Why HR professionals struggle with big data

Over the next 15 years, more than 12 million people will retire, while technological progress will lead to major changes in occupations. According to the World Economic Forum, almost half of the skills required of employees today will change in the foreseeable future. The new requirements will include creative and analytical thinking, technical skills, a willingness to engage in lifelong learning and self-efficacy.

HR managers need to think strategically about what their company’s needs will be in the future and use this to develop requirement profiles for personnel planning. This is the only way to recruit staff in a targeted manner and develop their skills. However, it is not just about putting the right people in the right place, but also about integrating them into the right teams and projects. Companies with mixed management teams – in terms of gender, ethnicity, culture and expertise, with more women in management positions – and an inclusive culture are demonstrably more profitable than average.

The higher proportion of women can even more than double the profit. It also leads to an increasing proportion of women in the company as a whole and to more talent being acquired and retained. It also has a positive effect on holistic and sustainable corporate management. The following applies: the earlier you start developing talent to fill upcoming positions, the more successful you will be later.

Making decisions based on data

To ensure that the best people end up in management positions and diverse teams are created, HR managers should rely on well-founded criteria, and big data and analytics provide these. By collecting and evaluating large amounts of data, HR managers can make better personnel decisions faster that are not (only) based on intuition and experience. In addition, they can use statistical methods, algorithms and machine learning to more easily establish correlations and patterns, and thus make predictions about future developments and scenarios.

The problem is that many companies still make little use of their data. In particular, human resources is still one of the least data-driven areas of a company, and potential is often not fully exploited. While data tends to be used in tactical-operational areas such as HR reporting and controlling, there is still room for improvement in the strategic area of people analytics. Most use master data to make daily processes more efficient and to optimize the use of existing resources. Aspects such as employee satisfaction and talent development are often neglected.

This is due, on the one hand, to the uncertainty associated with handling confidential, sensitive data and, on the other hand, to a number of structural problems. As a rule, a lot of data is available in the company, but it is stored in different systems and comes from various sources, which makes it difficult to link it. “In addition, there is silo thinking in many companies. Each department evaluates its own key figures, if at all, and looks at them in isolation from others. This makes it impossible to identify any correlations,” explains Viole Kastrati, Senior Consultant SAP – BI & Analytics at Nagarro.

The problem becomes more significant when new requirements are added. For example, minimum quotas, participation offers and the obligation to set individual targets for certain companies to achieve equal opportunities in leadership positions. Human resources must also contribute to transparent reporting requirements here.

However, it is often unclear where the data needed for reporting is stored and what quality it is in. “Often the data quality is insufficient to make reliable statements. Insufficient or incorrect data can even lead to wrong decisions,” says Kastrati. The manual effort required to consolidate and clean up data, as well as the additional costs, should not be underestimated either.

4 steps to a comprehensive analysis…and 3 questions to ask

The first step towards improvement is to implement a database and load it with data from various sources. If a database already exists, the available data must be tested and corrected. It is best to start with the headcount, followed by accounting data, time tracking data and, later, personnel development data.

Subsequently, the reporting should be set up properly. It ensures that all relevant data and information is consolidated, evaluated and presented in a clear and concise form. Solid reporting provides transparent, consistent and combined HR metrics essential for strategic planning, risk management and the management of HR measures. Kastrati: “Without systematic and continuous reporting, it is almost impossible to get a complete picture of the HR situation and make informed decisions based on it.”

An important aspect of workforce planning is identifying gaps between current headcount and future anticipated needs. This analysis requires a precise examination of the existing workforce, including factors such as age structure, qualifications and turnover rates. Only by examining these elements in detail can companies ensure they are optimally prepared for future challenges.

A successful human resources plan is closely linked to human resources cost planning, and therefore companies should answer these three questions:

1. Future corporate goals. What growth targets has the company set? In which areas is a higher or lower demand for personnel to be expected? A clear definition of these goals makes it possible to develop targeted HR strategies that support the corporate vision.
2. Changes in the labor market. How is the availability of qualified specialists developing? Which current trends are relevant? A thorough understanding of market conditions is crucial to attracting and retaining talented employees.
3. Internal developments. Which employees will retire? Where is there potential for internal restructuring or development? These factors must be incorporated into human resources planning to be able to react to upcoming changes in good time.

Companies should then monitor the measures and adjust them as necessary.

An index barometer provides an overview

Given the large number of key figures required, it quickly becomes clear how important it is to have a complete overview and a common thread in planning and evaluation. To do this, the key figures should be linked and combined in a meaningful way. A central measure here is the definition and visualization of control and monitoring key figures. A proven means of effectively presenting the complex key figures, measures and risks of a personnel plan is the use of index barometer dashboards, which offer intuitive visualization.

Such dashboards should include three views: the overview view, to quickly grasp the current state; the analysis view, to identify trends and correlations between different key figures and determine the causes of certain results; and the detailed view, to meet specific user requirements.

In addition, the introduction of modern tools offers numerous functions that are particularly beneficial for HR controlling: real-time analyses, vivid visualizations, integrated planning and forecasts, for example on gender gaps, the proportion of women in management positions or changing age structures. With the help of predictive analytics, supported by machine learning, future developments in the HR area can be accurately predicted, enabling a proactive response to potential bottlenecks. Kastrati: “The labor market will change even more than it does today. Defining key positions, monitoring certain indicators and taking measures in line with corporate strategy will become increasingly important for success. Big data and analytics provide valuable support in this regard.”

Catrin Schreiner is a copywriter and the owner of the content agency Sprachwuerdig.