HR Data for Strategic Insights: The CFO and CHRO as Allies
This article was updated on June 15, 2018.
HR data for strategic insights is altering the role of both CFOs and CHROs. Organizations that can work effectively across financial and HR functions in order to implement big data solutions are best positioned to capitalize on the evolving benefits of human capital management (HCM) and predictive analytics.
Investments in HCM analytics can enable organizations to better predict the value and performance of their most important asset: their people. As a TechTarget article explains, "Competitive advantage comes from a company's ability to model future states based on predictive outcomes, the alignment of organizational capabilities and the ability to follow through on the strategy to support these areas."
Big data is a big part of that competitive advantage opportunity.
Making the HCM Analytics Business Case Together
Finance leaders and CHROs need to partner to develop strong business cases for HCM and predictive analytics investments. As TechTarget highlights, "Any good vice president of HR recognizes when the technology she uses to manage people has become antiquated. And any CFO worth his salt understands how to calculate return on investment, which typically comes with a new HR system."
Working together and leveraging their unique strengths, the CFO and CHRO can make necessary HCM investments happen. Organizations shouldn't just be considering bottom-line initiatives to cut employee-related costs, they should also be looking for top-line enhancing investments to boost human productivity. Whenever the costs and benefits of HCM investments are considered, the CFO and CHRO are natural allies in making the business case.
Integrating Financial and HR Data
Many organizations maintain actionable HR-related data, but it's so trapped in silos that it's impossible to integrate this data in order to make valuable business insights and support better decisions. An ADP Research Institute® report, Harnessing Big Data: The Human Capital Management Journey to Achieving Business Growth, explains the necessity of solving "the silo problem," because "organizations are grappling with a complex set of disparate HCM systems and processes, managing an average of 33 payroll systems and 31 HR systems."
The finance area, of course, has its own data silos hindering that value creation.
To be competitive in today's fast-evolving, data-driven business landscape, data silos are no longer tolerable. Organizations need to effectively utilize their data in order to generate actionable business strategies. Automation and systems integration are key drivers of enabling big data analytics, whether its financial, predictive, HCM or anything else. TechTarget reports that "the benefits of integration are huge: lower costs, streamlined operations, increased productivity and major improvements in managing the talent within the organization."
Put simply, failing to capture these benefits through strategic investments can hamper your organization's growth.
Big Data and HCM for Deeper Insights
As experienced finance leaders well know, measuring the returns on any kind of investment is a complicated endeavor, especially when it comes to human capital investments. It's difficult to make a straight-line connection between, say, incrementally increasing benefits and seeing higher levels of productivity. Life and business are dependent on the intricate array of dynamic, fluid interactions.
A CFO Magazine article warns that "today, predictive analytics in human capital too often means searching for the straight lines. Yes, higher pay and valued co-workers can reduce employee turnover, but they only work up to a point. Smart leaders will look for inflection points, and that requires thinking about sets and conditions."
But if big data is purposefully gathered and implemented, it can drive a more sophisticated, data-driven analysis of HCM investments. The true benefits of dig data will come from massive data-crunching capacity paired with experienced, data-informed, collaborative human decision-making.
By leveraging big data and HCM, finance leaders partnering with their CHROs are in position to make the best possible decisions. This synergistic approach "can compare compensation structures across different organizational entities and can even advise the distribution of resources to focus on investment for a more appropriately engaged workforce aligned with organizational decisions," says the ADP Research Institute report. Working with your CHRO to make the business case for HCM analytics capability is, therefore, the linchpin for developing HR data for strategic insights.
For more information on HR data for strategic insights, download the ADP Research Institute® report: Harnessing Big Data: The Human Capital Management Journey to Achieving Business Growth.