While Business Intelligence has become fairly commonplace in Finance and Sales, there remain departments in which BI “deliverables” (analytics, reporting—planning, too) are not widely contemplated, much less utilized. HR presents an interesting example.There certainly is a case to be made for better BI, given the HR figures that impact directly on the bottom line. This is especially true for service sector firms (consulting is a great example) for whom HR costs can be well over 50% of a company’s expenses. Obtaining and utilizing this data for reports and ad hoc analytics would be a real boon for these kinds of firms; additionally, such firms would most definitely find it useful to be able to plan on the basis of HR data like head count; employee salaries and benefits/compensation, and; billable (and bench) hours, by department, by project.
A friend who works at a medium-sized consulting firm observed that salaries constitute nearly 80% of cost projections at his firm: “along with my salary, the firm covers my health insurance to the tune of $1,600 a month; life insurance, $150; disability insurance, $75—and then there are the payments for social security and Medicare/Medicaid tax… Consider those figures in light of the 25 plus consultants at our firm.” Planning for all sorts of increases (these costs never go down!) becomes a key priority at a firm like his…and of course there are firms with many more employees and further cost items (travel and entertainment, office expenses, etc.)
Planning, Spreadsheets, Excel-friendly Solutions
As well—and more on the topic of planning, which is often overlooked as a BI “deliverable”—consulting managers will want to know what to expect from the multiple projects they are responsible for at any one time, along with those scheduled in the near and longer terms. Projects typically include billable hours from different staff, with different rates, so that a customer engagement of, say, 500 hours could include 100 hours of support; 250 hours from a consultant; 100 hours from a senior consultant, and; 50 hours from a project manager. It’s a simple example, but it demonstrates the importance of getting the cost and revenue projects right, as well as the necessity that a planning system allow for great variability, across all employees, their billable hours, their projects, and so on. Add to this the logical, and critical, capability to quickly measure Actual performance v. plan.
Not surprisingly, when speaking of BI including planning capabilities that require great variability we come to the topic of Excel, i.e., it’s usage as a tool to collect, calculate…and often enough collapse under the weight of an application that the product wasn’t intended for! It’s a fact of life—Excel is almost universally used in planning exercises. The good news for firms is that they can have their cake and eat it: the best planning solutions, infinitely variable to a customer’s needs (HR and otherwise), provide a “live link” to Excel and to other front ends of choice (dashboards, of course).
Taking Everything Into Consideration
So far we have been considering HR salary costs and project resource revenue projections—clearly of major importance in the case of a consulting firm we used as an example. But there’s so much more to be learned by different firms with their own employee metrics: widgets built by manufacturing firms; calls completed by marketing firms; goods sold by sales-oriented firms. All firms have a “people” component to their offerings, so all can benefit from these types of cost-and-revenue (and planning) HR Analytics.
The great value—and the fun—of HR Analytics doesn’t end there. Any firm wise enough to extract business intelligence from HR data and use it as a component of a planning application will feed that data into the firm’s overall P&L reports and projections.
Beyond that—beyond what might be considered the nexus of HR and Finance—there are the “new trends” in HR Analytics centered on staff satisfaction and how it relates to productivity. Some of the data no doubt exists in company databases—employee start/stop dates; positions open, and candidates interviewed; demographics—providing a solid basis of business intelligence for study and action. In sum, HR Analytics are as rich with possibilities as the workforce is diverse and unfailingly human!