Feature

Human capital intelligence

Sudipta Dev focuses on the significance of using workforce data to make informed business decisions

HR has evolved from being an administrative function to a strategic role in an organization. This position derives its power from looking beyond the obvious functions of recruitment, retention and training, and being a partner for business success. This can be enabled by making the best use of workforce data for business needs—through human capital intelligence, which provides strategic insights for better decision-making vis-a-vis workforce investments.

It is not an easy task of course—collating the data, analyzing it, generating the report and distribution of the same. But its significance has become imperative for every organization and necessitates building a framework of business intelligence to gather significant information from workforce data. It enables the management to better understand and address the impact of workforce investments on business performance and results. “While most organizations today are tracking some type of HR metrics based on employee counts, such as turnover ratio and average tenure, the data typically stops there,” said Geeta A Sundrani, Director, Oasis HR consulting. She pointed out that this data can now be leveraged for better decision-making, strategic planning, and fiscal management across the enterprise through Human Capital Intelligence (HCI).

Data collection

Automation of every HR process is necessary for data collection and tabulation. “In addition to these human resources inputs, the analytical infrastructure requires data that resides outside the HR function also. Extracting compensation information from payroll applications and customer based application can also be a good source of data,” stated Sundrani. For example, customer satisfaction levels metrics for measuring employee performance in areas such as customer service or logistics. Investment in the systems is justified on the basis of allowing business access to detailed data, thus enabling close analysis of root causes and major trends, and implementing initiatives accordingly.

“Automation helps standardize the process, provide enough material for reference to context, captures data for analysis and helps define the desired output,” stated Navin Joshua, Executive Director, vCustomer India. There is a need to appreciate the knowledge base of an individual, map it to the intelligence systems and help other managers make informed corporate decisions. “So HCI will play a big role in integrating the human intelligence with technology,” added Joshua, emphasizing that this can be applied to diagnose specific problems in the organization or develop an ongoing capability for the entire company.

Making the best strategic analysis

It is necessary for an organization to have systems in place for effective analysis. Right from the recruitment stage to an employee’s exit from the company, every detail can give a greater insight. For instance, if a large company is hiring candidates from 30 other organizations, an analysis finds that among them there are two companies from which the people hired are more culturally attuned because of certain similarities. This discovery is valuable information for the hiring managers.

“By bringing together data from numerous sources and examining human capital in a broader business context, HR intelligence can provide managers with far deeper insight into their human capital assets,” pointed out Sundrani. For instance, take the analysis of the impact of employee attrition among middle managers. Traditionally this would have been viewed by managers in terms of the direct costs that are incurred, particularly in terms of hiring fees: there may also be an implicit acknowledgement that the loss will impact the smooth running of the business, but this is unlikely to be quantified. But an exhaustive analysis of employee attrition would incorporate many more factors. The two tables outline the costs with respect to new employees and former employees. “Measured in this way, managers have a whole new insight into the true costs of losing key personnel—an insight that may encourage them to take preventative action to head off future losses, or to revise compensation policies and other factors that influence attrition levels,” added Sundrani.

How HCI helps

HR analytics tools access these varied data sources, analyze the information, and present reports that enable better business decisions. Joshua explained the difference it makes to the following HR processes:

• Performance analysis: A standard source of identifying the training areas of an employee. Plays an important role in linking the ratings to possible standard rewards. Can also help define the career path of an employee based on the rating scales and overall score.
• Retention: Based on the past trend, a few inferences can be drawn from the top reasons of attrition, average tenures of employees leaving the organization. It can help define managers start out with specific efforts for retention.
• Competency development: With comprehensive job descriptions and competence maps defined for each position, a detailed comprehensive mapping can be done. The gaps identified can then be studied for planning a programme for competence development.
• Recruitment process: In the case of recruitment, HCI helps identify the popular, cost effective sources of recruitment, factors that largely determine stability or fitment of a prospect in the organization. To an extent, the evaluation of the various aspects of a prospect during the selection process can be standardized.

Data analysis can in fact go a long way in making the hiring process more efficient and faster: it can help identify cities, companies or media from where they can recruit people; find the right recruitment company to partner with; and pick the college campuses that must be targeted.

It improves the quality and accuracy of hiring, apart from ensuring faster recruitment and getting people on board quicker. Bangalore-based The Head Hunters India had been using an in-house developed (proprietary) tool for its client organizations. “Search companies like ours conducts recruitment day-in and day-out. As a rule of thumb to generate 250 offer letters we would have to meet 5,000 people and go through 20,000 biodatas. It is a massive task anytime, but we were able to do this quickly by using the tool,” said Kris Lakshmikanth, Managing Director and Founder, The Head Hunters India.

It is critical to integrate human capital intelligence with the organizational strategy to focus on the factors that can optimize workforce productivity and efficiency, and make a difference to the bottomline. Analysis of the data is not enough, HR has to put the report before business managers in a language that is understandable by the latter.

sudipta.dev@expressindia.com