How Can HR Teams Overcome Data Challenges to Improve Business Outcomes?

HR teams that effectively leverage people data and analytics can achieve an 82% increase in 3-year profit and 21% higher profitability. However, a significant 70% of HR departments struggle to use this data effectively. This article breaks down the key challenges and provides a clear path to harnessing data for better recruitment, talent management, and business results.

What Are the "4 D's" Blocking HR's Use of Data?

The main barriers to effective people analytics—the practice of using data about employees to make better business decisions—can be summarized as four key challenges. Overcoming these is the first step toward data-driven HR success.

• Disruption: Constant change, especially in areas like compensation, makes it difficult for HR to maintain consistent strategies. For instance, 80% of HR teams report they cannot keep up with compensation changes, leading to potential fairness issues and employee dissatisfaction.
• Data Trust: The integrity of data is crucial, yet a startling 75% of leaders distrust their organizational data, and 89% specifically distrust HR-managed data. This lack of trust often stems from poor data quality or non-transparent collection processes.
• Doubtful ROI: With budget constraints, 83% of HR departments feel pressure to "do more with less." Proving the return on investment for initiatives like improved employee engagement can be challenging when the outcomes are not always immediately tangible.
• Deficient Resourcing: Nearly all HR professionals (95%) report being overworked and stressed, yet 91% remain excited about their work's potential. This enthusiasm is often hampered by a lack of dedicated personnel or tools for deep data analysis.

How Can HR Teams Break Through These Barriers?

Breaking through the "4 D's" requires a strategic focus on data quality and investment. According to research, 70% of HR leaders cite this as the most critical element for their future success. High-quality data provides the foundation for strategic decisions, from optimizing the candidate screening process to predicting talent flight risks.

Investment is also key. A significant 93% of organizations are increasing or maintaining their investment in HR data and analytics tools. This enables teams to leverage advanced technologies, including AI, to gain deeper insights and streamline operations. Based on our assessment experience, organizations that prioritize this investment see substantial returns, such as achieving an average of $713,000 in annual savings and a 50% reduction in legal costs.

What Does a Successful People Analytics Transformation Look Like?

A practical example comes from BMSS Advisors & CPAs. Rebecca Tipton, an HR Services Manager, faced challenges managing compliance for clients across multiple U.S. states. By implementing a dedicated solution for up-to-date legal information, her team reduced the time required to create a new employee handbook by more than 30%. This allowed them to reallocate time from manual research to strategic client service, demonstrating a clear ROI and improving operational efficiency.

Practical Advice for HR Leaders

To start transforming your HR function with data, focus on these actionable steps:

• Audit Your Data Sources: Begin by evaluating the quality and reliability of your current HR data.
• Invest in Integrated Tools: Seek out solutions that combine workforce data, AI, and HR expertise to simplify analysis.
• Start with a Pilot Project: Apply analytics to a specific challenge, such as compensation planning or turnover prediction, to demonstrate quick wins.
• Prioritize Transparency: Communicate how data is collected and used to build trust across the organization.

Harnessing people data is no longer optional for strategic HR. By addressing the core challenges of disruption, trust, ROI, and resourcing, HR teams can move from an administrative function to a key driver of business outcomes.