• By Vipul Mehta

Business intelligence (BI) can be used in HR to improve results across all aspects of the organization —candidate screening, performance appraisals, cost-containment, retention and productivity.

With BI HR can accelerate to:

• Acquire Talent: Key insights can help HR cost-effectively find the right people in the shortest time.
  
• Deploy Staff: To segment workforce and invest time in the key employees who make the biggest contribution.
  
• Segment Talent: To provide opportunities for growth such as training, on-the-job experience, and mentoring.
  
• Retain Top Talent: To identify the critical talent within the organization and ensure HR retains it.
  
• It’s not enough for HR to simply manage administrative issues. Rather, value will lie in using a fact-based analytic approach to solve business problems and providing a longer-term viewpoint about how the organization should adjust to environmental changes.
  
• Aligning payroll and incentives with corporate goals
  
• Monitoring key metrics like turnover, demographics, cost per employee, recruiting, and training effectiveness
  
• Analyzing opportunities for improvement in areas such as recruitment, attrition, and retention
  
• Minimizing the administrative burden of manual processes involved with spreadsheets
  

BI acts as a decision support system that helps analyze and manage all HR processes. It provides access to accurate, timely, comprehensive data from HRMS applications and provides the tools to make better, more strategic decisions. Perform comprehensive manpower analysis and budget reports. View employee development and performance reports. Analyze salary, recruitment, vacancy and termination trends. The results: drive faster, better decision-making that aligns your workforce with corporate objectives.

More than ever before, HR professionals are being asked to show how their company’s 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 company’s 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.

BI 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) – 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 – 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.

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 “what-if” projections for the future.

Delivering Business Intelligence to a Global Organization: BI is an especially critical area – and challenge – 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.

It’s best for companies to start with a few key business challenges that are significant to overall results. Although a long-term vision is essential, it’s 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 company’s 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 – 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.

How Business Intelligence Supports Strategic HR Decision-making

• Provides accurate, meaningful and actionable information
  
• Introduces modeling capabilities based on real data to make projections about the changing dynamics of a company’s workforce in advance of, during and after policy, regulatory and other changes
  
• Delivers the methodologies, tools and analyses to understand the business impact of workplace trends, decisions and policies
  
• Identifies and links performance drivers and critical workforce trends that better inform the strategy for end-to-end business solutions
  
• Gain Daily Business Intelligence: Leverage predefined KPIs to set management goals. Consolidate all key information on a single homepage, with one-click access to automated out-of-tolerance notifications, KPIs, reports, and more.
  
• Manage Workforce Development and Learning: Analyze competence gaps by person and job. Analyze skills gaps for groups and individuals. Manage training attendance, resource use, costs, and success rates.
  
• Optimize Compensation: Analyze salary trends. Compare average salaries by group. Look at salary distributions and skews by grade, performance, and service test. Evaluate benefits plans for maximum value.
  
• Manage Recruitment: Analyze time and costs by recruitment method. Review recruitment success rates. Analyze applicant statistics and dropout reasons.
  
• Analyze Workforce Composition: Understand workforce trends by job, geography, user-defined categories, minority groups, and business areas.
  
• Manage Utilization and Productivity: Analyze planned and unplanned hours by cost band over time. Analyze absenteeism by reason over time.
  

Companies around the world face a workforce that is getting older. This will make attracting and retaining talent a top priority. This trend will catapult into the role of HR department right into the middle of formulating a people centric business strategy, especially in Knowledge Industry.

As the global war on talent continues, it will become increasingly difficult for large organizations to hire, motivate and retain talent. With the technological advances and globalization, organizations will be subjected to intense competition. Thus, utilizing the right human capital will be of paramount importance. Intense competition will also lead to growing attrition. This is where HR can play an important role in ‘Talent Management’. Rather than doing only administrative work and ‘reactive’ hiring/firing employees, the HR professional need to ‘proactively’ start solving people issues. IT executives will not be able to address this on their own. Like it or not, they will have to collaborate with HR department in producing solutions to strategic ‘people’ issues facing the organization.

With BI tool, HR department can utilize all the data related to their existing employees to analyze their human capital and provide decisions around staffing and retention. Business intelligence can also help HR Department to mine out information regarding:

• How to motivate individuals and departments within organizations?
  
• Do our incentives and benefits reward smart contribution?
  
• How to flush out innovation from individuals and departments?
  
• Will the individuals work their best in collaborative environment?
  
• What is the best technique to train employees?
  
• How to incorporate feedback from individuals?
  
• Why do employees leave the company? Where do they go?
  
• What does the individual employee think of work environment?
  

With the BI tools, the HR can tailor the benefits and incentives. The era of providing generic benefits is over. BI tools help get ‘Mass Customization’ of benefits to suit individual employee. This will be very critical to be competitive in attracting and retaining talent.

• Is my workforce capable enough to meet my target?
  
• Why is my employee turnover so high?
  
• Have I recruited the right people?
  

Getting these answers is very critical not just for your HR strategy but to your business as a whole. But are your systems giving you the right information to help you answer these questions?

They might be giving you numbers, percentages and statistics. But a lot of times you would not have known what to do with them. Unless and until they facilitate good decision making and intelligent choices, they mean nothing. So how do you get those ‘good numbers’?

HR is a key function and BI is required for better people management and overall business management.

We understand the critical need of good decision making whatever be the functional domain. It is with this vision that we design and integrate business intelligence solutions with HR solutions.

Along with integrating HR with your core business strategy, you will have a reporting system which will take care of your metrics. Get your metrics for:

• Trends analysis
  
• Workforce analysis
  
• Recruitment cost analysis
  
• Employee turnover
  
• Budget control
  
• Salary Monitoring
  

BI can help HR departments become a strategic asset within their respective organizations in two ways: by generating efficiencies within the department itself; and by using the insight that BI delivers to help their organizations make strategic decisions around staffing, planning, and budgeting to support key goals.

BI can help HR provide answers to the questions that have a direct bearing on their organization’s strategy. For example:

• Do our recruitment programs attract our future managers?
  
• Which employees are ready for management positions?
  
• What will our staffing needs be five years down the road?
  
• Who are the most productive employees across the company?
  
• Which employees are at risk of leaving? What can we do to keep them?
  
• Do we have the right skills mix to achieve our goals? Where are the gaps?
  

With answers to these questions, HR can identify trends in their workforce that lead to a better understanding of how to maximize human capital. Positive trends can be leveraged for greater value; negative trends can serve as an early warning system to spur corrective action before problems become acute.

Hiring, retaining, and deploying employees with the right skill sets can be challenging and has strategic implications to firms across industries. With 1KEY Business Intelligence Reporting & Analytics software, the decisions that determine the composition of the workforce can be done with greater insight and accuracy than ever before.

Posted on March 31st, 2008 by Vipul Mehta
Filed under: Business Intelligence, View Points & Perspective

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