HR has traditionally never been associated as a data driven department. We primarily associate it with softer side aspects of managing an organization, be it training, interviewing, employee engagement and talent management. However, this is changing with a more networked society, and transparency of information with employees. The market dynamics is demanding that organizations become agile, nimble and leaner to take on unexpected competitors.
This is resulting in decision making moving to the business managers. Traditional tasks normally associated with HR are now business unit leader’s responsibility. This had a ripple effect and freeing up bandwidth in HR departments, and to allow them to shift focus from mundane to strategic interventions.
At the same time with a fast changing economic environment, the demand for data driven decisions has never been higher, especially in areas of nurturing talent, recruitment and training interventions. This has become easier given HR systems integration with rest of the organization. Earlier HRMIS was more a tool for capturing information, without real time data being available, not any longer.or instance when a sales personnel has a year-end or mid-year performance discussions can now be done with real data being made available to managers, for example, information on sales target met, percentage exceed from target values, spread of deal winning, referential customers can be made through a click of a button from the HRMIS system. Not only during these meetings, but information is now available for regular evaluation from integrated HRMIS for a regular one on one discussion.
In a highly competitive market environment, it is becoming imperative for organizations to reduce costs and improve the return on investments. This is resulting in a fight for talent which can enable organization to meet and exceed these demanding business goals. There is immense pressure to acquire talent and retain high performing employees.
This is where data analytics in HR can become the differentiator and help organization gain a competitive edge. Using HR data analytics it became aha! moment for an organization, when it realized the best sales personnel were those who resumes were grammatically correct, and not those who went to the best schools, as one of the factors among others.
Talent requirement and availability is disbursed across geographies/countries with corporations going global and truly global operations. Therefore traditional route of sourcing talent might not work in this environment. Plus with a constant need to proactively source right candidates, there is movement away from request to hire and recruit to identify talent and create opportunities within the organization.
Another example is where an ideal HR Systems, should enable an organization to scan the horizon for companies whose stock price is going down south, reducing the wealth of employees’, zeroing down on these companies for talent. Or reach out to prospective candidates through the social media, and track the responses of candidate real time. HR Analytics on postings, public data can enable an organization to turnaround background verification process, rather than relying traditional methodology.
These can give HR the edge lacking till now and turn them into data driven enablers like any other department. The change will be profound and it will bring to the table an outside in perspective and transform itself into a truly strategic partner.
Achieving this goal will not be an easy path. Investments into systems will be precluded without self- realization for the need for focusing on analytics driven HR function. Winning approval for such a strategic investment would be made easier if the business case can capture the competitive advantage gained.
A simple maturity model below describes the path organizations traverse before reaching the summit of analytics driven decision making in human capital management.
The following can be the areas for organizations to focus on for driving higher business performance through data driven analysis of the workforce
- Measure performance in real time - Pay employee to drive further performance
- Management decision making basis Talent analytics build trust of workforce, bring transparency
- Predictive analytics - Succession planning, Budgeting basis models , which are function of business cycles
- Data mining to understand root cause of lower employee engagement, attrition and so on
- Leadership pipeline and traits identification, with intervention success rate
Argument is incomplete without looking at what can be the fallacy of using too much data driven measurement in human capital management.
As a more networked society comes of age, there is constant fear of invasion into our privacy. Even now we are seeing the youth taking to professions and employment which gives them balance in life, privacy and separate their work life from personal life. With options to express their opinion on sites such as Glassdoor, too much data driven organization run the risk of getting negative comments and thereby scaring prospective employees away.
Data privacy concerns are high on the agenda for western countries in Europe and North America. It has been noticed in recent times, organizations which are unable to separate professional and personal life have been at the receiving end of employee attrition, lower morale and dearth of talent.
Organizations which can balance these two counter prevailing demands; walk the fine line and still deliver breakthrough and sustainable differentiated analysis in the human capital management area, will be the leaders in their league.
Like in the movie Money Ball, it does not require the most expensive employees to make a winning team, but with right set of skills, transformation from a good to great can happen.