There was a question posed on the web a while back (I’m hard pressed to find it) asking what linkages were important to the performance of an HR organization. I’m equally hard pressed to think of an instance where integrated data and analytics is not critical to an organization’s overall health and direction setting activities. Here are a few examples:
- Total Compensation Affect on Performance: It’s wonderful to have a data warehouse that will let you know what your total compensation is broken down by business units, divisions or departments. This should include differentials between departments for benefits plan costs and incentive compensation. The problem is it’s worthless if you are not correlating these numbers to your performance indicators, whether this is sales or some other measure of revenues and profits.
- Talent Management Affect on Profits: Do your performance plans work? How about your learning activities? Is your compensation properly correlated to your performance, or is your incentive compensation plan actually a de-motivator. At the end of the day, your best intentioned talent management activities may not be yielding you any advantage. How can you tell if you’re not reporting on these factors versus corporate performance measures?
- HR Costs versus Sales Bids: Your sales organization quite possibly sits around trying to figure out how to price your services in RFP’s. Utilizing average labor costs and burden rates and estimating productivity, they come up with some numbers to plug into proposals. Are these number right? Who knows? With analytics, you’d be able to provide your sales organization with real numbers on how much work a specific group of people can perform and how much their actual costs are.
- Talent Acquisition Effectiveness: We’ve all talked about it, but how many of us are actually measuring our new hires against performance 6 months or a year into their employment? How many organizations have profiled their best recruits correlated with retention and determined what a great job candidate looks like? We’ve always looked at numbers like time to fill and cost per hire. But these numbers are insignificant compared to whether that particular hire was effective or not.
These are just a few examples of how your metrics should be supporting the organization’s strategic measures, not your HR operational needs. Without an analytics tool, it’s simply too hard to understand the linkages between your numerous programs and how they each individually impact your company’s higher level strategies.