While organizations are optimistic about organic growth, the need for efficiency is still the top driver of Human Resources (HR) strategy.
More than ever, organizations are turning to HR to drive business value, so HR initiatives must be aligned with the overall strategic needs and the goals of the business.
In order to meet these non-merger or acquisition-related growth goals, organizations must manage and allocate labour as efficiently and effectively as possible, both in the near and longer-term.
Nonetheless, there still exist challenges embodied by perceptions of operational leaders regarding the strategic impact of HR on the organizations.
Analysis of more than 450 organizations around the world that participated in Aberdeen Group's research report, The 2011 HR Executive's Agenda, shows that, on a scale of 1 to 5 where 5 is very strategic and 1 is very reactive, business leaders on average gave HR a 2.71 in terms of strategic importance and defined as HR being closely tied to business objectives.
However, HR understands how to address this gap. In fact, when asked about the one process HR would automate first, 28 per cent of respondents cited employee data management earning it top priority.
CIO Engagement Is Critical
The CIO has an important role to play in facilitating collaboration between HR and the lines of business through enabling data integration. Visibility into this data and the ability to leverage it to impact business performance requires two things:
- This data has to be maintained according to labor laws and standards, and updated on regular basis.
- In many cases, this visibility may require investment in business intelligence or analytics tools that can provide both periodic and real-time reporting.
Agility is the name of the game, and the ability to use accurate historical performance and workforce-related data quickly is crucial. In fact, nearly nine out of ten of organizations using analytics tools have a centralized global repository for all workforce data.
Having a system of record (HRIS/HRMS) for HR is imperative to deal with business leaders' inability to leverage HR data for making better decisions.
And, when this data integrates with business performance data, it drives measurable business outcomes.
The Return on Investment (ROI) — as reflected in Aberdeen's data — can be significant (see below). All of this shifts the CIO role from a supporting function to a leading enabler of success:
- 20 per cent decrease in unnecessary overtime
- Two times the improvement in customer satisfaction
- 13 per cent increase in workforce utilization by 13 per cent
In addition to the impact of analytics tools on workforce optimization strategy, utilizing them in overall talent planning efforts also yields tremendous gains.
Having solid data upon which to build forward-looking recruiting and development efforts to ensure that the organization has the right talent to support business objectives is critical.
Case in Point
One manufacturing company integrated a system of goal setting geared towards improving the leadership ability of their internal teams and achieving excellence in product delivery.
The initiative called for each employee to select two areas in which to improve within a specific timeframe. In addition to frequent touch points between employees and managers, the company adopted a performance dashboard that was shown during quarterly hands on-deck meetings.
This enabled every employee to view the progress of the company, and drill down to see how their own performance impacted on-time shipment - defined by the company as a key operational metric.
Four years after adding the dashboard, the company's revenue had improved seven-fold. In 2008, the company achieved 100% on-time shipment, which is a tremendous accomplishment in its industry.
This is one example of how integrating employee performance data with operational data drives alignment and improves the bottom line.
"In addition to nailing down the business collaboration aspect," said the CEO, "We needed to ensure that our information technology team was on board. Their engagement helped us implement this dashboard and ensured we leveraged its capabilities as intended."
Regardless of the economic landscape, organizations that are able to align human capital management initiatives to business priorities are most likely to thrive. And agility is a main ingredient in the recipe for success.
The key to this agility is having visibility into data that enables better decision making. Not only is buy-in from CIOs and their teams a necessity, but their engagement throughout the process of implementing enabling technologies, such as HR management systems, talent management systems and analytics, is crucial in their success and value to the organization.
This engagement propels the CIO role in the organization from a support function to a validated partner in business outcome.
Decisions are only as good as the intelligence upon which they're founded. By partnering with the right stakeholders, business operations and information systems, HR will move the organization another huge step forward towards accomplishing its strategic objectives.
For more research from Aberdeen Group that applies to the CIO, please click Aberdeen's CIO Toolkit.
Jayson Saba is a research analyst, human capital management at Aberdeen Group.