Big Data, HR metrics – Looking into the Past to Predict the Future
Russell Wong
In a world
inundated with information, it is important to know what to do with the data coming at you and to be able to leverage it for the immediate and long-term benefit of your organization. All areas of an organization can benefit from great data, and increasingly, companies are looking at the important strategic insights available in HR data, particularly when it’s benchmarked against other similar organizations.
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Russell Wong
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Across all industries, HR and business leaders recognize that employees are a key business resource that is no longer viewed purely as a cost centre, but as the most important driver of growth. In this fast-moving global economy where growth is driven by talent and knowledge, it has never been more important to carefully manage this asset for performance and cost-effectiveness.
To create reliable benchmarks for HR strategy development and decision-making, companies need data they can trust. And, developing trustworthy data requires large data sets which are objective and accurate. These sets of “big data” enable companies to analyze their workforces in non-traditional ways.
What is big data and what does it mean to organizations?
Big data is a collection of information that can be used to tell a richer story that is often not apparent through traditional reports. Previously, HR benchmarking, comparisons of Key Performance Indicators (KPIs) were made by analyzing, at best, a few hundred similar organizations. Businesses used whatever data they had to react to trends and shifts in the workforce.
Now, technology makes it possible to access HR metrics from tens of thousands of organizations to create benchmarking datasets. This big data allows organizations to look beyond simple, historical metrics. It enables them to understand what is happening in their workforce, to assess its impact and to build strategies to manage long-term shifts. There is a growing need for data to help organizations plan strategically for the overall growth of the company, and HR metrics play an integral role. According to PricewaterhouseCooper’s 15th Annual Global CEO Survey, more than 80 per cent of US CEOs say they need critical talent-related insights to make business decisions, but only a small percentage actually receive relevant information.
Workforce insights can unlock significant value and substantially improve the decision-making that drives business performance, enables cultural change, and builds competitive advantage.
What are the most important HR metrics?
In today’s competitive environment, the effective management of human capital is critical. For this reason, more corporations are measuring hundreds of HR KPIs to help drive business strategies.
When we talk to our clients, they cite several valuable metrics including workforce productivity, employee engagement, employee retention, and labour costs, but two key areas emerge at the top of most lists: demographics and skills.
It’s no secret the Baby Boomers are leaving the workforce in droves, but what smart companies are looking at is the impact to their workforce. What gaps are these retiring boomers leaving? What skills and knowledge will need to be replaced? When are key leaders or experts likely to leave the business? Simple questions, but the answers have far reaching impacts on recruiting, talent management, succession planning, leadership, performance and productivity, among others. Armed with this data, HR executives are in a good position to begin building the strategies their organizations need for short-term investments and long-term viability.
Looking ahead: Emerging trends
Human resources executives are digging deeper into workforce analytics to make more informed decisions regarding employee performance, turnover, salaries, promotions, and benefit programs. In an article from the Harvard Business Review, the author cites Black Hills Corp. as an example of a company applying workforce analytics to improve the organization. An acquisition doubled its workforce to 2,000 employees, but as a 130 year-old company, Black Hills faced challenges including an aging workforce, need for specialized skills, and long timelines ramping up employees, resulting in a major talent risk. Forecasts showed that within five years the firm could lose 8,063 years of experience from its workforce. To prevent massive turnover, they applied workforce analytics to calculate the number of annual retirees, the types of workers needed to replace them, and where to look for new hires. The resulting workforce planning summit prioritized 89 action plans designed to address the potential talent shortage.
HR executives and their teams are becoming critical change agents, helping to drive business performance. Success for most organizations will require a new strategic focus on their people, and this focus must be data-driven, using internal information benchmarked against best-in-class companies. When HR teams are unleashed from their traditional day-to-day transactional tasks, they will be better able to focus on data-driven insights to build and inspire a great workforce. This need is driving huge growth in the outsourcing sector, particularly HR outsourcing, which IDC Canada predicts will be a $2.4-billion market in the next year. Whether they outsource or automate or both, HR teams will become powerful strategic resources for successful organizations.
Russ Wong joined ADP Canada as its Chief Financial Officer in 2013. In July 2015, he was named Interim President. Prior to joining ADP, he was CFO of Chubb Edwards, where he helped integrate an acquisition that doubled the size of the business, and CFO of Lexmark Canada, with overall responsibility for financial matters, supply chain and logistics, information technology and call centres. Russ is a Certified Management Accountant and holds an MBA from the Rotman School of Management at the University of Toronto and a Bachelor of Business Administration from Wilfrid Laurier University. The past President of Financial Executives Canada – Toronto Chapter, he serves on its Board of Directors. @russellwongadp
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