Six Reasons for HR to Leverage Big Data
While big data has been used in many fields – from retail to healthcare, there’s one dark horse that will benefit substantially from the use of big data analytics. According to the Harvard Business Review, 71% of CEOs surveyed believe that human capital resource is the most important contributing factor to sustainable economic value. It’s now time for HR to enter the game, after all, a company’s payroll sometimes makes up almost half of the company’s costs. Big Data in HR Management can go a long way in achieving this. Here are some key reasons:
Predicting Turnover Risks
One of the most daunting tasks for any HR person is increasing employee retention. Businesses with a high turnover rate end up losing huge sums of money on training and welcoming new employees who may leave the organization soon enough. Google, as early as 2009, started crunching data from employee reviews, promotion and pay histories in a mathematical formula, which it says can identify which of its 20,000 employees are most likely to quit, according to this article.
While predicting turnover risks will come as a fresh wave for many companies, the task of using big data accurately and effectively remains. Software giants have already started rolling out software tools that use advanced analytics to address retention challenges.
“After a long struggle, predicting turnover risks will come as a fresh wave for many companies”
Even though there are many companies that spend a lot of money behind their employees in the form of training, out-bound activities and sponsoring expensive education to promising employees, there’s scope in optimizing this expenditure. Where is all the money really going? Can it be put to better use? Wasteful spending is an invisible problem; after all, what looks good on the surface may well be sapping useful resources of the company. Big data solutions are able to provide answers to many such questions.
The goal for companies must be to uncover hidden gaps that the business didn’t already know – and to be predictive when it comes to certain HR functions like training and choosing between HR initiatives.
Pressure on ROI on Human Capital
“Make do with what you have” is one of the most common phrases a manager must deal with. The manager always gets sandwiched between his team complaining of work overload and his boss putting forward stringent deadlines and assignments. Human capital is the most important resource any company has. As a result, performance data becomes vital. Linking performance to employee costs is one way to measure the ROI. This data is fairly straightforward in a sales organization – but it can become more complicated in a service-oriented business.
Performance data is big data itself, especially for large organizations. Halogen Software’s blog on employee performance data talks in great length about the scope of performance data and why it has been underutilized.
Talent Management and Planning
Over the next five years, the focus is going to be on talent management, namely, hiring and recognizing the right talent. While the traditional approach can turn out to be a costly affair, big data analytics can throw light on formulating a strategic approach.
Of necessity is better alignment between what the business needs and what kind of talent and skills is being hired. Big data becomes important in workforce planning for 2 reasons:
- Trends and patterns of employee movement are the basis for forecasting future needs for maintaining total headcount.
- By looking at workforce planning information as well as current staffing levels, HR can estimate significant recruitment peaks and regulate final recruitment levels accordingly. Even though this must be done regularly, it saves the last minute rush to hire an expensive replacement.
“Alignment between business needs and talent acquisition is important, and this is where big data steps in.”
Demand for Insightful Data
Even though this seems like an obvious claim, that the demand for insightful data is higher now than ever; nonetheless, this is an important requirement for leaders and managers today. A decade ago, decision makers were more likely to base their decisions on gut and personal experience.
- Today, however, increasing number of interviewers like being equipped with statistical data about an employee even before the interview has begun.
- When it comes to making decisions on employee satisfaction and engagement, more leaders are beginning to rely on facts more than experience.
Are all the metrics that HR uses effective? Are comprehensive metrics leading to a positive outcome or are they just a ‘feel good’ factor? Also, having fancy programs is great, but where’s the evaluation? As mentioned in this article from Halogen Software, there are common mistakes companies make while creating and implementing metrics. The most common mistake being that metrics do not align with the goal of the organization. Analytics tools can help enormously in figuring out the right metrics for your company.
“Organizations should focus on creating impactful quality metrics, rather than a large quantity of metrics.”
Does your company use big data analytics, especially in HR? If so, has there been a positive impact?