SHRM’s study of HR technology competencies (no link, but easy to find if you’re a member) revealed some not so surprising facts last year. According to them (and every other study we get out of the HR vendor industry) more effective utilization of HR technology yields more effective HR. They specifically point out a competency around the ability to use HR metrics effectively as a key contributor to overall effectiveness.
New research indicates that companies with the most high-performing HR function behave differently when it comes to the use of HR technology, and this may be the most convincing reason for HR professionals to improve their knowledge and skills in this competency domain. A recent study from a global business process advisory firm, the Hackett Group, found that “a significant cost gap exists between world-class and typical companies, with world-class companies now spending 25% less than their peers.” (1) Hackett Group. (n.d.). World-class HR metrics: World-class spend less, yet achieve higher effectiveness. Retrieved January 30, 2006, from www.thehackettgroup.com The high-performing companies examined for this study, which were defined as companies ranking in the top 25% in efficiency and effectiveness metrics, also operated with 16% fewer HR staff. (2) Jennifer Schramm, 2006. “HR Technology Competencies: New Roles for HR Professionals.” SHRM. Retrieved from SHRM.com on April 9, 2006.
So it’s great that we can lever our HR technologies if we can hire the right types of HR professionals. But the real question is, what do we do with the knowledge, and how do we deploy it?
As Boudreau and Ramstad write in their work on a decision science for human capital talent, “the marketing decision science enhances decisions about customers, and the finance decision science enhances decisions about money, so a talent decision science should enhance decisions about talent, both within and outside the HR function. (3) Boudreau, J., & Ramstad, P. (2005). Talentship, talent segmentation, and sustainability: A new HR decision science paradigm for a new strategy definition. In M. Losey, S. Meisinger & D. Ulrich (Eds.), The future of human resource management. Hoboken, NJ: John Wiley and Sons. “ (4) Jennifer Schramm, 2006. “HR Technology Competencies: New Roles for HR Professionals.” SHRM. Retrieved from SHRM.com on April 9, 2006.
I love how the above is phased, and it begs the question, “who is making human capital decisions?” When your organization does headcount budgeting each year, it’s very likely that the process is wrapped around the projections for sales and revenues – something that finance often controls, and HR has relatively little involvement in. The problems is that nobody really knows the HR organization as an aggregated group the way HR does. After all (going back to the metrics), we have all the performance indicators, we know the competencies and skillsets, we have the best awareness of the employment market, and we can most effectively influence talent growth. So why is it that Finance tells us (and operations) how many people we need to hire every month? I’m not saying we should go it alone, but it would be nice if it were a more collaborative process.
Step one would be to simply have the data. This might mean implementing an integrated data warehouse. Step two is that you need to start understanding how to use this data, including hiring the right people. Step three is demonstrating to the business that we have something of value to contribute. My guess is that the large majority of our organizations are somewhere between steps 1 and 2, meaning that we have a long way to go. However, up until step 3, the path is relatively straight forward. It seems to me that it’s time to execute on the technologies we have.