Human Resource organizations are primarily concerned with;
Acquiring well qualified employees
Developing skill sets to meet corporate goals
Managing employee satisfaction and productivity
Controlling HR costs
Common areas where BI can help HR organizations include;
Hiring – BI can be used to measure metrics such as time to fill, acceptance rates, and cost per hire. However, HR organizations get even more value from using BI to measure quality/performance of hire, manager satisfaction, hire satisfaction and tenure, which can increase recruiting efficiency. The insight gained can help drive more cost effective recruiting practices either lowering costs or improving the quality and retention of new hires.
Employee Development – BI can be used to build internal bench strength so that internal candidates are ready to step into critical positions when vacancies arise. BI can help identify high potential employees, evaluate skills gaps, monitor progress against training goals, and match employees against job assignments which will prepare them for future opportunities. Modeling employee career preferences and development needs against strategic succession plans helps ensure the smooth transition of people with all the needed skills and knowledge to be successful in higher level positions with broader responsibilities.
Performance Management – BI can be used to clearly communicate expectations and progress against goals. Greater visibility of expectations and progress help motivate employees and shift their focus from activities to impact. BI can also be used to help employees visualize the links between company goals, their performance and their incentive compensation (commissions, bonuses, profit sharing, etc), which can help drive behavioral changes and increase productivity.
Retention – BI can be used to monitor the reasons for turnover (health issues, unsatisfactory performance, dissatisfaction with job/manager) categorized by turnover type (voluntary, involuntary, transfer) and employee attributes (age, job function, tenure, performance rating). With greater insight into who is leaving and why companies can develop more effective retention strategies. BI can also be used to model the financial impact of employee turnover, which enables more accurate cost/benefit analysis of retention strategies.
Some studies estimate the total cost of employee turnover is around 150% of an employee’s salary. The following screenshots show the ability to use graphical controls to model the impact of turnover on the company’s finances.
The first screen shows the current 5 year cost to hire based on 40,000 employees, an 80% retention rate and an average replacement cost per employee of £16,800 is £495 million.
The slider at the bottom of the chart was moved to the right to increase the retention rate by 0.50%.
The result is a 5 year cost savings of over £6.7 million.
The slider at the right of the chart was moved up to simulate an increase in the replacement cost per employee. And this final screen shows that if the replacement costs increase by approximately £2,000 the cost savings of increasing retention by just 0.50% is an additional £800K.
Common BI functionality used by HR organizations include;
Data management – With BI you can integrate multiple HR data sources such as recruitment, payroll, and training. You can identify problems in source data, make corrections, filter out bad data and ensure the quality of the data you consolidate into a data mart or warehouse. If you add a new data source or change transformations that are part of your data consolidation processes you can easily determine the reports and dashboards that will be affected. You can increase trust in the information used for decision making because everyone can see where the information comes from and how the numbers are calculated. And automation of manual processes can reduce HR reporting and analysis costs.
Subscription Based Reporting – With BI business users to select which information they want to receive, what format for delivery (Excel, PDF, HTML, etc), and when they want it delivered (calendar schedules, threshold alerts, etc). Automating delivery helps ensure the correct people are aware of HR trends and variances in time to take action. And the ability to create a single report but deliver different data views to different users at different times based on individuals’ roles and security settings reduces IT costs and workloads.
Ad-hoc Query and Analysis – With BI you can do more than just identify HR trends and variances you can determine the root causes. Business users can interactively explore HR data to answer questions not addressed by standard reports. Through iterations of asking a question, getting and answer and asking more questions based on the results, you can get a deeper understanding of the relationships between business drivers, and how they are impacting various aspects of your organization like recruitment, development, retention and operational efficiency.
Scenario Modeling – With BI you can you not only understand what happened and why, but also model scenarios to resolve problems or capitalize on opportunities. For example, you could project the impact of altering staffing levels or compensation on profit per employee. Or you could model work schedules based on sales forecasts, historical demand, current promotions, and worker preferences.
Dashboards and Scorecards – With BI you can map employee activities to strategic goals and objectives. Define metrics and targets, assign owners and cascade strategy throughout the organization. Link incentives and compensation to initiatives and targets. Visualize inter-dependencies and timelines to better coordinate activities.