I want you to imagine you’re a CEO and it’s your first day working for a new company. You’ve gathered your executive team around a conference table so they can give you an introduction to each area of the business.
It’s the Chief HR Officer’s turn to speak. They present you with some information about the business that includes the following annual statistics:
- Headcount of 45,231 employees, an increase of 3%
- Average sickness rate of 8.1 days per year, slightly down by 0.2%
- Average salary increase of 4%, in line with budgets set by the CFO
- Churn rate of 11% (employees leaving the company), up 1.5%
The CHRO adds, with a satisfied flourish, that this information was produced by their new HR Intelligence solution that went live last year (at some expense!).
You are the CEO. It’s your job to take information from your executives and make decisions for the good of the organization.
What do you do with these statistics from your CHRO?
As a CEO you might smile warmly, murmur something encouraging and then turn back to your CFO to talk about EBITDA and cash flow.
If you’ve worked with reporting solutions in Oracle for any period of time, you might admire the fact that this company can get those statistics out of the HR system at all.
Time for a cliché: “Most companies can’t even generate an accurate headcount report”.
These stats are not good enough to interest an executive. The missing ingredient is ‘intelligence’. The figures are useful but they are not intelligent. They are results of reporting and whilst an experienced HR Executive might be able to spot problems, they don’t help a CEO or CFO make decisions.
Let’s try again
To demonstrate what I mean, let’s suppose the CHRO came in and presented the following stats:
- Our headcount is 45,231, an increase of 3%. However, we noticed that our biggest division, Retail, has a headcount of 25,432 which is a decrease of 5% year on year.
- Our average sickness rate is 8.1 days per year. The average sickness rate for our industry is 5.3 days per year. Looking into this, our sickness rate is skewed by our Retail division where our sickness rate is actually 15.1 days per year; about double the industry average for Retail workers.
- Average salary increase is 4% inline with our budget strategy. Looking into the detail, we found that average salary increase for managers was 9% and the average salary increase for non-managers was 2%, slightly below the rate of inflation in the primary region where we operate
- Our churn rate of 11% is inflated by our Retail division where the churn rate is actually 30%.
You’re the CEO. What do you do with these statistics from your CHRO?
Now you’ve got some intelligence
At the very minimum, there’s an obvious problem in the Retail division of your business that warrants a conversation and follow up meetings with your CHRO. As it happens, the problem is in your biggest department with the workers that have direct contact with your customers. They are the workers who are responsible for generating the bulk of your annual revenue.
Suddenly, the CFO is keenly interested – these stats from HR could affect the bottom line if the problem is allowed to persist.
Time for a cliché: “HR now has a seat at the table”.
Anyone out there use Oracle Business Intelligence Enterprise Edition (OBIEE)?
It’s an expensive bit of software. I know a lot of customers that use it. They almost exclusively use it for reporting, not for intelligence. Generating payroll reports; list of performance ratings by person; department listings; training records; employee directory and so on.
That’s fine – it’s good for that. But you’re paying big money for something that’s not particularly hard. Good old Discoverer could do that and it didn’t cost as much.
I rarely see a customer using these tools to generate real intelligence that can be used to make business decisions at executive level.
Looking outside of HR
This doesn’t happen in other software. Here’s an example from our business. Every month, we send out a newsletter with product updates, webinar schedules and links to articles like this one (shameless plug: register for our newsletter here). Obviously our aim is to get as many people reading the email as possible and ‘clicking a link’ to read something we’ve posted.
If I told you our average open rate on each newsletter was 15% and the click through rate was 1.5%, what would you think? Are these figures good or bad?
This is what our online tool tells me (real stats taken from a recent mailshot):
That’s basically telling me we’re doing ok. Our Open Rate and Click Rate are on point for the industry we’re in, no need for me to worry or take any action.
Fixing Analytics in HR
Similar stats are available in our CRM and Support systems comparing our business performance to industry standards. These systems give me insight into trouble spots I might not otherwise be aware of.
So why are we often so behind in HR?
Part of the challenge is that implementing Analytics and Intelligence falls into the black hole that sits between IT and Line of Business. Often, the software companies come up with amazing technology but little in the way of plug and play solutions. You need a great Business Analyst to anticipate what the line of business needs, what the system provides and then explain it all to a technical consultant who can go and develop it. That’s one of the hardest roles to fill in any IT team.
External benchmarking can also help provide context to the figures your ERP spews out and this might be a key reason why HR is behind the times; companies are too scared to let their HR data into the wild – an obvious pre-req for any decent benchmarking tool. However, there are plenty of sample KPIs out there. Just google for average sickness rates, average time to hire, average length of service and you’ll find plenty of useful stats.
What’s this got to do with Applaud?
If you following Applaud, you’ll probably know that we don’t specialise in Analytics and Intelligence.
That’s about to change.
Some of the new tools available in Cloud based systems are almost wondrous compared to what you might be used to with on-premise ERP. Lightning fast elastic search; predictive analytics; adaptive intelligence; real time statistical analysis; benchmarking; mashing up data from multiple data sources & systems to consolidate reporting.
We’re excited about making that great Cloud tech available to customers. And not just to customers using Oracle EBS: for the first time we will be providing functionality that works for other ERPs including newer Cloud based solutions like Taleo.
We are also eager to apply our world class HCM domain knowledge to deliver meaningful intelligence out of the box. This is the missing piece in so many BI solutions out there – great tech doesn’t guarantee great results unless you know what to do with it. We’ll be releasing some early examples soon as part of our new Absence functionality.
Keep an eye out for more announcements as our development continues, we’re looking forward to sharing more of our plans soon.