• HR Software
• HR Systems

A Practical Guide to Delivering Meaningful People-Based Information
This Briefing Paper explores the concept of people-based business intelligence, an emerging approach to people management that moves reporting and analysis away from inward-looking HR metrics into a broader business context. Made possible by a combination of software tools, process automation and evolving people management priorities, business intelligence gives organisations greater insight into their employee base and helps propel Human Capital Management up the boardroom agenda.

The Briefing Paper argues that:

Senior management teams struggle to get the information they need about their employees because so much reporting is rooted in the inner workings of the HR department. While operational HR indicators have an important role to play, people-based business intelligence provides a deeper insight into underlying trends, meaning and business context.

People-based business intelligence transforms the scope of HR reporting and analysis. Measures range from operational efficiency (‘How fast are you recruiting?’) to effectiveness (‘Are you recruiting the right people?’); from cost assessment to trend analysis; and from ad hoc ‘what if?’ analysis to strategic workforce planning
While some components of people-based business intelligence software have been available for the best part of a decade, take-up has been relatively slow. Adoption levels are likely to increase, however, with the emergence of easy-to-use software tools, context-rich management dashboards and distribution mechanisms such as employee portals. Business intelligence capability is also starting to be offered as a hosted service, where the provider takes on the IT burden of running the software and the customer accesses it over the internet.

One prerequisite for people-based business intelligence is an effective data management strategy, pulling together people-related information and centralising access to it. Many organisations will look to use their HR Management System as the ‘central source of truth’ for people-related activities, inside and outside the HR department. Taking this approach doesn’t simply improve business intelligence: it also helps simplify complex, multi-function activities such as onboarding.

Traditional approaches to software projects tend to focus on automation ahead of business intelligence, partly because automation tackles highly visible inefficiencies. As a result, business intelligence initiatives are often relegated to a second phase of implementation – and frequently forgotten in the face of more pressing day-to-day priorities. Webster Buchanan Research believes that the two components should go hand-in-hand: automation, after all, generates much of the data needed for effective business intelligence, which in turn gives organisations greater insight into their operational efficiency.

While improvements in software provide the platform for business intelligence, some HR functions lack the necessary analytical skills to make the most of the outputs. In the future, service providers are likely to step in to offer these skills as an additional outsourced service.

When Webster Buchanan Research carried out a recruitment survey earlier this year, several questions about metrics gave a good insight into the way HR directors and managers think. Our findings demonstrated that recruitment reporting is still largely centred on traditional HR-specific metrics such as time/days to hire, rather than business-centric measurements. Less than a quarter of respondents (23%) said they report on the direct cost of recruitment today, for example, and just 6% on indirect costs (for example, in HR/line managers’ time). Only a third of respondents report on the business impact of unfilled vacancies, including the impact on productivity.

Although respondents to the survey were committed to changing the way they report – over a quarter expect to start reporting on the business impact of unfilled vacancies this year – the results demonstrate that much people management reporting is still rooted in the inner workings of the HR department, rather than assessing its impact on the broader business.

Reference: ‘Recruitment 2008: From Marketing Theory to the Practicalities of Web-based Hiring’, a survey published in March 2008 by Webster Buchanan Research.

Establishing this link between traditional people-related metrics and broader business drivers is fundamental to any Human Capital Management strategy. As the HR function strives to find a voice at board level, the ability to present employee-related issues in a relevant context for senior management is becoming increasingly important – a way of thrusting people-related issues to the top of the agenda and reinforcing HR’s business credentials. This combination of business context and board level relevance is what Webster Buchanan Research terms ‘People-based Business Intelligence’ – sometimes called HR Business Intelligence. It’s about making better use of the rich sources of data that the HR function has at its fingertips, both for HR’s own benefit and for the broader business.

None of this is to demean the stature of classic HR reporting. Metrics such as days-to-hire are key indicators of HR operational efficiency, while absenteeism statistics and other data provide useful comparators, both to measure against historical performance and to compare with external benchmarks. But people-based business intelligence takes this kind of analysis to another level and provides a deeper insight into the underlying trends and meaning. It doesn’t just measure absenteeism rates, for example – it measures what absenteeism costs the business in terms of bottom line profit, employee morale, opportunity cost and so forth.

Much of this impact analysis depends on an organisation’s ability to tie together different pieces of information. For example, most organisations retain data relating to employee performance, built around individual performance appraisals and departmental performance against target. Likewise, information about salaries, bonuses, and benefits are readily available, albeit often in different systems. The problem is that many organisations struggle to link the different sets of data together to ensure that compensation is closely tied to individual and group performance.

Part of the issue here is cultural, although this is slowly changing as people management rises up the corporate agenda and demand for better information grows. Part of it is about how effectively organisations manage their data, which tends to be scattered between spreadsheets, HR management systems, finance systems, specialist applications, filing cabinets and in many cases, employees’ heads. This too is changing, thanks to the emergence of a new generation of affordable, easier-to-use software applications and tools. And part of it is about how well equipped organisations are to analyse data when they actually get their hands on it.

This combination of changing HR philosophies, new technology enablers and practical solutions to skills shortages provides the platform to deliver effective business intelligence.

Computers In Personnel Ltd
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