Evolution of HR analytics: A Middle East perspective

Establishing strategy and processes

Organisations are in the early stages of adopting and building HR analytics strategy and processes. A fully integrated and aligned HR analytics strategy is required if the investment in capability is to add real value, but present HR strategies do not recognise the importance of HR analytics capability, although this is now likely to change as 82% of respondents stated that they were using HR analytics to inform their new HR strategy. HR leaders play an important role in establishing the analytics strategy, and therefore should own the agenda and ensure that capability is in place to deliver against their vision.

Organisational maturity

As a first-generation corporate society there is great opportunity for the region to lead HR analytical maturity on a global scale. While in some cases the aspirational nature of business leaders is driving up capability through targeted investments, there is pressure for others to remain in line with the perceived activity of the competition: 71.7% of those surveyed stated that they will either keep investment in HR analytics at the same level, or increase it. This trend of investment, coupled with the rapid growth of some organisations, shows there is a need within the region to establish robust analytics programmes. The relative youth of organisations may also allow them to build their analytical capability in an agile way from the very beginning, instead of retrofitting a new approach into a legacy IT system.

Linking HR analytics to business outcomes

Where HR analytics is adding most value is when it is tied to overall business outcomes. HR directors find that the business case for investment in future HR activity must include data derived from HR analytics, and other functions are increasingly pulling on HR data for their own business cases. Focusing HR analytics on business issues and real problems is creating new competitive opportunities for organisations in the region.

Technology: from barrier to enabler

Technology for capturing, analysing and reporting on data is often a barrier to the better implementation of high-impact analytics. Organisations throughout the study are struggling to map their HR data (given its size and scope) and apply a coherent methodology. As a result technology remains poorly utilised and incompatible, resulting in significant cost pressures. Organisations are focused on designing and implementing perfect end-to-end HR processes. One opportunity here is to simplify this approach and ensure they are capturing and using the most important workforce data to add business value.

HR analytics skills are in short supply

The role of HR analyst is only just reaching prominence in organisations in the region, and as a result the skills and competencies to do HR analytics are not yet prevalent. This is not an issue specific to the Middle East, rather a global one, but it is more salient in the region given the rapid expansion of industries which require sophisticated analytical techniques. However, while there is a desire to build capability, only 22% of organisations surveyed were investing in HR analytics training, and less than half are accessing analytical talent from other teams in their own organisation. As with the global HR community, there are significant gains to be made for individuals and organisations willing to invest in numerically based research and analysis techniques, for example psychology, sociology, engineering and economics, but investments are yet to be secured by HR teams. As a result those organisations that fast track and invest in their analytics capabilities early are likely to drive tangible competitive advantage.

HR analytics is a significant theme for organisations in the region because of the potential it brings to producing a fully strategic and influential function which is able to drive value creation for the organisation. A new generation of workers is demanding more and more from the region’s businesses, and increasing intelligence in the form of data on those organisations is important if the Middle East is to become a leading global economy. Organisations in the region aspire to reach the capability of running highly robust predictive analytics, but at present less than 3% of organisations stated that they had developed predictive capability in their HR analytics activity. With a clear strategic focus on nationalisation across the region, there is also an opportunity for both countries and organisations to leverage HR analytics to help shape and drive this agenda to create sustainable long-term value for organisations in the Middle East.

Focus on creating value for the business – apply analytics to current or future issues

HR professionals in the region should look to gain investment by meeting business need – integrating current capability with outcomes for other business functions will ensure that insights are able to drive up business outcomes.

Establish organisation-wide standards and protocols

HR managers operating in both national and multinational contexts should look to establish standards and policies that detail organisation-wide and industry-wide definitions. These should be applied within the organisation consistently and reviewed on a frequent basis.

Partner with IT to develop systems which are fit for purpose

HR functions within the region should work closely with IT to build systems which allow a modular approach to the development of analytical capability. These systems should be designed with long-term investment and development in mind, and should be developed around the specific needs of the business.

Combine technical capability with HR specialist knowledge – manage the buy/build ratio

Middle East organisations must look to build multi-disciplinary teams which bring together business and HR acumen with technical know-how. Highly numerate individuals with an understanding of statistics should partner within the function with subject experts to develop business-relevant people insights.

Concentrate on ‘foundation analytics’ before reaching for aspirational predictive capability

Organisations should focus on developing their core HR analytics capability, by building capable teams which are able to lay the foundations for future predictive analytics. These teams should ensure that HR and IT are fully aligned, that data is robust, meaning that the most important workforce and business data is collected, and that analytical activity is focused on adding business value, outside of the HR sphere.

FAHR, the Federal Authority for Government Human Resources, is a public sector entity established in 2006 to oversee the management of human resources of ministries and federal authorities within the UAE. The authority manages the policies and administration of human resources for all UAE civil service ministries. The organisation supports 48 government entities with more than 91,000 employees.

Context

FAHR is the overarching public sector service which manages human resources for the civil service of the UAE. Part of its remit is the development of policies and processes which enable the civil service to maximise the performance of the organisations’ employees. For FAHR, HR analytics adds huge potential for the development of new policies which are informed by HR data, and by analysing HR data the organisation believes it can better understand the impact that HR is having on the civil service, an important concept for the leadership of the UAE.

How analytics is being applied

As the organisation develops new policies and processes, an important step is to test and understand the impact of new policies. By applying analytical techniques, FAHR is able to explore where policies are effective and ineffective, and understand the impact that new policies are having on the performance and productivity of the workforce:
‘FAHR is managing the policies and we are introducing the new HR policies for the Government. What we are trying to do is to make sure that we introduce the right policies and procedures according to our HR data. We are trying to amend our federal policies and procedures based on the HR data, and then help the ministry develop their own if they need to. So, they have to take our policies, for example for health and safety, and they have to develop this policy according to their requirements.’

To set the standard for the use of HR metrics across the ministries within FAHR’s remit, the organisation has established a set of 17 core indicators. The indicators that they have developed are being standardised across all departments, and all departments are applying the same metrics to their analytics activity – the result of this being that all departments are able to report using the same data and senior leaders can compare across departments. Within the core 17 metrics there are a number of key measures which FAHR has clearly aligned to their HR strategy at the organisational level, but not at the individual level:
‘Within the 17 we have turnover, absenteeism, nationalisation, satisfaction, training hours and grievances. What we are measuring is what we need for FAHR to manage the overall HR and culture procedures. It’s not for managing the individual employees.’

Impact of analytics: looking into the future

With these standards in place FAHR is now looking into specific aspects of their HR activity which are causing issue or have the potential to cause issue. Particular examples here include absenteeism and security which, when looking at the data and running some simple analytics, the team has been able to explore in more detail. As a result the HR team is now developing a new approach: ‘Currently the most important thing that we’re looking at is absenteeism and sick leave because those are the main areas for us. ...We are trying to produce some policies on those things and we are developing some guidelines; so for example, we are trying to see what is making absenteeism high and sick leave high and we are trying to solve it. We are also now introducing a new system called employee well-being for the UAE federal government.’

Next for the team is to look at the data from across the ministry and explore workforce planning and engagement/happiness, areas which they have highlighted as important not just for the civil service but for the nation as a whole. By exploring these issues in more detail they hope that they will be able to develop more productive workforces that are able to deliver against the HR strategy of the civil service:
‘So what we need now is workforce planning. We don’t have any indicators about workforce planning, which we should have. We also want to understand “happiness”. This right now is a priority in the UAE and we want to introduce something that measures happiness. We were trying to find out some KPIs that would lead to happiness, not satisfaction, because we are trying to move from satisfaction to engagement.’

Fadeel S. Al Fahoum, HR Analytics Consultant, FAHR

Jumeirah Hotels & Resorts are regarded as among the most luxurious and innovative in the world and have won numerous international travel and tourism awards. The company was founded in 1997 with the aim to become a hospitality industry leader through establishing a world-class portfolio of luxury hotels and resorts. Building on this success, in 2004 Jumeirah Group became a member of Dubai Holding – a collection of leading Dubai-based businesses and projects – in line with a new phase of growth and development for the group.

Context

Jumeirah Group is a leading global luxury hotel and resort group which operates 23 properties worldwide. Over the coming four years the strategy is to almost double the number of hotels the organisation manages and operates. These large expansion aspirations will require new talent in the organisation to drive performance across the group and with the current management to operational roles in a 20:80 split, the organisation recognises that a period of ‘talent stocktaking’ needs to take place if HR is to aid the organisation in realising its growth aspirations. To do this Jumeirah is building its HR analytics capability, and is beginning to use HR analytics to inform strategic business decisions regarding new markets and expansion.

How analytics is being applied

A barrier to realising the potential for analytics is in the use of different IT systems. In particular it is the relationship between the HR and finance system, which currently offer different perspectives on the value of HR analytics to the business. HR recognises that if it is to grow the capability, the two systems need to work more closely together and should use the same data sets and definitions: ‘One of the challenges we have faced is that we operate on two different platforms, finance and HR, which provide different perspectives on data and cost. In HR our focus has been on the benefits that can be derived from that data, in terms of business analysis and strategic planning. Our initial task was therefore to present a strong business case to finance and the other functions to persuade them of the value of investing in this data driven approach.’

This drive to appreciate the cost and value side of HR activity has meant that HR has been working closely with strategy and business planning functions. To do this, external consultants have provided expertise and guidance to assist the HR team to manage costs and plan expansion into new regions. By looking at how teams are structured and managed in Middle East operations, the HR team has been able to develop recommendations for making cost reductions by reviewing a number of different data sets together. This use of multidimensional data has helped the group to understand exactly how other teams in other regions may be structured, and also illustrated some of the pitfalls that may occur when building new operating models in future growth regions:>br/> ‘One of the conversations we had with our external consultants is around affordability. For example labour costs differ significantly between UEA and Europe. We need to understand how to find the right balance between cost and efficiency. Also for this region we should look and understand how we can be more efficient: do you need five people, or do you need three people? So, on the back end of the global grading, we’re also looking to understand what an affordability model is for a hotel, given the complexity of that space. Some of our hotels have a water park; some of them have a lot of retail outlets. How can you develop a planning model, so that, if we know we’re opening a property in China, and we know it’s a 400-room hotel, what is the right manning structure? What is the right cost structure for the hotel to be affordable?’

Impact of analytics: looking into the future

Managing costs while planning for future talent needs is a difficult balance to achieve, and one in which Jumeirah expects HR analytics will play a key role over the next three to five years. While other systems are in place which are enabling some level of operational data analysis and reporting, it is the linking of talent data into the workforce/business planning process where HR believes it will start to realise real value for the organisation:
‘I think our new talent management system, and the visibility that will give us on succession planning and talent management, will be the first step in, first of all, understanding where our talent is. We know the line-up of properties that we plan to open, so we need to link that to the strategic workforce planning to say, “Well, how many people do we need by when and where, and from what grades perspective?” If we can marry those together, that will probably start the thinking and discussions around … how we can drive business performance more.’

The aspiration for Jumeirah is to build capability into a global platform in which analytics is a seamless and integrated process. To achieve this there is a programme of work being undertaken to standardise the measures, processes and policies across the group, which over time should mean that a single system is easier to implement and more likely to add value to the business: ‘Ideally, we would be on a single, global platform. I’m not sure if that is feasible, but at least, we’re setting it up so that it will be scalable over time. We recently launched a project so we have consistent grades for the entire population. Today we do have consistent grades for the executive population, but not for the population below … by rolling out a consistent framework of job families and job codes, two or three years down the road reporting will be a lot easier. It will make it a lot easier to manage and strategise that data.’

By linking this strategically relevant HR data to financial costs, HR believes that they will be able to help the organisation grow and continue to be a success across the Middle East and into new global markets.

Peter Spaans, Vice President HR, Jumeirah Group

Telecom is a telecommunications organisation based in the Middle East. The organisation employs over 2,000 people in technical and customer service based roles.

Context

Telecom is a young company which employs relatively young employees. With an average age of around 39 years old, and a senior management team with an average age close to 45 years old, the organisation prides itself on its innovative and fresh approach to developing its people and supplying telecommunications services to its wide-ranging customer base:
‘Everyone has started to realise that [talent management] is very important. We are a young company, our workforce is young. The average age I think at this moment in time must be around 39 years old. Our chiefs, their average age collectively maybe, at this moment in time, maybe it’s 45. We need to start, you know, being wiser in how we manage succession.’

Being custodian of a young talent pool does, however, pose some interesting challenges for the business, in particular the makeup of talent pipelines into the organisation, and the development of clear succession plans for senior roles. The organisation has a desire to recruit from within as much as possible, but succession for senior roles is sometimes difficult when talent is not freely available from within. As a result the organisation has started to apply HR analytics thinking to their talent pipeline and succession planning processes, and is now moving towards applying analytical thinking to strategic talent and resource planning decisions.

How analytics is being applied

Analytics is being applied in a number of ways at Telecom, both at the level of senior engagement with high-level HR performance data, and also at a more granular level as to the nature of individuals within the succession plan, and in the maps of skills to roles. One particular area of interest for the rest of the business is the difference in cost between developing talent from within, and recruiting talent from an external source. For senior roles the difference in cost can be significant, and as a result Telecom is focusing on the development of succession plans which illustrate to senior leaders how cost can be reduced by investing up front in the development of future talent:
‘If you look at it from a financial perspective: best practice says that if you hire someone externally it will take them six months to get used to the company, to the culture, adapting. It’s expensive as well at that level to bring in headhunters. If we are recruiting Emeritus the pension issue also is in place because you need to buy their pension or transfer their pension to the organisation. So from a financial cost it’s going to be very high. It would be easier to make sure someone at SVP level, who, hypothetically moves into a more senior role or you have already the pipeline happening from within. The benefit here also is that the engagement could be higher. They know the history and so on.’

To do this the HR team has looked specifically at developing HR analytics capability within the HR function by recruiting from highly analytical backgrounds. For example, the team features both clinical and industrial psychologists, highly numerate and well versed in how to complete highly complex and sophisticated analytics. These different skillsets are now being embedded into the organisation and the HR team expects that the business will soon be able to realise the value of developing this kind of talent within the function:

‘The good thing is that the [HR] team has the capability to analyse information. They come from an industrial psychology or clinical psychology background and are very used to using data and analysis to develop conclusions. We’ve started implementing and are putting all of our knowledge together ... and we are trying to take best practice bringing it into the business instead of spending too much time doing something new ... and adjusting it to our needs.’

Learning from best practice use of analytics is a valuable exercise for the HR managers at Telecom as they look to develop their own analytics functions. Examples of best practice around leadership and succession, for example, have steered the development of their own talent analytics and talent management initiatives – and while they’re still early in the development of activity, it is apparent that the HR team is learning a lot from their exposure to new ways of thinking:
‘Something we have taken from external and used internally is the leadership index which was looking at success. Within that it looked at things such as critical roles: how many of the identified individuals would fall in the critical roles. … It’s an easy one, although at the moment for us it still didn’t happen because we’re at the early stage … we also used lessons from external sources to develop individual development plans, and measured the completion of these. We wanted to quantify it.’

Impact of analytics: looking into the future

HR at Telecom sees the possibilities for HR analytics in helping the organisation to develop its talent capabilities, and in particular secure future talent inflow to the business. Part of their vision for the future is the availability of this data and the format that it is presented in to the rest of the organisation. Reporting of succession plans is something clearly very important to the HR function at Telecom, and as such features heavily in the way the team speaks about their goals for the development of HR analytics capability within their HR function:
‘In the future for talent management I hope we can see where we are in terms of succession: out of the critical roles, how many ready people we have. This includes understanding who is already pretty advanced in their development. And, it’s information that would be accessible to the board, the chiefs, if they needed to. HR analytics should be something that comes naturally to us and it automatically gets captured somewhere. That would be my dream.’

For Telecom, this tension between a young, agile and innovative workforce is presenting highly complex challenges in the way it manages and grows talent. What is clear, however, is the value that HR analytics is adding to HR in terms of illustrating areas of interest such as succession planning, and Telecom is moving towards making the most of the new data and capability it is developing within the HR team.

HR Manager, Telecom