HR Analytics: Driving fact-based business decisions with powerful workforce insights
Use data and analytics, not guesswork, when making HR decisions
The effective management of talent and people is essential for business success and critical to achieving and sustaining a competitive advantage. Strategies and decisions on recruiting, developing, rewarding, and retaining talent should not be based on guesswork and gut instinct. Rather they should be underpinned by workforce data and analytics, leading to informed decision-making on building workforce capability and leveraging your company’s most important asset—your people.
Your most important—and expensive—asset
The people talent within an organization is widely recognized as being critical to business success. And people costs represent on average a huge 70% of total operating expenses. So why do so few organizations manage this critical asset with the same rigor and logic that they apply to other key elements of business operations such as finance, customer management, production, marketing, or sales? In part this is because until recently there has been a scarcity of data-driven, business-aligned HR leaders driving proactive and progressive HR operations. This is rapidly changing for the better. Equally as significant is that HR has not had access to the same technology solutions and analytical tools enjoyed by finance, manufacturing, and sales executives. Until now!
Gaining competitive advantage
To achieve and maintain a competitive edge, workforce data and analytics must drive organizational decisions on talent acquisition, development, deployment, and retention. Further, HR performance metrics should inform management on the degree to which the design and delivery of HR programs and services support key areas, such as leadership development, performance management, and compensation. How effective are your HR programs at
building the capability and performance of the workforce to successfully execute business strategy and deliver against organizational goals? If you
don’t know then how can you improve?
And companies should also measure how their HR programs and services compare to those of other organizations, particularly competitors. If a competitor is consistently first to locate and bring on board the best talent in the market (or maybe take your best talent away) they gain a competitive advantage. And if they deploy, develop, reward, and retain this talent better than you, then they will extend their advantage.
Making the right decisions on people
Analytics can answer several important questions when it comes to making the right decisions on hiring, development, deployment, compensation, and retention. For example it can help answer:
- How will turnover patterns and age demographics impact growth plans?
- How well does the existing employee population fit current and future
skill and capability requirements?
- What is the profit per employee? Is it increasing or decreasing, and how
does this compare to other organizations including competitors?
- Are top performers being retained? If not, why not, and how is this
impacting the organization’s ability to meet its strategic goals?
- Where in the organization can the necessary skills and competencies for
certain jobs be found?
- Are certain HR policies, programs, or practices having the desired
effect or, perhaps, unintended consequences?
Developing the people you have and delivering great HR service
Even more, HR analytics can help you create more effective and efficient talent programs and employee services delivery. There are several areas where performance metrics and benchmarking can help provide clear answers:
- Are you building and retaining the optimal capability of the workforce
for organizational effectiveness?
- Are internal customers satisfied with HR services and can they easily access
(including via mobile devices) HR services and systems?
- Are employee programs delivering the desired results?
- Is the HR function operating efficiently and effectively?
Keep up with the rest of the company
Modern management is based on making rational decisions using detailed analysis. This applies to all functional areas of the business. Why should HR be any different?
That’s why organizations are increasingly demanding workforce management information and predictive analysis to assist in making informed business decisions with trend projections. Further, organizations are increasingly demanding that the HR function demonstrates the contribution that it is making to the business in terms of the attraction, development, deployment, and retention of a skilled and capable workforce and how this compares to leading practices.
Cloud makes it possible
HR Software-as-a-Service (SaaS) solutions and cloud computing provide a large part of the solution by making agile and powerful HR information systems accessible to organizations at a lower cost. Cloud HR solutions with libraries of standard metrics, industry benchmarks and HR best practices that help measure the things that matter clearly accelerate the drive towards HR analytics, fact-based decision-making and powerful workforce insights.
When workforce analytics is embedded within an organization’s HR and Talent Management solution it becomes part of day-to-day operations in Resourcing, Learning, Retention, Succession Planning and Performance Management with information readily accessible to HR, business leaders and managers via multiple devices.
While technology is a critical enabler, the HR function also needs to acquire greater skills and capabilities in the area of workforce analytics and performance metrics. These might be gained through developing existing resources, recruiting externally or transferring (from Finance?) new resources into HR.
The focus on HR analytics is set to intensify as organizations seek to deliver business success and achieve a competitive advantage through more effective, business-aligned Talent Management. How talent is optimally managed must be informed by data and analytics and critical to this is leveraging appropriate technologies alongside extending the skillset of the HR function.
To learn more about driving fact-based decisions with powerful workforce insights visit SuccessFactors Workforce Analytics via the link: