Remarkable though it may sound, there are still many questions organisations ought to have the answers to, but simply do not. Most financial directors will easily be able to report how much they spend on stationery, but when it comes to, let’s say, the more business-critical numbers, such as the cost of unauthorised absence or the return on investment (ROI) of their top employees, most shrug their shoulders.
We think this needs to change. As organisations seek to recruit and retain evermore hard-to-find talent, and as human resources directors (HRDs) are increasingly being tasked with determining who in the business creates the most value, perhaps 2018 will finally be the year when more HR functions decide to move away from intuition and base more of their talent decisions squarely on data.
For those firms that do, the payback is an almost instant elevation in their HR decision-making capacity and a more accurate methodology for managing talent. It’s a methodology that benefits from having much deeper conversations around fundamental people questions, such as who is driving the most value, who’s impacting top-line performance, how long new hires will take to reach productivity, and even predicting who is more likely to leave and why.
So how do they do it? Firms thinking about the contribution their talent makes are those on the critically important digital transformation journey. It’s a journey that aligns people much more closely with business objectives and where, for the first time, HRDs can arm the chief executive with metrics that prove their people really do make the fundamental difference. Perhaps most importantly though, digital transformation is a journey where HR can earn the respect and confidence it needs internally to help create the type of organisation and culture the chief executive and employees really want.
Purpose drives people
A barrier for HRDs has long been that the function is still thought of as one preoccupied with process and administration, a factor that often puts it at the back of the new, particularly IT, investment queue.
What digital transformation, notably through the cloud, is able to create, however, is a sea-change in HR transformation, where not only the basic back-end processes are streamlined, but increasingly more value-add benefits can also be applied. These include tools that create the right employee experience, including everything from the onboarding new joiners receive, to the learning opportunities this creates, to the measurement of performance so that it prompts new promotions or career paths. Talent and the way talent is managed are now at the forefront of decision-making because technology not only proves ROI, but reinforces that organisations really are productive communities, places where there is collaboration, shared purpose and values.
Insights that reveal the unexpected
In part the early digital transformers are being driven not just by the need to turn employee data into meaningful business metrics, but by employees themselves, talented people who know their skills are scarce and who are making conscious choices to only work with those they know have a modern and effective talent management strategy. This is no bad thing. What employees are effectively telling businesses is that if they don’t have the tools in place to engage and develop talent, they’re already behind the curve.
As such, we believe corporate risk should now be measured in terms of the cost of not being digitally transformed, rather than the perceived risk of doing a digital transformation in the first place. To those HRDs still wary of the over-promises and under-delivery of previous technologies, we say the cloud is different. Its advantage is its ability to provide real results far more quickly. Although the temptation is to think the cloud is all about technology, the reality is that it’s just the enabler.
Far more important in any digital transformation is the mindset that undergoing such a journey creates. The true measure of success integrating HR data and analytics is whether it really does create an organisation-wide appetite for more information-based decision-making.
Connecting people to organisational purpose
So what next? HR professionals now have a real opportunity to redefine what their function wants to become, but act they must. For many HRDs proving the bottom-line benefits of many HR initiatives has been a problem, however with analytics this impact is now beyond doubt. Our solutions create metrics that can be traced back to specific HR interventions.
Data analytics will be the key skill HR departments need so they can, with laser-like precision, impart their view on where the business needs to go
One retail client has been able to link higher productivity to introducing more consistent workforce scheduling. It might not appear an obvious link, but that’s exactly the point as data reveals what HRDs may not expect. This business found talent was motivated most, which positively impacted sales, when they knew their working patterns were predictable.
It’s not to say digital transformation is the magic bullet. To some degree it’s only the start. It presents new challenges, such as working out what data is relevant and for what purposes it should be used. If the first aim of transformation is data-driven decision-making, the next task is for HR to equip itself with the right skills to then take this journey forward. Data analytics will be the key skill HR departments need so they can, with laser-like precision, impart their view on where the business needs to go.
But, if HRDs use technology to move from being a supporter of change to an agent of change, that’s when the real goal of analytics will be achieved.
And what an achievement this could be. Fundamentally, most people want to work in organisations where they feel a sense of alignment to the purpose of that business. It’s more impactful management of talent that encourages employee engagement. If HR professionals can empower line managers to have much deeper conversations with their staff about how they can grow and develop in alignment with business strategy, the benefits of this are clear to be seen.
It’s exciting times. We’re beginning to see the signs of change, where cloud technology is enabling firms to take control and deploy tools that provide real data fast. There’s an old business adage that suggests managers spend 40 to 50 per cent of their time making decisions, but two thirds of the time the data behind these decisions is wrong. Now, HRDs are not only able to use data to make the right business decisions, they’re able to use this data to identify, reward and nurture their very best talent.
People Passion Purpose
For more information please visit www.successfactors.com