April 27, 2015
First generation organisations in the Middle East have a unique opportunity to lead the development of HR analytics worldwide but are hampered by unreliable data, a lack of analytical skills and inadequate infrastructure, according to a new report from the Chartered Institute of Personnel and Development (CIPD). Evolution of HR Analytics: A Middle East Perspective highlights the appetite for Middle Eastern firms to use HR and people measurement capability – or ‘HR analytics’ – to gain insights that can improve overall performance and productivity. It explores the unique opportunity that ‘adolescent’ and fast growing firms have to develop innovative approaches to HR analytics, without being shackled by legacy IT systems, ingrained HR policies and strategic barriers that more established organisations can face.
Edward Houghton, Research Adviser for Human Capital and Metrics at the CIPD, comments: “This is a unique moment for HR professionals in the Middle East. As a first generation corporate society there’s a huge opportunity for the region to lead HR analytical maturity on a global scale. The emergent nature of HR practices and policies within the region provides a chance for HR analytics to be built from the ground up, embedding HR systems and processes early on to drive long-term business performance and growth.”
The CIPD’s report found that many organisations in the Middle East are already using HR analytics to tackle some of their most pressing HR issues including talent pipeline planning, organisational development, engagement and learning and development. The survey of over 100 HR professionals in the region found that 71% feel that HR analytics is helping their organisation to understand their business culture and 76% said it was helping them to understand business performance.
The CIPD’s report also highlighted that investment in the development of HR analytics capability by organisations is largely expected to continue at the same level or increase over the next 12 months (46%) with an additional 16% expecting a significant increase in spending (by more than 5%).
Despite this willingness to embrace HR analytics, the CIPD’s report also indicates a number of barriers that are hampering the implementation of HR analytics in the Middle East. The main challenge is two-fold. Firstly, there are few highly-skilled HR analytics experts able to implement HR insights processes. Just 22% of organisations surveyed said they were investing in HR analytics training and less than half were accessing analytical talent from other teams in the organisation, instead opting to fill this gap with vendors and consultancy firms.
Secondly, the IT structure to enable high quality data collection and analysis is often lacking. In the study, many organisations said that their various HR management systems and finance systems are not universally applied or integrated, resulting in unclear and ambiguous data which is inconsistent and therefore unreliable. There are also further challenges around how organisations define standard HR terminology, such as measures of headcount, or full-time equivalents, with regards to the contingent workforce. Many global organisations are also operating with different definitions for HR processes, illustrating that there are some clear silos which persist in HR functions.
In response, many organisations have become focused on designing and implementing ‘perfect’ end-to-end HR processes and ERP system implementations to be able to better capture, analyse and report on HR analytics. However, Houghton cautions that this approach will delay HR professionals’ ability to apply evidence-based thinking to the overall business strategy and urges organisations to build the foundations for HR analytics sooner rather than later.
Houghton continues: “The old adage of ‘you can’t manage what you don’t measure’ still holds true. Rather than holding out for a ‘perfect’ system organisations should simplify things; to capture and use the most important workforce data to add business value before exploring the wider spectrum of HR analytics. It’s encouraging to see how many organisations in the Middle East are already building both capability and credibility in the business through the use of HR analytics. While there are challenges in adopting this in existing multinationals, there’s a real opportunity for new, fledgling organisations in the region to invest in the IT infrastructure, HR strategies and team capabilities to be able to complete and benefit from high quality HR analytics.”