This article was updated on July 22, 2018.
Out from under the avalanche of today's escalating data landslide comes a previously untapped source to drive organizational outcomes — HR. Yes, the Human Resources Department. Make no mistake. HR can be a powerful business partner. Who else has such an overarching perspective and, now, the tools to have a strategic impact on business decisions?
Keeping up in a fast-evolving world hasn't been easy for a traditionally transaction-focused and complexity-ridden department like HR. As the transactional aspects have been streamlined, data volume has increased – in part because that effort captured even more information. More systems were engaged — each focused on specific transactions — but these best-of-breed, mostly independent systems weren't typically 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 potential of this information can't be ignored. And who better to understand the business implications of this data than HR? Workforce management is a varied and complex thing and HR has been juggling the related data for decades.
But this familiarity doesn't make the task any easier. At first glance it's a dizzying abyss. Especially for global corporations that use an average of 30-40 systems each for both HR and payroll (2015 Global Human Capital Management Decision-Makers Survey, ADP Research Institute®). Tracking metrics, geographically — like turnover, salary by job, and retention — was once a nightmare. Now, there are new tools and analytics for workforce information that can help and organizations are increasingly realizing 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. You may have to be selective about the information you provide 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 do you get from here to there? Consider these five steps toward harnessing business insights:
- 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 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 move the dials.
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 strategic advisor with its fingers on the pulse of the operation...with the information to help predict outcomes and opportunities...with insights to confidently guide and influence.
HR's greatest opportunity to drive impact lies in understanding how workforce decisions drive business decisions. It's a power that is clearly yours for the taking.