The 2024 PPA Summit „No Data – No Strategy: HR as a strategic partner in the conception and implementation of evidence-based transformation processes , organized by the Predictive People Analytics (PPA) of the Ludwig-Maximilian University (LMU), ifo Institute and hkp///group, focuses on the effective use of HR data within firms.
PPA Summit Co-Inititator Petra Knab-Hägele, Head of Strategic HR Advisory & Senior Partner hkp///group, talking to Florian Englmaier, Director of PPA & Professor of Organisational Economics at LMU, and Monika Schnitzer, Chairwoman of the German Council of Economic Experts and Professor of Comparative Economics at LMU, about future potential and challenges of conceiving and implementing evidence-based transformation processes.
Petra Knab-Hägele: Ms. Schnitzer, Mr. Englmaier, the importance of HR management in transformation processes is constantly increasing. In general, HR is more than ever taking on a strategic role in overcoming the current challenges. What does this mean for the HR function as such and how do the strategic requirements differ from the more traditional operational view of HR?
Florian Englmaier: Seeing HR as a strategic partner means integrating HR into the core strategic decision-making processes of an organization. It involves aligning HR practices with the company’s overall business goals and leveraging HR’s expertise to drive organizational performance and transformation. This approach ensures that HR is not just supporting operational needs but is actively contributing to strategic initiatives. In contrast, traditional HR practices often focus primarily on administrative and operational functions. While these tasks are crucial, traditional HR might not be deeply involved in shaping or implementing the broader business strategy. The role is more reactive, dealing with issues as they arise rather than proactively influencing strategic direction.
Petra Knab-Hägele: The traditional role of HR has been a more reactive one, less characterized by a proactive influencing of strategic directions. Is that also changing from your perspective?
Monika Schnitzer: HR as a strategic partner is closely integrated with areas such as workforce planning, talent management and organizational development and uses data-based analysis to inform decision-making. This proactive engagement helps to ensure that HR strategies support the company’s long-term vision and adaptability. This role is also extremely important in the context of macroeconomic challenges such as demographic change or skills and labor shortages.
Petra Knab-Hägele: What are the most attractive potentials of using HR data in contributing to corporate strategy and to improve corporate practice?
Monika Schnitzer: Decision-making is improved through robust insights. HR data helps leaders make fact-based decisions rather than relying on intuition alone. It also means that HR uses its own data and empirical research to develop and implement strategies that are both effective and aligned with business needs. This proactive approach helps overcome challenges before they become major problems and capitalize on opportunities for growth.
Florian Englmaier: HR data also improves strategic alignment. By linking HR metrics with business objectives, organizations can ensure that their HR practices support overall corporate goals. Using HR data helps organizations make more informed decisions, anticipate and address issues proactively, align HR practices with strategic goals, improve efficiency, and enhance the overall employee experience, eventually supporting long-term success.
Petra Knab-Hägele: How do digitalization and data offer opportunities for transformation in HR?
Florian Englmaier: Digitalization has revolutionized how we collect and analyze data. With digital tools, we can gather real-time data, automate repetitive tasks, and gain insights that were previously impossible. This enables HR to be more agile and responsive to changes within the organization and to take on a strategic role.
Monika Schnitzer: The easy availability of granular data is the basis for data analyses that allow the upcoming transformation processes in companies to be steered in a targeted manner, measures to be accompanied and the respective success to be evaluated promptly.
Petra Knab-Hägele: As one of the most important providers of studies, we at hkp///group have gained extensive experience in the collection, evaluation and provision of HR, performance and organizational data. We know not least from these comprehensive market surveys: Data management is not trivial. What potential problems do you see in the use of HR data in corporate practice?
Monika Schnitzer: It is extremely important to collect and evaluate data in a targeted manner and to involve employees in the process. Without their trust in the collection and use of data, there is a risk of failure by default. Data protection and security must also be guaranteed. To do this, companies need solid data governance practices and security protocols to protect themselves against legal risks, among other things. However, this is possible and the investment required is well worth it given the potential of this data.
Florian Englmaier: Another challenge involves the complexities of data collection. Gathering accurate and comprehensive HR data can be difficult due to issues such as inconsistent data sources, incomplete records, or errors in data entry. Inaccurate or fragmented data can lead to unreliable insights and potentially misguided decisions. Thus, laying the groundwork by thinking carefully about how to collect which data in what format is key for successful data driven HR.
Petra Knab-Hägele: With the PPA Summit on October 8, 2024 in Munich, we are also shedding light on the interface between business practice and science in the context of evidence-based HR management. What role do economic research and academic findings play in the further development of HR analytics?
Monika Schnitzer: Academic research provides a theoretical foundation and empirical evidence that can inform and validate HR practices. By using research findings in the design of their strategies, companies have more effective and evidence-based methods at their disposal.
Florian Englmaier: Collaboration between academia and industry can lead to innovative solutions and advancements in HR analytics. Conferences like the PPA Summit serve as a platform for sharing these insights and fostering such collaborations.
Ms. Schnitzer, Mr. Englmaier, thanks so much for the conversation!
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