Over the years, human resources has been bumped down lower and lower on the influencer list in organizations, and losing what seats professionals ever had at the executive table. This shift has been largely caused by HR’s increasing focus on operational tasks. Consequently, HR is seen as a support group rather than a strategic influencer. While HR is often measuring and presenting tactical metrics, the most important key performance indicators (KPIs) should be around supporting and advancing the value of the company through the strategic objectives.
Because it’s often not viewed as a strategic partner, HR has become the caboose of technology innovation and resource investment at most organizations. While 2015 saw $2.4 billion in venture capital funding for HR tech and slews of new HR tech startups gaining notice, many companies aren’t investing in this technology. But if HR departments shift their focus to become big-goal advisors, they can not only campaign for better technology platforms they need, but they’ll earn that seat at the table.
Better technology allows HR to engage in more meaningful metrics and analytics about the organization’s people, deeper than the traditional benchmarks used by many HR departments today. The historical benchmarks of training, time to hire, employee turnover, etc. are surface-level information focused on efficiency rather than effectiveness and therefore lack deep insight into a company and its people. Those metrics don’t indicate an employee’s value, but merely the competency of the organization.
The data behind the people
Just like the department itself, HR analytics need to be focused on strategy, data and analysis, with the KPIs focused of advancing the value of the company. Since HR is all about people, these analytics should measure employees in terms of the value they add to the overall company strategy. Instead of concentrating on hire rate, the HR team should make sure they’re hiring the right people who directly contribute to the company’s main goal and help them on the specified roadmap to success. Instead of fixating on employee retention percentages, the HR team should evaluate whether they’re keeping the people who really matter to the company goals and weeding out or reorganizing the unnecessary roles or the underperforming employees.
Executives at a company must identify the strategic objectives, and collaborate with HR to determine how the personnel of an organization individually and collectively need to develop, work and be staffed in order to achieve the strategy. For example, say a company’s main goal is to become number one in customer satisfaction — its HR actions and analytics should be directly tied to hiring, training and motivating people with good customer skills. The company cannot present the best experience to its customers without the right, qualified people in those key positions, with the right measurements to analyze and readjust if needed.
Analytics for all
HR analytics based on the main strategic goals shouldn’t just be for the HR department and the C-suite, however. Every person in the company should understand how their role and their behavior impacts the strategic objectives of the company. HR should be guiding that communication initiative. Employees should also be given access to analytics that reflect their individual efforts against the target and evaluate their performance in providing necessary value to the company. Their quarterly and annual performance metrics should be aligned to strategic goals so that each employee knows how he or she is contributing to the company’s success in the areas that matter most.
These individualized and collective HR analytics should be future-thinking and forward-moving, rather than retrospective and backward-facing. If HR wants to be a real strategic partner bringing significant information to the executive table, they need to be focused on lead indicators rather than lag indicators.
A perfect example of this is measuring employee engagement vs. employee turnover. Measuring employee engagement analytics on an HR technology platform — through candid, anonymous employee surveys like Employee Net Promoter Score, etc. — allows the HR team to investigate the factors of the company making employees dissatisfied and change course before employee retention is affected. Such a system of proactive analytics that helps organizations control the future further solidifies the HR department as an essential player in the overall company strategy.
Selecting HR technology
The HR technologies that offer these analytical features are intuitive and seamless, and operate well with the overall company’s platforms. Some business performance technology plugs directly into the company’s ERP system, connecting HR’s metrics to the financial and overall analytics of the company. These platforms give the HR team quick access to operational metrics — like paycheck delivery, strategic analytics and employee engagement — through prebuilt templates that they can get immediate value from.
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While strategic KPIs are the goal, operational metrics certainly have a place as well and are worthy of review. These analytics can then be easily shared with employees from the C-suite to entry level to help everyone know where they stand in moving the company’s main goal forward and getting the job done efficiently. This is the technology that drives meaningful HR metrics and strategic thought.
As HR becomes more of a strategic force within an organization, using forward-thinking analytics and making personnel decisions informed by the overall company objective, it can once again take a seat at the major-player table. HR will become the advisor in all matters about the people in the organization that it should be, rather than focusing on tactical items that miss the big picture of getting the company where it wants to go.