On-demand dashboards and robust data handling capabilities are key selling features for any workforce analytics package. But HR professionals are better advised to take a deliberate approach focused on business value when choosing HR software.
It’s advice made more important given the excitement surrounding use cases for these analytics tools—from evaluating sales representatives’ performance to curbing employee attrition rates—and a growing vendor landscape, with tech titans like Oracle and SAP and cloud-based services like Workday joining the field. Market research firm IDC predicts that worldwide revenue for human capital management systems is expected to reach $11 billion by 2016, growing by about 8 percent per year.
“The challenge with analytics in the HR world is that it’s not exactly a world that’s steeped in analysis discipline,” says Rob Eidson, a specialist leader with Deloitte Consulting and an expert in HR reporting, metrics and analytics. “We’re talking about recruiters and trainers and program people as opposed to analysts. There aren’t a whole lot of HR folks who are really good at data analysis so it’s a very different discipline for them.”
But rather than focus on an application’s features and functions, Eidson says taking a deeper dive into an HR department’s inner-workings is more likely to lead to just the right tool. Eidson offers these four strategies for evaluating workforce analytics software
1. Think like a business owner.
While the personnel directors of years ago were in charge of staffing policies, today’s human resources executives are business partners, Eidson says. That means the tools they use have to deliver business value.
“The old-school traditional HR professionals of the ‘70s and ‘80s were personnel police,” says Eidson. “But the new HR business partner has to understand the business to be effective. HR is now a different kind of discipline.” For this reason, Eidson says it’s critical that HR sit down with business line leaders from warehouse managers to the CFO to find out the company’s current business goals, what challenges they’re facing, what the future holds for the company and how HR analytics can help drive business decisions. Only by truly understanding the business can an HR professional “not just pick a tool but pick a tool that solves a business problem,” says Eidson.
2. Assess your in-house capabilities.
It’s critical to assign analytics responsibilities to the right people. “I have seen some absolutely glorious failures because HR delegated the responsibility of running its analytics toolset to the wrong people,” says Eidson.
Assessing in-house expertise and skills on the HR team is the first thing to do. Are there HR professionals with data science skills on staff? Would this tool be better managed by IT personnel? Will it be necessary to hire new staff to manage the system? And does HR shared services really have the time or energy to devote to analytics? Answering these questions is one of the first steps to determining just how complex a workforce analytics solution a company can handle, and how that solution will impact precious resources, Eidson says.
3. Find out what matters to IT.
The array of vendors, from start-ups to industry stalwarts that have joined the workforce analytics market, makes for a challenging landscape for HR professionals to navigate.
A good starting point, says Eidson, is for HR to sit down with IT to discuss the company’s IT infrastructure. If, for example, Oracle has provided its talent management, payroll and HR management systems, then selecting an HR analytics tool from Oracle can help cut back on integration costs and headaches. What’s more, it’s often easier to work out a more cost-effective implementation and maintenance package with a vendor when you have a pre-existing relationship.
Another approach to workforce analytics is outsourcing. According to Eidson, turning to a third-party provider is ideal “if you’re trying to build a system from scratch and you have no in-house analytics skills whatsoever. Consultants bring a lot to the party, especially when it comes to providing a different eye and objective opinion on your data.”
4. Start a pilot project.
Anxious to start taking advantage of workforce analytics after carefully selecting an analytics system to deploy, HR professionals may be tempted to dive right into a full-blown implementation. But Eidson says it’s always worth asking a vendor if a trial run is possible before signing on the dotted line.
“More and more vendors are offering to take 5,000 rows of a company’s data and show them what it looks like through its workforce analytics system,” says Eidson. “After all, you don’t buy a car without test driving it.”
Cindy Waxer, a contributing editor who covers workforce analytics and other topics for Data Informed, is a Toronto-based freelance journalist and a contributor to publications including The Economist and MIT Technology Review. She can be reached at email@example.com or via Twitter @Cwaxer.
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