This article was updated on July 11, 2018.
Most CEOs believe employees have a significant impact on business strategy, according to PwC. However, few organizations have leveraged the full power of a global HR system of record to gain a complete view of their global personnel to drive business strategy and create a virtually seamless global workforce.
Large global organizations often have multiple HR systems that store data in disparate silos, which makes answering basic workforce questions nearly impossible. As PwC goes on to describe, this is a top challenge for CEOs and executive teams, with nearly half believing their biggest long-term challenge is to determine the people needed to support the business strategy — "talent deficiencies undermine strategy 40 percent of the time."
In order to compete, organizations must be able to see the entire picture of their talent, which includes HR and payroll data, time and benefits and talent and performance management. With a complete system of record in place, HR teams can build and optimize a global workforce that is a primary driver of the organization's overall business strategy.
What Is a System of Record?
A system of record "provides the most complete, most accurate and most timely data" and can be used to feed other systems, TechTarget notes. Data accuracy is critical in payroll systems and using your payroll system as the data driver to other HR systems can help to ensure accurate data is being integrated across your HR system of record, helping to improve the accuracy of your workforce analytics. An HR system of record, would be the single source of information for all HR, payroll, time, benefits, and talent management data and would be used to store, retrieve and analyze that data to provide a truly comprehensive view of your global workforce.
Power of People Analytics to Revolutionize Business Strategy
How can a complete view of the global workforce revolutionize your business strategy? The answer can be found in using people analytics in combination with the system of record technology.
PwC describes four ways HR teams can use this data to drive business strategy. First, organizations would have the insights needed to create operating plans to grow competitive advantages in new countries. Second, organizations could create unique customer experiences as part of an annual sales strategy plan. Third, quarterly reviews could use data to align costs with business strategy. Fourth, strategic plans could align with plans to stimulate innovation.
In other words, HR organizations can extract insights from data stored in a global system of record and utilize the data to impact multiple levels of an organization's strategy.
Here are a few examples of organizations doing just that.
Technology and Processes Together Achieve Results
McKinsey & Company reports that HR can use advanced analytics to position themselves as "fact-based strategic partners of the executive board" and utilize human capital to increase value in their organizations. For example, PNC Financial Services analyzed sales performance data between internal and external hires and found that internal hires had higher sales performance, prompting the bank to shift its recruitment strategy.
According to McKinsey & Company, the move had major implications because "millions of dollars of value were at stake." Connecting the dots between HR, payroll and performance management data helped them uncover actionable insights that led to a strategic shift in their hiring processes.
In another McKinsey & Company example, a large organization used retention bonuses as a reactive means for retaining employees. After deploying an advanced analytics project that used data from its talent management, payroll and performance management system, it found that the root cause of the attrition was a lack of mentoring. The organization implemented mentoring programs, reduced retention bonuses, retained more employees and went on to save millions.
In both cases, not having a global system of record would have made these insights and changes in strategy impossible.
Opportunity to Lead Business Strategy
The examples mentioned above could not have been accomplished in a siloed organization using disconnected systems. Taking this a step further, organizations without a global system of record or the necessary perspective to make data-driven decisions assume certain risks, which could include both financial and legal repercussions. HR leaders that capitalize on this enormous opportunity to integrate technology and optimized processes, with the aim of building a truly seamless global workforce, can propel an organization's strategy to new heights.