The shift to Industry 4.0 represents a profound opportunity for HR organizations to harness advanced technologies and uncover strategic insights faster and better. Indeed, capturing workforce data digitally makes it possible to plan and manage talent with confidence and accurately predict the skill sets workers will need to thrive and survive in a workplace that’s undergoing rapid technology-driven changes.
It’s the reason why forward-thinking HR professionals are increasingly leveraging analytics to interpret workforce data more effectively and optimize their strategic workforce decision-making capabilities. In the process, they’re transforming HR’s ability to create value that has a direct impact on business results today while preparing the enterprise for the impact of a fast-evolving tomorrow.
The Rise and Rise of Data-Driven HR
In the past, a lot of HR data went unused. But in today’s era of big data and analytics, HR organizations are able to turn rich data sources into insights, including in predicting when employees will leave, seeking ways to improve retention, driving enhanced employee engagement or undertaking data-fueled succession planning to develop the next generation of leaders.
With HR increasingly tasked with quantifying how workforce initiatives such as learning and development (L&D) contribute to revenue streams and help reduce costs, workforce analytics now represent a key tool for HR teams looking to communicate the contribution training makes to core business objectives.
But as HR’s ability to gather and analyze data grows, so too does the opportunity for HR professionals to deliver yet more value. Distilling dizzying amounts of data into actionable and credible information represents a measurable strategic asset for the enterprise.
Predicting Future Success
Business leaders are looking to HR professionals for answers on how changes to the business are likely to influence the future face of talent.
As a result, HR needs to improve its ability to account for current and forecasted business needs, critically assessing the future demand for skills and understanding the patterns and obstacles that may affect workforce migration to new skill sets.
Data analytics can help HR teams to future-gaze with greater accuracy and certainty to improve business decisions in a range of areas, including:
- Turnover. Which functions, locations, roles or individuals are most at risk and what scenarios can we prepare in advance to mitigate against the impact of these losses?
- Churn and retention. This involves identifying and investing in staff with critical skills who hold key positions, and proactively managing retention issues to reduce the potential loss of development investments.
- Talent management. This involves forecasting your future high-achievers and high-performers, and determining the best sources for new talent and the best programs to develop and keep talent.
- Enabling the workforce. This involves leveraging technology to gain greater visibility of the workforce, understanding the skills they need to succeed and perform, what gets in the way of them achieving their best, and improving their overall well-being and effectiveness.
- Connecting L&D to business outcomes. Linking outcomes to business results is just the start. Establishing L&D KPIs makes it possible to evaluate the value of specific learning modalities, to measure the business impact of learning programs on people and the business, and to evaluate the true operational “dollar value” of every training investment.
- Modeling what the future might look like. This involves understanding the changes the organization may experience and what the impact of talent hiring, retention and engagement could be. It may include forecasting what the workforce should look like, by department or function, and identifying the potential capability gaps that will affect the enterprise’s ability to outperform competitors in the coming years.
Identifying Potential Problems
Many HR professionals are already utilizing data analytics to evaluate performance in key workforce management priority areas, including overall talent retention rates, cost and time to hire talent, the average tenure of new hires, time to full productivity per full-time employee and revenue per full-time employee.
By benchmarking success against these priority KPIs, HR teams are able to demonstrate they are acquiring the right talent, retaining top talent and developing future talent effectively.
But data analytics also enables HR teams to think more proactively and present their findings to leadership. For example, it can help flag potential workforce issues that may affect specific departments by offering answers to questions like these:
- What percentage of the engineering workforce is eligible for retirement in the next three years, and what is the propensity of eligible engineers to actually retire?
- Which recruiting channels deliver the best return on investment for specific roles?
- Do we have the right skill sets in place to drive our longer-term supply-chain optimization ambitions?
The best HR leaders are stepping out of their traditional siloed role to actively engage with business leaders and drive organizational value. In other words, rather than just passively responding to the routine needs of the enterprise, they are supporting line managers via strategic HR interventions that contribute to the long-term health of the business. Leveraging workforce data analytics can focus HR resources in more agile ways to support fresh priorities as these arise.
Adding Value: Data-Driven HR Gathers Pace
The goal of intelligent data-driven analytics is to add value to the organization in the smartest way possible, and the idea of the data-driven HR team is certainly growing in momentum.
Today’s HR teams can make use of data analytics to better understand and evaluate the business impact of people in the workforce, improve decision making in people-related matters and enhance the overall effectiveness of employees. All of this affects an organization’s ability to achieve its strategic aims.
With the right technology in place, HR teams are able to illustrate the causal relationships between efforts toward key business objectives and the results these produce. Along the way they gain the ability to evaluate:
- How to initiate continual improvements to programs and processes so that these are more effective and better aligned with the business.
- The actions required to maximize program investment outcomes by generating greater value at a lower cost.
- Whether training plans are delivering anticipated outcomes, and how well these are aligned with other HR or talent initiatives.
Making use of data analytics to interpret workforce data can generate improved talent recruitment and retention outcomes, enhanced employee productivity and engagement, and the delivery of data-driven insights to business leaders. This makes it possible for HR professionals to play a truly strategic role in enabling the business to deliver — today, and into the future.