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December 05, 2010

 

Human Resource Department is a part of any organization. Many companies do depend on HRM on various things like improving performance standards and excellence, staffing motivation etc.If HRM is clubbed with Business Intelligence it bound make some excellent results and also enhances the value of HRM.the statistical techniques applied in BI are bound to yield precise and reliable results in solving many problems proactively. In this article we see the application of BI in the HR department.

Business Intelligence (BI) is a term coined for technologies and applications employed in data collection, access, analysis and information about an organisation’s business. It refers to the use of several financial / non-financial metrics / key performance indicators to assess the present state of business and to assist in deciding future course of action. It is ‘actionable intelligence’.

Human Resource Management is based on ideas and techniques developed to enhance worker motivation, productivity and performance.

Human Resources metrics have always been linked to other key performance indicators such as revenue and profitability. However, applying measurements systems, including Balanced Scorecard, to people management is always a challenging task.

 

HR is not usually viewed as a source for hard measures. In order to analyze the return on all workforce investments, such as recruiting, developing capabilities, compensation and directing behavior, HR function should understand the business challenges of its entire organization.

 

 

 

HR professionals must understand the organization’s business plans and the operational, financial and customer-facing goals they are expected to achieve. Then they should associate these goals with the existing workforce metrics.

 

In many cases, HR information is scattered, which leads to non-systematic hiring, training, performance management and compensation processes. Detailed HR measurement data is essential these days, as globalization, tight labor markets and an aging workforce are causing many businesses to more closely inspect the performance of their largest investment: the workforce whose compensation represents 60 percent to 70 percent of the general expenses.

 

 

New Business Intelligence technologies offer HR departments the ability to invest in Human Capital Management analytics solutions designed to yield the insights essential for making informed decisions on HR.

 

Business Intelligence allows HR departments to become a strategic asset within the organization. It helps boost the efficiency within the HR department and make key decisions around recruitment, planning, and budgeting to support the strategic goals.

Business Intelligence systems help HR professional access information from data warehouses and other sources, structure analyses to find areas of improvement, and communicate the results in a way that is convincing to others.

 

HR function in the organization is not limited by administrative issues. HR department should use a fact-based systematic approach to solve business problems and offer a longer-term viewpoint in order to adjust to environmental changes. The key task of the HR professional is to proactively produce solutions to strategic business issues facing the organization.

 

 

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.

 

Fortunately, today’s advanced technology systems 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.

 

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 that are front of mind because of Sarbanes-Oxley.

 

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.

 

 

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.

 

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.

 

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.

 

Business Intelligence for HR functions as decision support structure for assessing and administering all HR functions. It offers access to precise, appropriate, wide-ranging information from HRMS applications besides facilitating tools to make improved and more calculated choices.

 

Applying Business intelligence in HR helps in executing extensive manpower assessments, preparing account reports, employee performance reports, evaluating wages, staffing, available jobs and termination rules. This eventually helps the organization in making advanced choices that joins the staff with the corporate goals.

 

BI helps the HR to provide strategically sound solutions with the help of right expertise and methodical instruments.

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