Informatics, the future of HR

I remember one of my customer meetings last month quite vividly. It was with the HR General Manager of a multi-national manufacturing company. Perhaps one of the most affable people I have met, he spoke at length about his experience managing HR in different companies and interspersed his speech with lively anecdotes and his opinion about the changing role of HR.

“HR owes its origin to Industrial Relations” he began. The nature of the workforce has, obviously, changed a lot since the Industrial Revolution, but it is not difficult to imagine that about a hundred and fifty years back in Victorian England, there might have been a clique of managers specialising in dealing with workers in coalmines or shipyards. Around the turn of the century, with communism in the air, it couldn’t have been too easy for those managers. A seismic change might have begun.

“The role of HR now is to lend an empathetic ear to the concerns of the workforce”, he seemed to conclude. I could imagine a long line of people outside his office, awaiting his advice. If it had merit, I am sure he would raise the concerns to senior management and get them addressed. What he was trying to underline, was the importance of ‘personal touch’.  That one ought to deal with people issues one-on-one.

It is hard to deny the simplicity and power of this argument. Yet it begs a question. By taking up individuals’ concerns one-by-one, does one lose out on the bigger picture?

Personal Touch versus HR Informatics

Some HR managers would contend that they know their staff personally. “Especially the top performers”, they will emphasise. It is a fairly logical way to prioritise one’s focus; I am sure most HR managers would be able to rattle off their top performers’ names, and their respective backgrounds, aspirations, concerns, and so on. Surely, knowing deeply about each of the top performers would be a sufficient and effective method to improve talent retention.

Yet I put to you that there is a far more powerful and effective approach to talent retention!

The former HR Head of one my customers, a large telecom player, once spoke about an interesting paradox. He said that 70% of the top performers in the telecom company actually have a non-telecom background. However, only 30% of the workforce hired are from the non-telecom sector! Such a statistic has profound implications. It led the telecom company to challenge its hiring practices. It also led them to re-evaluate their training and leadership development programmes.

Knowing top performers personally leads to insights that are largely anecdotal in nature. Moreover, it is a difficult approach to scale and apply to a large employee base. An HR organisation might be able to track its top 10 or 25 performers this way, but the moment the numbers touch 50 or 100, the personal touch becomes dissipated and the knowledge about top performers is spread across a number of HR managers. Since the personal touch method leads to largely anecdotal evidence, it becomes difficult for the entire HR organisation to draw meaningful insights out of it that can lead to tangible changes to policy.

Using data to understand top performers, or for that matter the entire employee base, allows one to not only look across the entirety of the employee base, but to also go deep into any individual issue. More importantly, the science of looking at HR data, something I call HR Informatics, can lead to deep insights that are not possible to obtain in any other way.

Retention through the lens of HR Informatics

Let me start with an interaction I had with the Global Head of Rewards and Performance Management of a large pharmaceutical company. Apart from looking at his employee base through the lens of the usual departmental divisions, he likes to look at each employee through the lens of how much they contribute to the company’s gross margins. For him this means assigning employees to individual therapeutic areas that cut across divisions such as Drug Discovery, Development, Manufacturing, Sales, and so on, and tracking not only their isolated performance but also the value they add to the company.

He went a step further. Sitting at the corporate office, how could the HR senior management really retain a ‘personal touch’? The answer also lies in HR Informatics. He would like to be able to understand through data, the profile of each and every employee of a plant located somewhere in northern India. He would like to monitor in real-time, who is leaving the company and who has remained for a long time. Looking at his data, he wants to be able to understand the causes of why people left the company and make effective changes to policy that directly address these causes. Such pinpoint precision in dealing with HR issues is no different from ‘personal touch’. It is in fact more effective than personal touch, in terms of objectivity, accuracy, thoroughness and speed of analysis, and implementation and monitoring of results.

HR informatics for Predictions and Sourcing

A few months back, I had a discussion with the Associate President and Head HR of a bank in India. She spoke about the power of data, not only in terms of knowing about the past and the present, but also in being able to predict the future. What if one could know the attributes that lead to high performance and retention in an organisation? What if one could use this to predict which top performer was about to leave? What if one could use these principles to hire top performers that would remain in the organisation for a long time?

Such statements are truly incisive. They lay bare the limitations of ‘personal touch’. But is HR Informatics able to lead us to answers? Thankfully, the answer is ‘Yes!’ At the heart of our answer is the principle of knowing as much as possible about your employees. For every employee, it is important to create a profile with information that pertains not only to the employer (such as performance, compensation, trainings, and progression) but also to demography and educational and employment history (such as age, gender, location, qualifications, information about one’s parents, previous roles and companies, and skills) One should aim to capture a large number of data points, for the larger the number of data points captured, the greater the accuracy of results. Such a rich map of information about your employee base then leads one to accurately profile top performers and describe attributes that lead to performance and retention.

These attributes can then be used to quantify the propensity of an employee to leave the company. A real-time monitoring of important attributes can also be used to create an effective monitoring system so that HR may step in at the right time and take steps to discourage a top performer from leaving.

More interestingly, the map of employee information can also be used to gauge how well a job applicant might fare in a particular team! The demography, educational, and employment history of an applicant may be compared to the ideal characteristics of a given team or a number of teams to understand their suitability.

In conclusion

In a world where it is common to have a workforce distributed across many offices and teams, HR is in danger of losing ‘personal touch’, the one defining attribute that has withstood the test of time. Thankfully, HR Informatics provides an effective alternative. Based on the same principle of knowing more about an employee, HR Informatics not only allows companies to retain ‘personal touch’ but also augment it by using the power of data and statistics. The future of HR is in using HR Informatics to understand the employee base better, and in using this information to improve retention, sourcing, and other important functions of HR.

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