Issue link: https://www.e-digitaleditions.com/i/86587
Analytics Data Driving Directions The quantification quest is no longer an impossible dream. By Andy Campbell and Henry Barenholz Any finance director worth their salt will try to spend most of their time away from their statutory reporting responsibilities and instead focus on those more strategic activities that actually help to ensure the long term survival and profitability of the business. Similarly, senior supply chain managers will care less about the organisations current stock position and more about accurately gauging future demand levels. This will enable the business to optimise its working capital position without compromising service levels to customers. Marketing managers, cognisant of the massive impact that trade promotional activity can have on the bottom line, will focus their energies on accurately modelling sales plans in order to optimise the return on their investments. Whilst reporting of current sales is important, especially to those whose compensation might be directly influenced, management focus is elsewhere. The common thread across all of these executives is that to effectively perform their jobs, they are heavily reliant upon forward-looking reporting and analytical tools that can facilitate improved organisational decision making. But what about the poor human resources director? For many years it has been popular to refer to people as "our most important asset," and if one considers the average total payroll cost as a percentage of total overheads, this is often financially accurate. The HR director has a significant responsibility to ensure that the organisation is most effectively managing this 'asset' and that it is being optimally deployed and developed. Sadly, however, when one considers the systems and tools that are available to support this endeavour, the HR function is often the poor relation. Systems are all too often inadequate, and reporting is often weak when compared to the executives described above. The Underlying Problems The first problem is that HR reporting tends to be primarily transactional and operational in nature. Information is available that describes what has happened in the past, but forecasting what might occur in the future is much more difficult. The oft- used analogy is of trying to drive a car whilst looking in the rear view mirror. The second problem is that information is typically restricted merely to efficiency measures. Reports are available that describe costs, headcount numbers, and other data elements of a primarily volumetric nature—such as employee ratios, starters, leavers, turnover, absence, etc. By contrast, information that describes the effectiveness of the "people asset" and the impact on the performance of the business that it delivers, is often sadly lacking. The last key issue concerns the sources and reliability of the data itself. The HR function is often swamped with information, but its voracity is often suspect. Data is typically held in a myriad of independent systems that represent functional silos. As a consequence, the resulting management information is often of poor quality, inconsistent, and out of date. In addition, the process of consolidating data can be manually intensive and time consuming, and even then the resulting outputs often lack credibility and are subject to challenge at the monthly board meeting. For many years it has been popular to refer to people as "our most important asset," and if one considers the average total payroll cost as a percentage of total overheads, this is often financially accurate. Yet information that describes the effectiveness of the "people asset" and the impact on the performance of the business that it delivers, is often sadly lacking. SUMMER 2012 | www.hroglobal.com [35]