If you’ve been in the HR space these past few years, you’ve probably heard about the industry’s new golden calf: people analytics, the data-driven method of studying people processes, functions, and challenges in business environments. It’s become a popular phrase for describing holistic approaches to optimizing human capital. It’s sometimes called HR Analytics for that reason.

While business leaders buzz about the new possibilities, compensation managers are quietly humming a different tune: “Haven’t we been doing this for years?

Professionals in the reward function have long been using data analytics to optimize business outcomes through means such as talent retention and acquisition. In other words, people analytics is nothing new. This may have led some reward professionals to believe they had little to gain from drawing on expertise from their “PA” peers, who are exploring many of the same data-driven processes that compensation has built its house on. After all, they were the first ones with a version of the floorplans.

However, now that the buzz has settled and people analytics looks here to stay, it’s time to ask how reward can make the best use of new processes – even if some of them seem familiar.

The people analytics team can help the reward function in three key ways:

  1. They can be an extra resource for diving into analytics projects that reward teams may not have time (or bandwidth) to pursue.
  2. A people analytics team may have expertise in specialized areas such as machine learning that the reward team does not.
  3. The analytics team may provide a fresh perspective on what analysis would be useful; they can be great thinking partners because they do analytics all day.

The key to using the analytics team effectively is to treat it as a partnership, not a team that you hand off unwanted projects to. 

One reason a partnership is useful is that everyone can benefit from a nuanced and detailed understanding of compensation data. Obviously, it is unwise to assume that people analytics pros have a comp planner’s degree of knowledge (or insight!) about comp data. 

The most critical step in analytics is often navigating one’s way to the right question. This journey is so often better done in a partnership than a solo venture, or worse, a rivalry. Again, we’ll put a fine point on the matter: people analytics and comp analytics are not two rival sports teams competing for relevance in a fabricated business bracket. Don’t skimp on the time set aside to work together even if it seems like the analytics team is eager to run off and start cranking numbers.

Examples of workable analytics projects may not come immediately to mind. That’s quite fine; even normal for most. You may need to step back and think about questions that you would like to have answered but may have been pushed out mind because you didn’t have the resources to solve them. 

One reward leader used the analytics team to review the extent to which a performance management plan was achieving its objectives. For example, did the actual compensation decisions align with the pay for performance policy, and did high performers over several years see pay commensurate with their performance? They also investigated whether performance ratings were given consistently in different parts of the organization. 

A long-term issue around the relationship between reward and people analytics is that PA teams are often consumed with more work from data management than data interpretation. They’re worried about finding a way to pull data out of their HRIS in a form that is suitable for deep analysis. They’re also worried about the quality of their data as well as worried about combining financial data with HR data. All these data management issues can be equally concerning to reward pros as well. The time reward spends partnering with the people analytics team will pay off in combined data management solutions that provide PA teams with data clarity and reward functions with the capability they need.

If you have been spending time with your people analytics group, then you may already have discovered it’s a wonderful marriage. It can be quite refreshing for the PA pros to be working with others who are already skilled in handling data. It is often helpful for the rewards pros to find a partnership with a bright analytics team that is not only keen but capable of helping. If you’ve overlooked the potential of working together, then reach out and find a project to collaborate on.



CompensationXL is the flexible compensation planning solution for merit, bonus, long-term awards, and total reward statements, enabling mid- to large-size organizations to implement competitive pay structures such as vested stock options and variable incentive pay.

www.compensationxl.com  .   [email protected]  .  Dial: 866-376-7769

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