Your HR systems may hold years of employee information without answering your most important workforce questions. That’s because most HR data is collected for routine processes, not specific business decisions. Will gathering different data lead to a better outcome? Use these four tests to decide when people analytics are worth the investment. 

Focus on decisions with meaningful financial consequences.Prioritize investment in areas where a wrong call could be costly. For example, questions about how to improve the performance of your salesforce or how to develop a culture that adds value to customer experience may justify a research budget.

Identify what you don’t know. Assess whether existing records can reliably answer your questions. If they can’t, define the additional evidence you need rather than settling for what’s easy to measure.

Determine how you’d act. Specify what you might change, from hiring criteria to training programs, based on the findings. If the results wouldn’t influence a decision, reconsider the investment. 

Weigh value against cost. Make sure new data can be collected reliably, ethically, and affordably. Estimate the potential financial benefit, the likelihood that research will reveal something useful, and the cost of collecting it. Invest when the expected payoff justifies the expense.

Adapted from What R&D Looks Like for HR by Max Blumberg and Dave Ulrich

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