21 Mar 2022
The importance of HCM analytics for competitive advantage
Human Capital Management (HCM) is central to competitive advantage for many organisations, with considerable emphasis placed on ensuring that people, compensation, talent and performance management data is accurate and compliant with legislation. HCM reporting and analytics are key to the strategic decision-making toolkit because data driven decisions enable the business to forecast future trends and identify solutions for potential problems
So often key business decisions are made without the critical supporting information needed to ensure the desired outcome is achieved. However; when using the reporting tools available with a modern HCM database*, you can identify where issues lie in attrition, excessive sick leave, diversity, pay equity, retention and so much more. Intelligent visualisations and data obvious aggregations enable the instant recognition of issues, both current and future, as well as being a mechanism to track business initiatives introduced in response. For example, a business can get an understanding of the factors influencing retention and identify potential flight risks by analysing performance and career growth potential against compensation and employee engagement level.
Today, more than ever, companies are aware of the value and potential of their highly skilled and talented workforce and are searching for metrics and methods to maximize this value, optimise outcomes and identify where change will get the best rewards. Insights are a competitive differentiator enabling informed decisions that will increase business performance and ultimately grow profit. In a world of continuous change and growing complexity, better people decisions enable you to make a difference.
The reporting tools available with many HCM software solutions go beyond basic dashboards and use information in a way that supports organisational initiatives, tracks progress and predicts events. Using Business Intelligence (BI) helps a business to identify, adapt and improve across the entire HCM space via a comprehensive view of their workforce; for example:
- Insights into headcount, hires, and transfers
- Analysis of team effectiveness
- Understand changing workforce dynamics
- Understand the impact of unplanned absences
- Identify frequency and type of absence to minimize negative effects on your teams
- Understand the drivers of turnover and retention and identify high performers
- Improve diversity and inclusion and understand the impact on satisfaction and performance
Effective reporting from your HCM system will enable you to build the right measures to capture the value in your workforce. Reports illustrate what is happening or has happened at a point or period in time. They can summarise and organise the data in ways that make it easy for the reader to digest. Analytics however, take the data to the next level by questioning and exploring below the top line information; explaining the ‘why?’ behind your reports and enabling you to question and explore further; to dig much deeper. Alongside the HCM system reporting tool, use of a BI tool will provide valuable insights into trends and help you to build strategies that drive your HCM policies.
It is important to have a considered strategy that focuses on what matters to the overall business and this should ultimately align with people actions and behaviours. Consequently, your people analytics will enable the business to not only measure and track progress in relation to business strategy, but also assist HR to manage the overall people strategy. And, this strategy will ensure you recruit, retain and reward a top team; fully understand the current and future position of people management within your business and ultimately achieve your business objectives.
There is no question that HCM reporting is vital to your business. Now, take it a step further and build HCM analytics that deliver the benefits that enable your people to thrive. People are the most important driver of business success and better people decisions will ultimately make a real impact on your business, through an engaged, motivated and appropriately rewarded team.
*Frontier Software is recognised as having developed one of the most successful solutions for HCM and Payroll management and their products are in use at more than 1700 clients worldwide. A truly comprehensive range of integrated software modules include HR, Talent Management and Human Capital Intelligence for HCM metrics. Contact Frontier Software on 01276 456902, email sales@frontiersoftware.com or visit our website at www.frontiersoftware.com.
Article originally published on HR Grapevine April 2022.