The way HR works needs to change—here’s how

It seems nowadays it is rare to open up an issue of an HR magazine, visit a blog site, or attend an HR show without reading or hearing about big data.

Let’s put this in the context of HR and submit a use case where a high-tech company were to open a new HQ location. HR would be tasked to help drive the decision of picking a new city. In this case, combining census data, salary ranges, educational institution rankings, corporate tax rate, construction costs, traffic data and so on using an algorithm could generate a ranking of the cities based on talent pool data.

But the reality is that most of HR is not ready for this yet. In fact, the vast majority of HR departments are barely ready for “little data”—applying analytics to HR processes captured at the transactional level. Here is why.

1. HR is still focused on business process improvement and automation

According to recent research by Sierra-Cedar (formerly CedarCrestone) as part of the 2013-2014 HR Systems study of over 1200 companies, the top priorities for HR are business process improvements (62%), automation of talent processes (44%), and service delivery improvements (40%).

Business intelligence and metrics are tied fourth on the list with HR systems strategy at 33%. This means that HR is still on a self-discovery expedition still looking to improve its processes, technology, and how it serves its constituents before starting to analyze how HR metrics tie into greater intelligence for the company.

2. Most of us do not have a single source of information

According to the same Sierra-Cedar survey, a benchmark for the HR technology industry, on average companies have 3.1 HR systems in place. Without a single source of truth or accurate data, it is very difficult to rely on any data. More often companies fall back on much smaller data sets captured by the payroll system to report on basic elements such as headcount, turnover, retention, new hire retention, internal promotions, and labor costs.

This type of reporting has many limitations as it prevents HR from being a better business partner. This is consistent with findings from a Ceridian survey where 92% of companies still rely on spreadsheets to report on HR data.

3. We still rely on IT

Research from Aberdeen Group shows that only a third of the top best organization (HR-wise) self-service reporting dashboards to senior leaders, even less (25%) to line of business managers. HR is still getting key metrics to the decision makers, which usually means that IT is involved in pulling the right data. The more HR relies on others, the less actionable data becomes for decision makers due to the risk of staleness.

So what can we do today to get HR on the right track to make use of big data?

1. Continue focusing on our process and technology

The biggest hurdle for HR to be a better business partner is being mired by the burden of administrative and tactical tasks. Streamlining workflows and adding technology to automate is the best way to start. By providing the right tools to the business, HR is better equipped to establish confidence in the data it provides to leadership.

2. Start measuring today

Define key metrics to report on the effectiveness of HR. It’s OK to start with spreadsheets and expand wide or deep. The most critical objective to accomplish is uncovering and tracking metrics that align to the business goals of the company.

3. Choose the right technology

Sometimes simply adding a third-party tool to fragmented systems and databases could work as a stop-gap, but it is not scalable. When ready, look for solutions that are built as single applications on single databases and do not rely on interfaces between HR, workforce management, and talent management systems.

A huge plus is a vendor that doesn’t rely on third-party tools (partnerships) to provide analytics. This is all about having an absolute single source hat will help manage HR data regardless of the size of the data sets.

We welcome your comments at ideas@qz.com.

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