C-level and HR leaders must embrace evidence-based HR or risk losing ground. This is according to a new KPMG Internation report entitled Evidence-Based HR: The Bridge Between your People and Delivering Business Strategy. 

According to the survey conducted by the Economist Intelligence Unit on behalf of KPMG, an overwhelming majority of respondents (82%) expect their organisation to either begin or increase the use of big data and advanced analytics (“evidence-based HR”) over the next three years. Yet, more than half of survey respondents (55%) remain sceptical about the potential of evidence-based HR to make a real difference to the HR function, even as CEOs grapple with regulators, customer requirements, talent, and the demands of the workforce.

Compared to KPMG’s 2012 report, Rethinking HR in a Changing World, there has been a modest increase in respondents who say their organisation’s HR function excels at providing insightful and predictive analytics, from 15% to 23% – but it is still far from satisfactory.

“We’ve never before had such a rich variety of data available for the HR practitioner to prove without a doubt that their decisions can be backed up, as opposed to relying on instinct and best practice, says Mark Spears, KPMG Global Head of People & Change and a Partner in the UK firm. “For the first time in my 30 years’ experience in this space, HR can demonstrate that their activities and processes have a direct impact on the delivery of business objectives.”

Evidence-based HR still at embryonic, pioneering stage. Evidence-based HR uses data, analysis and research to understand the connection between people management practices and business outcomes such as profitability, customer satisfaction and quality.

According to the survey, however, there are still considerable bumps in the road towards widespread acceptance of this approach. One major roadblock may be the credibility of the HR function. Nearly one in three (30%) non-HR executives believe that the HR function does not play a sufficiently strong role in meeting the organisation’s strategic objectives, a view shared by only 8% within the HR function.

Yet, despite this large gap in perception, there is still a strong view amongst non-HR executives that HR can become more value driven. 49% agree that HR leaders are able to clearly demonstrate tangible correlations between people management initiatives and business outcomes.

Spears says: “Becoming evidence-based requires an effort of will and a sufficiently changed mental model. Many successful organisations are the ones where C-level executives invest and work alongside HR to connect a company’s people strategy to positively impact business performance. While this approach is not yet widespread, with the right skills and support, it is just a matter of time. Companies and HR practitioners must respond urgently to avoid losing ground and stay ahead of the competition.”

Other findings from the study include:
* More than one-third (35%) of respondents have either not yet applied advanced analytics or big data tools to improve the efficiency of the HR function or don’t know whether they do or not;
* Over three-quarters of respondents (76%) expect the increasing use of data-driven insights in the HR function to positively impact profitability over the next three years; and
* Corporate culture is cited as the single largest obstacle to the use of evidence in people management (32%), followed by lack of skills and resources (30%) and the quality of the data (29%).