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HR Analytics – Approaches to Consider

by Mark Conway, OracleThursday, July 22, 2010

In “Competing on Analytics,” Thomas Davenport and Jeanne Harris profile a CEO who asks his direct reports “Do we think, or do we know?”1 Executives are now expected to manage and make decisions based on “facts,” and perhaps no area is scrutinized more than those that impact a firm’s workforce. Developing a culture – and capability - of evidence-based decisions requires the right infrastructure, optimized business processes, data quality & governance systems, and analytic capabilities. Today’s HR analytics tools not only enable managers to gain insights on current workforce performance, costs and services, but to also model “what if” scenarios to anticipate changes in business. But, firms need to follow some basic steps and emerging best practices to take full advantage of this next generation of HR tools.

First, before looking at any BI or analytic tools, HR management and IT need to have a conversation on “What information do we need to run our business and make better decisions that we don’t have today?”  In addition, they must discuss, “What are the business processes, workflows and data definitions we need to put in place to generate that information?” This step is much more of a business discussion than a technology discussion. Then, knowing what information are needed and what processes can be automated, one can assess analytic tools for their fit and features: do they have a best practices library, a pre-built warehouse, pre-built KPIs, ETL, data integration capabilities, guided workflows, etc.

In their “Trends 2009: Human Resource Management”report, Forrester analysts Paul Hamerman and Zach Thomas identified several trends relating to HR becoming more business focused, e.g. that core HR systems strategies will focus on master data, and that analytics will help HR become more strategic. 2 A November 2009 paper on “HRAnalytics: Driving Return on Human Capital Investment,”by CedarCrestone’s Lexy Martin identified similar trends, and laid out six steps to maximize success in deploying HR analytics:

  1. Invest in Data Cleansing
  2. Focus data and analytics on business results
  3. Start with the end in mind
  4. Plan for incremental deployment
  5. Use data-driven business case
  6. Manage change 3

Data cleansing, Master Data Management, Data Governance processes – are all necessary prerequisites to a successful analytics implementation. Have the business discussion, determine what data is needed, and as Martin points out, have an end goal in mind; but spend the time upfront to get the data management issues nailed down.

Once the implementation begins, target short-term, business-focused wins – a phased approach versus a “big bang” strategy, is how we see many firms be successful. An “incremental deployment” is a best practice that shows the value of the analytic tools quickly, and can build the case for broader, enterprise-wide adoption.

BusinessWeek Research Services found that “... when HR uses fact-based decision making – instead of intuition or best guesses – the group becomes a more credible partner to the business it serves.  Fact-based decisions help HR improve HCM practices, recruit and deploy the right talent, cut costs, contribute to business performance and provide evidence of those contributions.”  4     With today’s accountability and reporting requirements, no executive wants to explain that they closed three plants and terminated 600 employees based on a “best guess.”  Like the CEO in Competing on Analytics, their stakeholders will be asking – “Do you think, or do you know?”

Using HR analytics to gain insights, develop “what if” scenarios or lay out a series of alternative options, enables firms to be prepared for any eventuality. With today’s volatile markets, being nimble is a key competitive advantage. With the right processes and analytics tools in place, HR can deliver the kinds of insights to effectively manage an organization’s workforce, performance and agility.

Sources

1. Competing on Analytics, The New Science of Winning, Thomas H. Davenport and Jeanne G. Harris, Harvard Business School Press, 2007

2. Trends 2009: Human Resource Management – Talent Strategies Adjust to the Business Climate, Paul D. Hamerman and Zach Thomas, Forrester Research, Nov 21, 2008

3. HR Analytics: Driving Return on Capital Investment, An Oracle White Paper, Lexy Martin (CedarCrestone), November 2009 

4. HR Analytics: Gaining Insights for the Upturn, Bill Roberts, Business Week Research Services, May 2009

About the Author

Mark Conway is Director, Product Marketing, Business Intelligence, for Oracle, where he orchestrates BI marketing strategy, global marketing initiatives, and works with corporate marketing to communicate the value of Oracle’s BI solutions on a world-wide basis.

Mark joined Oracle from Hyperion where he worked in the Enterprise Performance Management (EPM) Strategy Group, and led a portfolio of programs to promote EPM as a management practice to the business & academic communities.  Prior to Hyperion, Mark developed and led PeopleSoft’s academic alliance programs; he also worked at Digital Equipment Corporation for fourteen years, in areas including Digital’s Internet Business Group, and DEC’s Corporate Research Group, where he managed university-based, sponsored research projects.

Mark serves on the Masters of Science in Business Intelligence Advisory Board at the St. Joseph University’s Haub School of Business, the Editorial Board of the International Journal on Business Intelligence, and the Oracle Business Intelligence – SIG. Mark has a Masters in Technology, Strategy and Policy from Boston University, and a Masters in Education from Northeastern University.

For More Information
http://www.oracle.com/appserver/business-intelligence/hr-analytics.html

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