Business Intelligence - Transforming HR Data into Business Acumen

Roselyn Feinsod, Principal, Towers Perrin HR Services, and Michael Tindall, Manager of Global Business Intelligence and Talent Management, ExcellerateHRO

The New Complexity of HR
More than ever before, HR professionals are being asked to show how their companyís workforce policies affect its overall business plan. As a rule, this information is not readily available.

For example, you granted merit raises to your employees this year. Can you measure your ROI on that expenditure? Did it resolve the turnover issue at your underperforming facility? Did it help retain the people and skills required to meet your companyís five-year growth plan?

In order to provide strategically sound answers, the HR staff needs the critical information provided by the right technology processes and analytical tools. They must be able to access and analyze data from all HR functional areas and employ appropriate methodologies to interpret the data, draw meaningful conclusions and make fact-based decisions.

Fortunately, todayís advanced technology systems can assimilate essential data and transform that data into business acumen that supports the broader enterprise business plan. Companies may have this expertise in house, or they may turn to HR outsourcers and consultants who have the data, technology and knowledge to provide solutions.

From Disparate Data to Integrated Information
Many companies struggle with the problem of disparate data that is housed in separate HR systems, making it difficult to extricate, and even harder to interpret.

The first step is to extract and combine data from the various vertical HR functions, such as benefits, payroll and staffing. This integrated information can then be examined using appropriate metrics and analytics to produce business intelligence (BI) ñ the useful information on which HR professionals can base strategic decisions.

For example, a company can discover what is really driving the cost of benefits ñ the plan design or a hiring freeze that was instituted to control near-term expense and has created an older workforce over time. Or, whether increased hiring is due to growth and skill upgrades or to unwanted turnover. Additionally, BI incorporates insight into statutory and regulatory compliance issues that are front of mind because of Sarbanes-Oxley.

By accessing HR data horizontally across functional areas, companies can establish an informational baseline. That, in turn, allows them to measure the results of HR programs and practices, and identify critical insights about their workforce. They can examine trends over time and build a base for modeling and conducting ìwhat-ifî projections for the future.

Delivering Business Intelligence to a Global Organization
BI is an especially critical area ñ and challenge ñ for global organizations, given the complexities of managing a culturally and geographically diverse workforce. An organization should start with a clear understanding of what it needs to measure and why, and take an inventory of the systems that house the base data. Often, a capital investment is necessary to obtain the requisite tools and infrastructure.

Itís best for companies to start with a few key business challenges that are significant to overall results. Although a long-term vision is essential, itís better to implement in stages.

Benchmarking Increases the Value of Business Intelligence
As HR outsourcing has matured, more industry benchmarking information is becoming available. Proprietary databases are being developed that can be used with benchmarking data maintained by third-party vendors, industry groups and government.

By comparing typical ranges for workforce metrics in the marketplace, HR can set appropriate targets. For example, a company can consider labor supply, compensation; healthcare and payroll tax norms to understand what will drive its future profitability and productivity, to evaluate the impact of changing workforce demographics or to consider where to expand call center operations geographically.

Linking Workforce Value to Financial Performance
Business intelligence is an important input in measuring the value of a companyís workforce because it helps link people data and programs to financial performance. Sophisticated analytics now can measure how HR systems and programs affect employee behavior and how that, in turn, influences customer behavior ñ and ultimately drives financial results.

Companies need to know the demographic and skills profile of their workforce in order to optimize the value of that workforce. That is increasingly the job of a strategic HR function. And, companies must be able to link workforce measurement and the role of the HR function to their business goals. That allows them to evaluate whether HR is doing the right things to help the company grow.

Using current employee data and projections about future workforce trends, companies can model the people implications of their business plans. HR can then develop targeted workforce strategies to help it attract, engage and retain the right people, in the right locations, at the right cost.

For example, a global banking organization modeled its total projected labor costs to make decisions about where non-customer-facing employees should be located. In another instance, a leading information services provider was able to better understand current and future staffing trends to better align its reward programs.

Leading companies create capability in workforce management. By leveraging a combination of excellent processes and technology, they take control of their future workforce today and position themselves to be ready to deliver on their strategy.

Contact: Helen Leflar, 972 605 8232, helen.leflar@eds.com