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How Humans Pair Up With Big Data for Human Capital Decision Making and Compliance

Author

Chuck Leddy

More by Chuck
Author

Chuck Leddy

More by Chuck

With "people expense" typically the largest cost of most companies, and recruiting and developing talent a top organizational priority perennially, little wonder why more CFOs are turning to big data for Human Capital Management (HCM) decision making in order to drive productivity, recruit and develop talent and gain an array of actionable, people-related insights. Big Data is also helping with compliance. The transition to big data for HCM and compliance decision making offers a number of large challenges.

Obstacles and Challenges to Harnessing Big Data

According to ADP Research Institute's white paper Harnessing Big Data: The Human Capital Management Journey to Achieving Business Growth, "Organizations are grappling with a complex set of disparate HCM systems and processes, managing an average of 33 payroll systems and 31 HR systems." So while talent management and compliance remain top company priorities, the tools to conduct these activities remain staggeringly fragmented. A disproportionate amount of precious limited HR resources go into simply managing complex systems rather than to more strategic functions. The white paper explains that "needing to pull data from dozens of different systems" hamstrings an HR department's capacity to focus "on more important strategic contributions like predicting skills shortages, managing global talent mobility and developing the next leadership team."

The need to simplify and integrate HCM into a single platform will be a key prerequisite to enabling big data. With all employee-related data in one place, companies can "start doing workforce analytics and predictive modeling, increasing both efficiency and effectiveness across a global organization." Let's look at how some firms are using big data for compliance and HCM.

Big Data and ACA Compliance

The Affordable Care Act will require companies to aggregate employee and health-related data in order to meet reporting requirements, which will compel firms to be continuously flexible in the use of their data. The ACA's fluidity and complexity will drive big data solutions because ACA compliance places an ongoing demand for more transparent analyses of data across the whole organization. Data silos will be lethal for ACA compliance, so fast and easy access to employee-related data at the employee level has never been more urgent. IT Business Edge explains "The whole focus on Big Data these days is probably going to do more to create a new level of urgency around compliance than perhaps any other new emerging technology in recent memory."

While the investments in compliance-related technology upgrades such as big data may be high, the long-term return makes them necessary. According to CIOReview, "The magnitude of the costs associated with non-compliance are so great that these compliance-related expenditures can be one of the best long-term investments that a company can make."

Big Data for Anti-Fraud Compliance

Big Data can help you to monitor transactional activities in real-time and set up controls to flag "irregularities" that may arise from the data. By flagging questionable activities quickly, such as the use of legally inappropriate language in emails, you can detect potential problems quickly and respond to them by taking appropriate action. As a report from consultants Ernst & Young explains the possibilities, "Anti-bribery and corruption analytics test of controls incorporate big data concepts that integrate multiple data sources: third-party watch lists; transactional data; text mining; and even social media and email to prioritize and isolate areas of risk or rogue activity."

Big Data for HCM Benchmarking

You can use your employee-related data to benchmark your levels of compensation and benefits for different positions against your competitors in the market. If you're not competitive on compensation packages for some positions, you'll surely experience challenges in recruiting and retaining top talent.

"Management teams can use [big data] information to quickly discern contextual insights they could never have found before, such as who is most likely to leave based on commuting distance or compensation, all relative to the benchmarking data. The insights gleaned can also lead to areas that need improvement, such as where compensation and benefits packages are lacking and could be adjusted," explains Diane Faulkner in a Forbes article How to Use Big Data to Recruit Top Talent. The possibilities of using Big Data for HCM are limitless.

Big Data for HCM decision making and compliance is a trend that's not going away. While the initial investment in developing capabilities may be high, and would include bringing in HR people with big data analytics capability, the time to move is now.