HR’s struggle in driving business decision

While big data and analytics play a key role in companies’ decision-making processes today, the reality is that most HR organisations fall well short of mastering these capabilities. 

Losing the Talent War

I had a conversation with an HR manager in the retail industry a few months ago with regards to their challenges around staff retention strategies for their retail shops.

The HR Manager told me that the time-to-hire is getting longer and it is becoming more costly to hire replacement staff, due to competitive labour market conditions. In order for them to retain staff, the company decided to increase the rate of commission payout in the hope of reducing attrition rates. The HR Manager commented that it seems to be working well, as the attrition rate is decreasing since there are less recruitment requests from hiring managers.

I became curious and asked if they made the decision to increase the commission scheme as they had projected that there would be long-term savings in terms of revenue from being able to reduce attrition rates.

The answer was no. They didn’t do any analysis at all.

By now, it becomes apparent to me that the business understood very little about the potential and actual impact that this has on employee engagement, store revenue and the cost of operations. So, it came with little surprise that I was made aware that they were also not measuring the effectiveness of the scheme – i.e. how much longer are the employees staying? By how much has the attrition rate decreased? And does it motivate employees to sell more?

How Can HR Data Drive Business Decisions?

Bersin by Deloitte reports that organisations with mature analytics are:

• Two times more likely to improve their recruiting efforts;
• Two times more likely to improve their leadership pipelines;
• Three times more likely to realise cost reductions/efficiency gains; and
• Two and a half times more likely to improve talent mobility – moving the right people into the right jobs.

Below are a couple of examples on how HR could potentially involve big data and analytics to influence business direction and performance.

1. Scraping Annual Performance Reviews
   In an article by FastCompany, Deloitte revamped its performance management system in 2015 after discovering that it was spending nearly two million hours a year on its review process. Last year, Adobe calculated that its 2,000 managers were investing 80,000 hours into performance reviews. Accenture learned that 75% of its review process was devoted to talking about employees, leaving only 25% for actually talking to them.
   
   In fact, according to a recent Harvard Business Review article, it is estimated that by now, more than one-third of US companies have since abandoned the traditional appraisal process.
   
   Employees are now looking to their managers for coaching and mentorship, and find purpose through constantly learning and growing on the job. Hence, companies are now recognising the importance of employees receiving timely feedback on an ongoing basis following assignments. If organisations want to develop high performers, managers must be equipped to coach and empower them.
    
2. Embracing the Remote Work Environment
   Historically, remote work has been a small part of the employment landscape, but, thanks to the internet and advancing mobile technologies, it is now possible to have a connected workplace away from the office. The ability to work from home is fast becoming an increasingly popular and sought-after perk in modern workplaces.
   
   Dell also reportedly wants half of its workforce to work remotely by 2020 and said that it makes good business sense as the company saved $39.5 million by consolidating office space or converting it to flexible unassigned work stations that can be used by any staff.

Change is not the problem, resistance to change is…

What are you and your business leaders doing to close the gaps and prepare for the future? How confident are they that they will remain competitive while meeting the future demands of the workplace?

Driven by demographic shifts and technological advances, many organisations are now trying to evolve and close the gaps among technology, individuals, businesses, society and governments. The 21st century challenge for business and HR leaders is to rewrite the rules of engagement to ensure that they can remain competitive.

Scott Thomson

Managing Director, Links International