their people analytics is ethics, whereby they give the highest priority to trust, accountability, responsibility and compliance. “When you don’t treat data properly, you don’t handle data ethically and no one in the organisation trusts you, that is the end of a people analytics team, remarked Oliver.
The two directions of people analytics: looking in the rearview mirror vs looking ahead of the road
Earlier, we noted that Swarovski’s focus in people analytics is predictive and prescriptive analytics. As Oliver explains, there are two directions in people analytics. One (descriptive analytics, reporting) is like looking through the rearview mirror in the back, reflecting what happened in the past, for example, the number of headcount and salary insights.
The other direction (predictive and prescriptive analytics) is looking straight ahead on the road and trying to predict what will happen in the future. “With every people analytics intervention, we try to predict what will happen in the future from a business impact point of view,” he adds.
Teams have focused too heavily on reporting rather than tapping into the possibilities of predictive or prescriptive analytics stated Oliver Kasper for HR Magazine. He also said that 1-2% of the biggest companies are doing the second one. The difference between the two directions of people analytics “like talking about the difference between a steam train and an electric car. Reporting is the steam train and predictive and prescriptive analytics is the electric car,” added Oliver.
People optimisation and business optimisation can be delivered through predictive & prescriptive analytics. But Swarovski hasn’t altogether disregarded the HR reporting part of people analytics. They have dedicated a Reporting team focused on operational and tactical aspects and a Predictive Analytics team focused on the business impact. The two teams have completely different skills and requirements and therefore should be separate units.
People analytics strategic priorities
People analytics plays an essential role in the strategic goals of Swarovski’s two company divisions: retail and production. In retail, people analytics helps them drive better sales and increase conversions, while in production, it helps increase production efficiency and product quality. They have one additional strategic priority in the HR function, which is focused on measuring a cultural change in the company. Retail has been the focus of Swarovski’s people analytics efforts in the last few years, explains Oliver, because it holds the highest possibility to increase their top line and the potential for highest impact with limited resources.
To get a better understanding of the reasons why stores with the same traffic of customers have a higher or lower number of sales, they looked closely at six dimensions of people analytics for retail which are driving the conversion rate resulting in sales: retention, stuffing, store manager, sales consultants, training and team composition. These six dimensions are their strategic themes for their predictive analytics, adds Oliver.
As analytics is more than just data and technology, it’s about culture and collaboration, Oliver outlines the key stakeholders you need to get on board to successfully establish people analytics with business impact (pictured in the image below). All of them play a crucial role in the HR analytics network for which you need a proper stakeholder plan to engage all of them.
Nuggets of wisdom from Swarovski’s case study
As they are almost four years into their people analytics journey, Oliver Kasper shares their most valuable learnings.
First, you should build a People Analytics Team and select the right skillset. Second, engage with your strategic HR Business Partner to understand the problem of the company and how you can help solve it with people data. Third, define a hypothesis within your predictive analytics project and the ROI to get top management’s attention. And lastly, you should deliver results and measure the impact on business performance.
If done properly, the people analytics initiative will result in top management attention and their interaction, high business impact and HR’s place on the executive table, concludes Oliver