HR Technology the key to Business Transformation

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 “You cannot mandate productivity;you must provide the tools to let people become the best.” – (Steve Jobs)

HR Technology can be defined broadly as the use of scientific knowledge and skills in the practical application of HR tasks and activities. It essentially includes the use of tools like big data, statistical analysis and systems automation in the application of HR.

One of the biggest challenges for us today is transforming the HR function from what has conventionally has been a ‘soft’ (qualitative, subjective, intuitive and perceptive) function to a ‘hard’ (quantitative, objective, analytical and logical) function. This will mean undergoing a paradigm shift – from the old, traditional HR to the new, transformational HR. I think what we are going through currently is the transitional HR, trying to find the best ways and means to make this shift.

 “If it doesn’t challenge you, then it won’t change you.”

Today, we hear about how HR is clamoring to be a ‘Business Function’ and if that has really to happen successfully, then it has to quickly make the above paradigm shift and adapt to new ways of thinking and working. If it wants to play a more critical role in helping businesses anticipate and manage change, then it must embrace and apply technology at its core.

With millennial comprising of more than 50% of the global workforce by 2020 and 75% by 2025, HR will have to quickly embrace transformation and build on technological advancements to meet both employee expectations and business requirements. Workforce and workplace analytics will become increasingly important and companies using data in their decision makings will become far more competitive and attractive to both employees and customers.

“It is not the strongest, or the most intelligent who will survive and grow, but those who can best manage change.”

Let us now look at the key elements of HR Technology that organizations must understand and adopt to make this transition to a more optimized business-oriented HR function:

GET SMART BIG DATA

HR has been traditionally mired with time-consuming tasks and endless paper documentations. What it needs more is the use of quantified information and digitization to maximize the power of data, especially that of big data.

This is important for HR to understand well the employees, the external customers, the market audiences and the social community. If HR has to use data as an enabler, then it needs to build a culture for the same.

“The focus must be on both quality and quantity of data that can drive today’s critical decisions.”

I often see some reluctance on part of HR professionals to use quantified information in their work, but this mindset has to change eventually. Today’s advanced research and workflow techniques give enough access to the power of big data and the use of the same must be optimized to the fullest. When combined with other technologies, big data also provides a tremendous amount of insight and helps to make decisions that can drive both people and business.

“You can draw insights from your workforce data to improve your company’s return on investment in human capital and align your company’s HR programs with your company’s objectives.”

However, what need to be kept in mind here are the source, quality, integrity and authenticity of the data being used. The quality of any systemic output will invariably depend on the quality of input that gets processed, and the same has huge ramifications on costs, time and outcomes.

IMBIBE AN ANALYTICAL CULTURE

It is said that data and not perceptions must drive both HR and business decisions. It is important that HR uses data in the maximum possible ways and progressively at all the four analytical levels (Descriptive Analytics, Diagnostic Analytics, Predictive Analytics and Prescriptive Analytics) to be a party to any significant business decisions and actions. Over the past few years, big data analytics has become the common language used across the organizations in other disciplines like Sales, Finance, Operations, Marketing, IT and Customer Service, and now the HR function must also start maximizing on the possibilities of the same.

“Based on mounting evidence, what I can state with total conviction, is that if HR does not adopt analytics,it will not be a party to any significant business decisions.” – (Dr. Jack Fitz-Enz)

Increasingly, more of HR and hence business decisions will require the use of real-time data and predictive analytics to ensure improvement in organization judgments and assure better management of potential risks. It is also bias-free, since it depends on logical use of data and statistical methodologies like correlation, regression, trends, variance, analysis, benchmarking, forecasting and modeling.

“The onus will be on measuring and tracking areas like cost, performance and productivity in the employee lifecycle management process.”

Some of the critical areas in HR Analytics that will come into use more often are Workforce Planning & Optimization, Workplace Safety Analytics, Workforce Transitions, Recruitment Analytics, Retention Risk Analytics, Leadership Development Modeler, Organization Accelerator and Health & Productivity.

Sophisticated and full-scale HR Analytics capability will also be able to create the opportunity for HR to impact business outcomes like sales, revenue growth and operating income. Today, companies like Starbucks, Limited Brands and Best Buy can very precisely identify the financial impact of the increase in employee engagement score amongst their employees at any particular store of the company.

“At Best Buy a 0.1% increase in the level of employee engagement adds more than USD 100,000 in the store’s annual operating income.”

According to a recent Rexer Analytics Survey, the most popular HR Analytics software packages that can be used by organizations are IBM SPSS Modeler, SAS Enterprise Miner and Dell Statistica (I personally would recommend using SPSS software packages from my own experiences).

HR Automation is an umbrella term for software platforms and associated hardware used for digitization of the Human Resources functions in organizations. This can include one, more or all of the areas starting from employee hiring to exit management processes.

In organizations today, the core HR Automation systems come under different bucket names like HRIS (Human Resources Information System), HRMS (Human Resource Management System) and HCM (Human Capital Management). Though there are few differentiators among these three labels used, however their usage and features are not exactly the same.

While HRIS is essentially meant to provide technology for storing employee database and automating some basic HR functions like employee attendance and leave management, HRMS also provides tools for other areas like recruitment and payroll management. HCM is a broader platform that integrates the core HR areas with talent management systems and helps organizations to treat employees as ‘assets’ (Human Capital), in exactly the same way as they would treat money, machinery and material.

A full-fledged HCM system can include discrete processes for Recruitment & Selection, Performance Management, Learning & Development, Compensation & Benefits, Rewards & Recognition, Career & Succession Planning, Payroll and Compliance Management. In recent times, HCM has begun to displace both HRIS and HRMS in organizations due to their adaptability and versatility.

Today HCM platforms are offered by large enterprise software companies such as Oracle and SAP, as well as smaller specialized HR technology firms. Some of these companies like SuccessFactors and Workday are also accelerating into the next generation HR digitization by migrating from on-premises systems to new cloud-based technology or SaaS (Software as a Service) platforms.

“Continual experimentation is core to innovation. You can’t apply learning principles to technology, if you don’t understand the technology. Similarly, you can’t truly leverage technology, if you don’t understand how people really learn.” –(Clark Quinn)

THE HR TECHNOLOGY APPLICATION FLOWCHART

It will be through an integrated application of these key elements of technology, namely – big data, statistical analysis and automated platforms that will help HR to create those robust ‘Decision Support Systems’ in the different people processes to maximize not only its own inherent potential, but also ensure that timely human capital inputs are given into critical business decisions for an organization to sustain, scale and grow in a highly dynamic and competitive market place.

Given below is a recommended HR Technology application process:

Technology is the key to HR and business transformation, as it helps us to collate, process and use a range of information about the workplace and the workforce to achieve company goals and objectives. In the HR Technology Workflow Process – the big data usage can be seen as the input, data-mining through various statistical tools can be seen as the throughput and systems automation to drive business transactions can be seen as the output.

These elements put together can immensely help to improve the end-user functionality experience for HR and employees, ensure that critical decisions can be driven through tangible numbers and assure that efforts can be measured more in terms of the outcomes.

“HR Technology is now here to stay. Today, it is no more just ‘nice to have it’, but you have ‘got to have it’. That is, if you want to change, and not perish in the transformational world of business.”


Author- Indranil Gupta- Founder of Meritt (www.merittconsultants.com). Previously He has worked in various leadership roles with companies like Sprint-RPG (RPG Enterprises), Ericsson-Hewlett Packard Telecom (EHPT), Mahindra-British Telecom (Tech Mahindra), Bharti-Televentures (Bharti Airtel) and Xansa (Steria), driving their Talent Acquisition, Talent Development, Talent Performance and Talent Rewards processes with impactful results.

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