Recently I commented on a Linkedin discussion about the definition of HR-Analytics. Clearly all participants agreed that HR-Analytics focuses on employees in relation to business results. In my view that is a limited perspective, let me explain why a broader perspective is needed.
Shifting business models
We are in the middle of a shift in value creating business models:
- From value creation through efficiency (standardized production) to
- Value creation through focus on customer needs (customer focus or service oriented) to
- Value creation through innovation and creative processes together with customers (knowledge and innovation)
This leads to increased dynamics and complexity in organisations. Performance requirements are unpredictable and changing fast. As a result we see a growing demand for organisations to become more agile and a need to operate from a more holistic perspective.
Agility drives organisations towards an ecological approach. Similar to biological ecosystems the consequence of the increased dynamics and complexity is that everything is connected. As a result, connectivity to all relevant stakeholders is key. If organizations fail to be connected, they are out of business. If you ever tried to optimize the ecological balance in your pond, you know there are many factors to take in consideration and you can’t predict what will happen. This requires a completely different approach.
Culture is leading
To adapt to the increased dynamics and complexity, human dynamics in organisations becomes more critical than ever. The ability of management and employees to adapt to new developments decides if they succeed. An agile culture is the keystone of an agile organisation. Organisations are part of a larger ecological system. If we want to create value through innovation and creative processes together with customers, aligning the human dynamics of customers and employees is essential. There are a lot more relevant stakeholders in this organisational ecosystem that are connected and influence the results: shareholders, (local) government, suppliers, business partners, and so on. The overall human cultural alignment between all these stakeholders decides whether organisations will succeed.
Culture = behaviour
Culture is a difficult subject. We are aware of its importance and at the same time we struggle how to deal with it. Culture = behaviour. Our values and norms are shown through behaviour, what we do and say on a day to day basis. HR is focused on developing and influencing effective behaviour in organisations. Effective behaviour in my view is behaviour that leads to achieving business results. So, HR-Analytics focuses on internal behaviour. However, if agile organisations are to be seen as being part of a larger ecological system in which many stakeholders influence the business results, it makes sense to incorporate the behaviour of these stakeholders.
People analytics, in my definition, focuses on all relevant human dynamics involved in the ecological system we call organisation. It measures the impact these human dynamics have on achieving business goals. And, as such, how well connected the organisation is within its environment. It includes leadership, employees, customers, shareholders, business partners, suppliers, (local) government and society in general. People analytics enables organisations to enter the agile era.
Wil Houtzager is partner at NextHRM and focuses on analysing and developing effective behaviour in organisations.