Out from under the avalanche of today’s escalating data landslide comes a previously untapped source to drive organizational outcomes: the Human Resources department. Make no mistake; the HR department can be a powerful partner for data-driven decision making. What other department has such an overarching perspective and, now, the tools to have a strategic impact on business decisions?
Keeping up in a rapidly evolving world hasn’t been easy for a traditionally transaction-focused and complexity-ridden department like HR. As the transactional aspects of HR functions were streamlined, the data volume that the department has to deal with increased – in part because the streamlining effort captured even more information. More systems were engaged, each focused on specific transactions but, typically, these best-of-breed, mostly independent systems were not integrated. You could see the data here; you could see the data there. You just couldn’t effectively do much with it together!
But business is driven by outcomes, and investments in areas like the workforce are measured by their impact on the organization. So the great potential of this information can’t be ignored. And what better partner to understand the business implications of this data than HR? Workforce management is a varied and complex thing, and the HR department has been juggling the related data for decades.
But this familiarity doesn’t make the task much easier. At first glance it’s a dizzying abyss, especially for global corporations, which use an average of 30-40 systems each for both HR and payroll. Tracking metrics geographically – like turnover, salary by job, and retention – was once a nightmare. Today, there are new tools and analytics for workforce information that can help organizations realize their potential.
To make that happen, HR may need to do some transitioning to help the organization leverage this data to strategically improve workforce management. As an HR leader, you may have to be selective about the information you provide to business leaders, limiting it to the data they would find strategic and valuable. Some questions you can ask yourself are:
- How is employee turnover impacting productivity?
- Are our investments in training actually leading to more sales?
- Which employees are most likely to leave?
- What will it cost to replace high-potential employees if they leave?
- How does our retention for specific roles rank with other companies in our space?
These are core business-focused questions, and the answers are essential for sound decision making and accelerating timely decisions by senior leadership.
But how does an HR leader get from here to there? Consider these five steps toward harnessing business insights from HR data:
Step 1. Learn the fundamentals of the business. Talk to business leaders, read annual reports, and analysts’ coverage of the company and industry.
Step 2. For goal-setting, move away from standard HR reporting metrics. Move toward the more useful business KPIs that drive the organization, such as earnings-per-share and net income.
Step 3. Examine the outcomes of HR processes to find their correlation to business strategies. Like a data scientist, look at other key business factors that can impact those outcomes.
Step 4. Now that the factors are known, redevelop those HR processes to focus on alignment with business goals and drive continual improvement and measurement against them.
Step 5. Relate workforce insights to business strategies and to data outside the organization. Recommend workforce initiatives that can have a positive impact on business outcomes.
Effective HR strategies drive the business forward. Performance management solutions need to align each individual’s goals to corporate goals. And your HR system should connect those goals to rewards while building career planning into succession models. That’s the destination.
The new big data world of business has HR breaking out of its silos and into the position of a strategic adviser with its fingers on the pulse of the operation. The department is flush with information to help predict outcomes and opportunities, and can provide insights to confidently guide and influence business decisions.
HR’s greatest opportunity to impact the bottom line lies in understanding how workforce decisions drive business decisions. The most successful organizations will understand this connection and allow it to inform their decisions and improve their business outcomes.
David Turetsky is Vice President, Chief Product Owner, ADP DataCloud, at Automatic Data Processing, LLC. He is responsible for developing products and services to deliver innovative big data products and services for ADP clients. He provides vision, leadership, and strategy for ADP’s efforts around reporting, analytics, benchmarking, data mashups, and predictive analytics.
David has more than 25 years of experience in HCM, HR, HRIS, talent management, compensation, and big data as an analyst, manager, executive, consultant and entrepreneur. His passion is manager empowerment and employee engagement through total rewards management. It has been the topic that he often presents to large audiences at many national HR conferences, such as the HR Technology Conference, SHRM, PIHRA, and APA. In addition, David has been published in WorldatWork Journal, HR Executive magazine, and other industry publications.
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