26th November, 2014
“Human Resource in our firm is not viewed with the same perspective as Sales and Marketing team”
“HR in our organization is treated just as a support function”
As a facilitator in Middle Earth HR, I have the rare privilege of interacting with many HR practitioners. And the above statements are the most common and yet most regretful submissions made by these practitioners when I ask them about the role HR plays in their organizations. Nevertheless wherever the organizations is, as per HR managers, HR is extremely well prioritized & trendsetters in their own fields. Does it mean that prioritizing HR will always make the performance of the organization better?
The solution is not difficult to find. Sales and Marketing performance has direct impact on the company’s balance sheet and hence these functions get due importance. And HR department function continues to be a support function in organizations which have failed in establishing the link between HR department’s role to the company’s performance. The successful companies understood the link between HR role and organization performance. HR analytics provide a framework by which one can relate the success or failure of company’s objectives through the HR department’s performance indicators.
With industrialization the tangible assets like machinery and equipment received envious attention for many years from the beginning and intangible assets have mostly been treated as ‘supportive’. Off late, many organizations at micro level and many countries at macro level have become successful by recognizing the importance of intangible assets like human capital, organization capital and Information capital, and developing them even though the balance sheets provide no space for such assets. The organizations can build acute competitive edge by creating an orchestra of resources and this is possible through Analytics.
What is Analytics then? Analytics is a process of converting data through qualitative and quantitative techniques into information. Analytics is also known traditionally as data management or as big data. ‘Speak with data’ said the Management Scientists years ago, but capturing and processing relevant data was prohibitively expensive some time back. With advancement of technology data has become abundant in all the 3 V’s- Volume, Velocity and Variety. What it required days together of working with data statistics earlier has become as simple as at the tip of fingers through ‘MS Excel’. Analytics therefore is gaining ground now and one of the most important role of Analytics has been to delicately handle the issue of ‘data overload’.
Analytics have been in place in many functions like Marketing, finance, Manufacturing etc. HR analytics is relatively new and is fast becoming a power organizational tool for achieving superlative performance. Basically in analytics we try doing the following four things.
Firstly HR analytics helps us to establish a direct relationship between the organizational strategy and HR functions in terms of its KPIs (Key performance indicators). This will help the managers of each function to establish the key proportionality of their KPIs with the organization’s performance. Clearer the relationship between KPIs and organization goal, better will be the alignment and effectiveness in actions. For example, if you are able to clearly say how a 20% improvement in a certain employee competence can increase the profitability by 30%, you will get a clear direction and the management will be willing to provide all resources for you to achieve this competency improvement. There are many Analytics driven organizations where the HR managers are clearly able to demonstrate the quantitative impact of such relationship.
Secondly Analytics helps you improving the accuracy of your selections of processes/people. You will be able to identify the bad and good interviewers, for example, by correlating the employee performance data in the organization with the interview scores done at the time of recruitment.
Thirdly HR Analytics, through predictive analytics of the lead indicators, can provide ‘Early Warning Signals’ to your organization’s performance well in advance so that remedial actions can be initiated before damage is done. You may be , for example, predict the mass exits of key performers through predictive analytics of lead indicators such as ‘unauthorized leave’, ‘number of social media updates etc. even 3-6 months before it can happen.
Lastly, HR analytics, through a series of operation analytics can make every one focus on the strategically driven few activities and reduce cost besides improving effectiveness. In a manufacturing organization with severe constraints on training budgets, for example, where the strategy was to reduce rework, a smart HR manager was able to identify key staff whose training will reduce rework. And he was able to focus training only on 35 employees of his 800 strong workforces and could achieve reduction in rework.
In the two day workshop on the certification program on HR Analytics and Metrics (CHAMP), we do an in-depth coverage of strategy mapping to enable the participants to learn, relate and align the organizational strategy with the HR strategies. The participants will then learn on the methodology of choosing right lead and lag indicators as their KPI. Detailed coverage on the methods of covering operational and predictive analytics is inculcated in the second day of the workshop. The guided project will help the participant to acquire fair amount of expertise in the Analytics function.
More than dealing with factual data, Analytics is logical. Analytics is fun. And more importantly, the availability of experts in HR analytics is a severe constraint at present. Go ahead and Catch it when it is young!
Venkataraman K is a postgraduate in Industrial Engineering from NITIE with over 25 years of experience. Till date he has trained over 50,000 people which include senior professionals, trainers and students aspiring to venture into the corporate world. He has been actively involved in training professionals in the areas of recruitment, policy formulation, compensation & benefits, HR Analytics, OD areas and has successfully conducted workshops at Bangalore, Chennai, Hyderabad & Delhi.
He has introduced several new techniques and concepts in the area of quantitative problem solving and creative thinking through continuous research of the testing methodologies. He has authored international bestseller book “Think without Ink” which has unique concepts for solving problems in the smartest way.