HR analytics: Predict HR strategy for business outcome
I was invited to a friend’s house, this Sunday, for dinner. Little did I know that it was a party of sorts and her otherwise large house looked cramped because of the many people who had come. Seeing few known faces & feeling tad stuffy, I decided to walk out to her garden area to breathe in some fresh air. I saw an interesting mix of individuals in one corner of the garden & decided to walk up to them.
One of them was an acquaintance who was a young HR professional who had recently started out. She had a sullen face and said she completely abhorred going to work the last week of the month. The others introduced themselves and before I could realize I was a part of their conversation. The group included a doctor (who looked at peace with his work & thank God for it!), two human resource professionals (one of whom I knew) and two marketing professionals.
After introductions, the group continued with their conversation around work. The sullen faced girl had to make month end HR reports for her boss. Not only did she find the report making work dull and error prone, she also did not quite understand why her boss wanted the reports every month in the same format and what he did with them. She said she did not want to be a statistician. She wanted to do meaningful HR work & she felt that report making was completely meaningless.
That set me thinking. She felt she was working on useless data population when her work was very critical and could create business impact. Did she know that if used well, her reports could show a quantifiable impact on top and/ bottom line?
A recent IBM study of over 700 Chief Human Resource Officers highlighted that only slightly more than one-third felt that their organization was able to use analytics to effectively make strategic decisions about their workforce. Companies invest in people and related practices. For most HR departments, analytics is capturing turnover data, running more reports and producing PowerPoint presentations. This has little business value and does nothing to improve HR’s credibility. Those working on these activities, just our young lady, felt their work was pointless.
HR analytics should be such that the organization is able to assess and demonstrate the actual business value of these people practices.
HR analytics can be meaningful & extremely predictive if the following steps are followed:-
Understand business goals of the company
Figure out how HR can contribute towards achieving those goals
Plan people initiatives that are aligned to business outcomes/goals
Prioritize these interventions based on their importance in terms of required outcomes, budgets etc.
Determine methods to measure the ROI of these outcomes
Share the analytics of outcomes with people managers as these are the people who would help you drive these initiatives.
Businesses can get a competitive edge by using HR analytics to ensure that the human capital strategy is aligned with business strategy. The first time that you try to connect your people data to business outcome data may be difficult. But once you are able to do it, it can change the way you plan, overall.
However, analytics is actually useful if you follow up a year later and determine how much ROI your HR investments actually had on the bottom line. That is the true measure of its usefulness. It can help you proactively plan and monitor how changes in HR practices affect the workforce and related outcomes.
If analytic is accurate, it can become a useful tool for top leaders to make critical business decisions.
I was glad that when we left for home for the young girl had a skip in her step and an air of confidence. She knew how important her work was and how it was contributing to the overall business success.