The foundation of execution excellence

A couple of months ago, I published an article that described how important it was to integrate “people management” systems and human resource activities across the organisation if execution was to be improved. The goal of integrated people management systems is not merely to make HR more efficient. It is to provide the organisation with “predictive” information on execution that drives talent decisions to make the business more “competitive”. This can only be achieved when people management systems are fully integrated across the organisation.

This integration, however, is only a required first step. Integration alone will not give HR a seat at the strategy table, nor will it result in better performance. Those organisations with access to centralised data can conduct analyses to understand how factors such as leadership, operational efficiency, and customer/financial outcomes are interrelated. Organisations must take advantage of this integration capability to produce new insights into the organisation and how it operates. HR must provide the business with a deeper understanding of the levers and drivers of execution, and then use this insight in executive conversations about solving business problems and changing behaviours.

This insight is often described as “Business Analytics”. Analytics has been defined as the extensive use of data, statistical and quantitative analysis, explanatory and predictive models and fact-based management to drive decisions and actions. I like to describe analytics as “making our numbers talk”.

 

Linking people information to your business for better decision-making

Execution excellence is dependent on the organisation’s ability to link people activities to business results by using integrated information about the workforce. This is the capability to not only analyse talent and HR data, but to correlate and integrate it with business data from finance, enterprise resource planning (ERP), operations, and customer relationship management (CRM) systems, etc.

In practical terms, this means strategically leveraging people metrics by combining it with other business data to provide deeper insight. Collecting people metrics is only valuable when it improves decision making. In a business environment that produces ever-increasing amounts of data, that basic premise is easy to forget. If knowing the turnover rate itself doesn’t impact any management decisions, the metric is useless.

For example, instead of merely measuring turnover rates, an analytic approach would seek to capture additional data, such as the type of people who are leaving, whether they are high, medium, or low performers, where they are going, and the types of jobs/locations experiencing the turnover. This information allows for a greater analysis of several different components of turnover and would help determine where reducing turnover could best improve business results and where to allocate scarce HR resources.

 

Design dashboards to help drive decision-making – not to justify HR activity 

Many dashboards seem overly focused on justifying what HR is contributing to the organisation. Instead, think of the dashboard as a vehicle to provide the organisation with feedback on how well leaders are managing critical – often constrained – talent resources. That is a different paradigm, and if it’s too difficult to imagine, stop and consider the reports the accounting department produces.

Few of those reports are intended to justify accounting department activities. The same is true for HR. Rather than trying to prove HR’s value, concentrate on providing insight about human capital decisions made throughout the organisation. Most talent decisions, such as hiring, pay raises, and promotions, are made by leaders outside of the HR department.  Presenting accurate metrics and analyses provides the organisation with feedback on the quality of its decisions. Accurate, timely feedback is a necessary precursor to improving future decision making.

 

Make the numbers talk 

Many organisations have a collection of metrics and dashboards. Simply publishing the dashboard for the executive team can result in missed opportunities to provide commentary and business insight. Instead of reporting the average age of employees, explain what this metric means to the organisation. For instance, use those demographics to illustrate how the rate of retirements likely will accelerate. Use this data as a catalyst to engage leaders in discussions about what the impact on the organisation will be if top leaders leave the organisation before the next wave of leaders are ready for top positions. Leaders may explore the consequences of inadequate bench strength and be more receptive to proposals offering strategies to build that bench. With integrated analytics, instead of telling business leaders “there is high turnover in supply chain”, you can now demonstrate that high turnover in the supply chain function is primarily being driven among shift supervisors in specific facilities, most of whom who have been with the company for less than one year. The result: HR and the business zero-in and solve the problem quickly and effectively to reduce cost and boost positive impact to production output.

Business intelligence simply comes down to answering questions and telling stories. Imagine the possibilities when you can tell your business leaders: “Employees who took this training course sold 30 per cent more products than those who didn’t. Or, improving engagement scores by 10 per cent in this location will reduce turnover by five per cent, reducing costs by x per cent. This is where it really gets exciting.  

HR used to be about hiring and paying employees. Today, that’s not enough. To grow our business and better serve our customers, HR must strategically partner with business leaders to ensure that we have engaged employees, in the right jobs, with the right capabilities, and the right training to deliver successful results. It’s a tall order, but with integrated people systems, HR is better equipped than ever to drive tangible results, and quantify their effect ultimately on cost and business performance. 

Analytics is at the heart of knowing how well an organisation is performing and “empowers leaders to lead with insight”.

 

John P Didominic is APM Group’s executive director for Client Solutions