For a time, HR was almost strictly an administrative function, with HR professionals focusing the majority of their attention on completing time-intensive, repetitive tasks and serving as personal consultants to employees trying to change their billing addresses, sign-up for benefits or asking questions about their latest paychecks.
But that changed once HR organizations deployed self-service technology. Employees could find information online and do much of the administrative work of the HR organization themselves, leaving HR professionals time to focus on more strategic tasks.
Only over the last few years though, have HR groups begun to realize the value of the rich and extensive information, collected via the self-service applications and stored in their corporate databases. They’ve already implemented the technology and procedures to get information into the databases. Now HR organizations are becoming experts at getting that information out.
The most efficient and progressive HR organizations today are learning how to use employee data to offer better performance and career management and help individual lines of business meet specific goals and objectives. HR intelligence allows HR organizations to understand not only how to run their business operations effectively and efficiently, but how to apply the information across the entire corporation to reduce costs and increase ROI.
Software programs, such as Oracle HR Intelligence, part of Oracle Human Resource Management System (HRMS), can be layered on top of existing database programs easily and even automatically create reports. Such products can be implemented simply, without having to create new data warehouses or deploy entirely new platforms.
While the current economic climate is affecting companies’ IT budgets, most companies are moving in the direction of HR intelligence, said James Holincheck, research director from Gartner.
It’s precisely the slowdown that may actually be encouraging some companies to deploy HR intelligence solutions.
“One thing HR intelligence can potentially help you do is identify specific areas where you may be able to cut costs,” he said. It can also help executives understand the ramifications of cost cuts. For example, if a company is reducing headcount, HR intelligence tools can help executives analyze the affects that reduction will have on the business.
Companies that are pinching pennies often aren’t in the position to hire new workers, even when they need to be more productive. Analysis of current employees could help identify useful skills within the existing company. “HR intelligence solutions can help companies weather a tough economy,” said Holincheck.
Using HRMS software applications, HR professionals can analyze trends and take action based on their findings. Burlington Coat Factory, the clothing retailer, uses Oracle (HRMS) and has found that automating some processes combined with the analysis capabilities of the tools are extremely helpful.
“We think it is critical to have the tools, the resources, and the data to be able to analyze how well we are utilizing and managing our human capital,” said Judy Mascio, human resource director at Burlington Coat Factory.
Mascio thinks it is critical to an HR organization’s success to be process efficient and have the ability to offer useful analysis to the company. The analysis and reporting tools available via the software allow Burlington’s HR department to examine employee data and trends.
The implementation of HR software has allowed Burlington to not only put transactional processing into the hands of its 23,000 employees, but to analyze the productivity of its employees as well. As a result, Burlington expects to dramatically cut employee expenses, and HR personnel are better able to focus on their core activities instead of fielding employee inquiries and processing employee transactions.
There are many ways that HR intelligence can make an organization more strategic. For example, an HR intelligence report can study turnover. A company might have a goal of 10 percent turnover in a year. But if the company meets that goal, how does it know if that’s good? What if the people who left were the most valuable, taking their unique skills with them? Or what if the people who left didn’t contribute much to the success of the business?
With HR intelligence software, an HR executive can easily create a report showing who left the company and what types of skills they had. They may learn that 10 percent turnover is a good thing because everyone who is leaving is a poor performer. Or they may learn that 10 percent is a negative because the company is loosing its best workers.
The report can also survey why people are leaving. If one reason is predominant, that factor can be improved upon.
An HR manager could also tailor the turnover report based on relevant factors. For example, a retail business may not be overly concerned about turnover on the store level but could be concerned about a high turnover rate among managers. A thorough HR intelligence software application would enable such distinct reports.
Some software products available today can even create daily reports. The reports use the most current information in the database to detail metrics such as headcount, salary, distribution of workforce, skills, turnover and absence. The software can also allow the user to set alerts for any specific metric. For example, an alert can be sent to the HR executive’s mailbox if absences hit a certain number.
With that information the HR professional can create other reports to try to find out why absences are that high, and take action based on that information.
By organizing and analyzing this vital information using intelligence technology tools, HR groups are able to make much smarter decisions for both their employees and the corporation. As such, C-level executives are beginning to view their HR organizations as strategic partners in helping the business achieve its short- and long-term goals.
HR executives can use the tools to study their own performance as well. A recruiter can look at the effectiveness of different sources used to recruit for specific jobs. Or, a recruiter can look at his or her performance statistics, such as cost per hire, relative to other recruiters in the company.
HR intelligence tools aren’t just for the HR department, though. They can be used by executives across the organization. “It’s difficult sometimes for an executive to know basic things like how many people do I have working in the company globally, or how many people in each business unit,” said Holincheck.
On a more strategic level, that information about a workforce can help an executive that may be considering getting into a new line of business or launching a new type of product. The ability to easily get a snapshot of workforce competencies can allow an executive to know if current staff can support new business strategies, said Holincheck.
But leaders in software development won’t stop at HR intelligence. The next step is using data for predictive modeling. So instead of using information to report on what’s happened historically, applications could try to predict what might happen in the future. Using information already gathered about employees who have left a company, for example, the application could predict which employees are likely to leave in the future.
If it finds that certain top performers are next in line for the door because like other recent workers to leave the company they’ve been in the same job for two years without a raise, the HR department can decide to offer the worker a new position in hopes of retaining him or her.
Predictive modeling tools could also be useful for planning for the future. “I’m not talking about the sort of salary planning everyone does annually,” said Holincheck. “But the tools to help enterprises navigate where they need to be in terms of people three to five years from now from a strategic perspective.”
Predictive modeling tools could help companies examine their workforce in order to make decisions around big events such as mergers and acquisitions or divestitures, he said.
With HR intelligence tools, the HR department can truly function as a strategic contribution to any organization.