All too many organisations are simply unaware of the potential goldmine that their payroll and HR data represents – and even if they do know, they are often not entirely sure how best to go about transforming it into valuable and actionable business insights.
But learning how to do so can reap the benefits in both productivity and profitability terms as data-driven companies tend to treat their information as an asset. This enables them to approach decision-making in a more collaborative fashion.
Enabling data transformation to support effective decision-making
Since the start of the pandemic, where the focus has been very much on the resilience of people, processes and technology, the HR function has really come into its own – playing an increasingly strategic role in helping steer the organisation through what have been decidedly choppy waters.
This means HR leaders are now coming under growing pressure to employ data more effectively, not only so they can bring useful insights to boardroom discussions, but also to make their case for investing in recruitment and retention initiatives, reskilling, and even workforce transformation.
At the heart of this approach is having access to clean and accurate data in order to support effective decision-making. Also required are data analytics tools – and increasingly artificial intelligence-based (AI) software too – so that HR professionals can find and present the insights they need without recourse to their IT colleagues.
To help them get there, here are four steps that organisations can take to enable them to exploit their payroll and HR data to the full:
Step 1: Unify your data to create a single source of truth
One of the most probable causes of inconsistencies in an organisation’s HR data is that it’s held in multiple, disparate systems located in a number of different departments and functions. This means information is likely to be siloed, with duplication in some areas and gaps in others.
The problem is that the fragmented, dispersed nature of such data makes it almost impossible to use analytics tools effectively in order to understand patterns and trends and obtain enterprise-wide insights.
With this in mind, it will come as no surprise to learn our research indicated that only 31% of all businesses believe their current payroll and HR system provides meaningful analytics.
As a result, when choosing your system, ensure it can integrate data reliably and securely from a wide range of sources in order to enable consistency and guarantee a single source of truth across the organisation.
Step 2: Simplify, standardise and cleanse your data
The fact that your data has been sitting in disparate systems means not only is it likely to appear in different forms, but it will also have been stored in a range of potentially incompatible formats. It’s also likely to contain a good number of inaccuracies.
But before transferring data to your new HCM system, it’s imperative to rationalise and clean such information in order to ensure it’s both accurate and readable by analytics tools.
Therefore, make certain your chosen system includes the necessary tools to help with this standardisation and cleansing activity. It should also provide appropriate tools to help you model and visualise your data effectively.
Step 3: Analyse your data with easy-to-use tools
Data analysis is not necessarily top of most HR practitioners’ skills list, not least because in many instances they do not have the time or resources to be manually pouring over information to look for patterns, trends, and other insights. Even if software tools are available, they are frequently seen as nice-to-have add-ons that are too complex to bother using.
This means that even if HR teams are able to draw out high-level insights from their data, such as overall staff recruitment and retention rates, they often struggle to dive deeper into the detail to uncover exactly where changes or improvements could be made. An example here includes pinpointing which demographics are more likely to stay or leave the company and why.
As a result, it is important to ensure your HCM supplier does not simply treat analytics tools as an afterthought. Such software is vital to provide HR leaders with the necessary insights to take strategic action, which means that having access to easy-to-use tools that do not require intervention from the IT department is non-negotiable these days.
Another important consideration is report-building. According to our research, just under seven out of 10 CEOs would like HR to deliver such reports in a timelier fashion to speed up decision-making. Just under two-thirds are also unhappy with either the quality or accuracy of such reporting.
But the problem for many organisations is that reporting is a very manual and time-consuming process as it’s based on spreadsheet analysis. This situation leads to inconsistent and sometimes even inaccurate findings.
However, the best HCM systems provide tools to enable a fully automated and secure report-building process. These tools make it quick and easy for HR leaders to deliver insights for discussion with key stakeholders in areas ranging from compliance and auditing, to possible areas for workforce transformation.
Step 4: Take action to ensure a process of continual improvement
Pushing forward with constructive action on the basis of the insights you’ve gained is possibly the most difficult and lengthy step of all due to the fact it involves taking more than one. It is, in fact, an ongoing, iterative process of continual improvement.
The first and one of the most important elements of this process is to define your goal – an example being ‘how can we reduce the number of people who leave the organisation in their first year of employment?’ – before you even start exploring the data in order to reveal telling patterns and trends. Clarifying the outcome you want to achieve from the outset ultimately means you are in a stronger position to obtain the insights you actually require.
What sets a best-in-class analytics tool apart is its ability to not only present the data in a way that is visually impactful, but also deliver insights that proactively point you towards the appropriate actions to take in pursuit of your goal.
But do bear in mind here that effective action is not just predicated on data alone. Equally important is asking key stakeholders for their interpretation of the findings to help you understand the wider business context. Combining qualitative and quantitative insights will only assist you further in choosing the right actions to take. While this process may take time, it will ultimately be worth it when you reap the rewards many times over.