Data analytics is one of the most trending subjects in HR at the moment. We are (almost) at the stage where using analytics in such functions as Marketing, Sales or HR is a must. We expect software solutions to have in-built data analytics capabilities with simple user-friendly interfaces. In preparation for the biggest HR Tech event of Spring 2015 we spoke to David Flaherty, the Vice President of Global Total Rewards, HRIS and People Analytics at The AES Corporation, about utilizing analytics to support HR operations, which it has been doing for the last 3 years.
What HR functions are supported by data analytics at The AES Corporation?
Talent Management, Sustainability, Culture Alignment, Global Total Rewards
What insight/trends are you able to extract with data analytics now that you maybe didn’t even know existed before when it comes to benefits and compensation?
A few key areas (there are several others):
- Outside the US, primarily in Latin America, we now have precise visibility into benefit costs on a per head basis at nearly half of our businesses, planning to expand out to the other staff.
- Our Board of Directors receives critical compensation metrics on key executives and others in our Succession pools.
- We are applying analytics to “win minds” in the U.S. with regard to shifting from tradition higher cost health insurance arrangements to more consumer-oriented designs. By showing people what they actually spend in medical care compared to the much higher amount they are paying in premiums, we present a clear and objective argument for shifting into our consumer-oriented designs.
How did you select the vendor for HR analytics? What were your criteria? Are you satisfied with the product? If you recently switched to a different vendor – what were the reasons?
Analytics is truly part of our day-to-day approach to driving business performance through our people. A business problem is identified and analytics is part of our toolbox to respond. Further, with analytics, we move away from the “gut feel” approach to deploying talent to a predictive model where assessment scores offer an objective indication of where people can be successful.
Our single most important product (and innovation) is the Talent Discussion & Analysis we present to our Board of Directors. We approached this discussion of talent and succession planning with the same analytical rigor as a Management Discussion & Analysis found in the Annual Report. As part of the presentation in London, I will high several innovative aspects of our Talent Discussion & Analysis approach, how we engaged the Board and how we vastly elevated the Board’s view of HR at AES.
Historically, we did not have a single tool for HR analytics, however, AES is currently implementing Workday as its global HCM system. With Workday, we hope to expand our capabilities into other adjacent areas such as predicting safety performance of our people, widening our internal talent pool for hard-to-fill commercial and development positions, and market intelligence. We chose Workday over other solutions based on the quality of its core HR transaction and record-keeping functionality which is fundamental to analytics.
How much do you/your team rely on data analytics in making day-to-day as well as strategic decisions?
It’s part of our day-to-day decision making in all areas of total rewards, a big part of our talent decisions and has been used to align culture with strategy with organization design. Our CHRO is from an analytical role within HR and our HR leadership is expected to provide analytics-driven responses and insights to improve business performance.
Many HR professionals remain hesitant to integrate analytics into everyday operations. What advice would you give them on the steps they should take to ensure successful integration?
Start in a targeted, incremental way. Don’t think you need to go from zero to 100 or keep up with the companies you hear about in the news or read articles about. Articles typically celebrate wins but presumably all companies have missed opportunities as well.
In our experience, simple insights derived by analytics may have been overlooked. A great example is how we looked at benefit choices and applied economic arguments to encourage people to shift from traditional plan designs to more consumer-driven designs.
Finally, source some staff from outside or HR. Finance professionals often have a skillset that can be quite valuable for HR analytics.
What do you think the role of an HRIS professional look like in 2025?
Employers will have mostly moved from the old enterprise on-site model to simple, intuitive cloud-based systems. If the technology requires any extensive training or ongoing support levels, it will not meet executive’s expectations.
HRIS and People Analytics will be a single function in many cases. A recent HBR article talks about data creators and data users, how, if the two don’t talk, data get “dirty” over time. Like other functions, in HR putting the creators and users in the same team will help mitigate this issue.
What trends have you observed in the field of rewards and compensation over the last couple of years? What are your predictions for 2015?
Total rewards HAS to integrate with your talent management objectives. Compensation & benefits needs to facilitate global talent movement – not be an obstacle. At AES, we have completely overhauled our global mobility program to create a non-traditional compensation model for individuals taking assignments that are in our “global talent” pool of roughly 350 people. The package one of these individuals receives differs significantly in structure (though not necessarily in value) from what someone may receive if we simply need to source a skillset from outside the local market.
If you had to pick only one device you would have to use for 3 months during and outside of work, which one would it be?
I am slightly more introverted than extroverted. I spend all day interacting with people either in person, on the phone or on telepresence. I do get tired from this and enjoy from 6 pm to 8 pm when most people have left.
To more directly answer, not a phone and probably not my tablet. That would leave me with a small lightweight laptop. I can always get on Jabber, Skype, etc… to communicate verbally or face-to-face. But I can turn the outside world off more easily with my laptop and find a state of “flow” as Daniel Kahneman writes about.
Why did you choose to speak at HR Tech Europe?
I attended the conference two years ago in Amsterdam (October 2013). I was really impressed with the quality of the speakers – main stage and breakouts. Also, there was an energy that I felt was palpable. You don’t always get that in your normal workday so hopefully I can feel that energy again and contribute to it myself.
Don’t miss David’s presentation at HR Tech Europe 2015, 24-25 March, London.