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Written by Billy Qiu
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Data mining - the missing link in HR decsion making
The role of human resources professionals is evolving! The HR department is no longer merely administrational and bureaucratic; it is now beginning to stand tall as strategically important in its own right. HR managers are now responsible for giving their organisation a competetive advantage in their field. Data-mining, the collection and analysis of key data, is one of the key factors in establishing this advantage.
Traditionally, data-mining was an arduous, somewhat hit-and-miss and highly labor intensive process, but now with new technological options available that need not be the case - data collection can now easily be automated. Desks in the HR department should no longer disappear beneath vast piles of paper in order to find some useful information. Automation liberates HR staff from the burden of amassing mountains of data by hand, allowing them to spend more valuable time on the strategic decision making process. However herein lies the major problem, identifying which information is most valuable remains a major challenge for HR managers, many of whom have vast human resource databases at their disposal.
Sub-heading: Processing possibilities - autom ating data collection
All organisations collect HR data, but the techniques of processing that data vary widely. Traditional methods are often slow, expensive and highly-subjective. For example, if a HR professional is looking for information on employee turnover, they may be forced to collate data from several sources such as accounting records, termination reports and personnel files, then all the collected data has to be combined and analysed.
Ordinarily HR staff would undertake this lengthy and detailed process, a situation which not only takes up valuable time and energy, but also creates a large possibility of human error. Also, as the quantity of data available grows, so does the amount of time and effort needed to analyse it, as well as the scope for mistakes. However, many organisations have now established a Human Resource Information System (HRIS) - a system designed to retrieve, manage and collate HR data - in order to streamline the process of data-analysis. An HRIS can adopt two major functions: the first is as an administrative tool; the second is as support for organisational decision making.
"many organisations have now established a Human Resource Information System (HRIS) - a system designed to retrieve, manage and collate HR data - in order to streamline the process of data-analysis."
Sub-heading: Toe in the water - cautious approaches to technology
Thus far many organisations are maintaining a tentative approach towards using technology in dealing with data. Many have taken the first step and are enjoying technological benefits in administrative areas, using an HRIS simply to collect and collate. However, far fewer have realised the competetive advantage they can gain by using technology to exploit data.
The benefits of an HRIS in terms of administration are clear. Routine administrational processes can still be done effectively, but become far less paper-intensive and with minimal need for human effort, almost becoming ‘self-service'. Taking this technological approach allows HR managers and their staff to free themselves and focus attention on other things, such as making those all-important strategic decisions.
"Thus far many organisations are maintaining a tentative approach towards using technology in dealing with data."
Sub-heading: Diving in head first - getting the most out of technology
Data mining has, to date, been used more successfully and far more extensivley in fields other than HR. For many HR managers mining techniques and the complexities of HRISs are still somewhat unchartered waters. However, with the prospect of using the information unearthed by data-mining, that should soon change. An HRIS may be an expensive investment for an organisation, but the opportunities created from the information it provides can easily justify such an outlay.
Exactly how can your organization go about using an HRIS to establish a competetive advantage? Simply applying data-mining techniques with no focus can easily lead to the unearthing of meaningless information. Instead, it is important to know which information is useful, or to put it another way - it is vital to know exactly where to dig. Every organisation has different data and different organisational information needs, but it requires a certain level of expertise to carefully evaluate that data. There are four key areas upon which HR professionals should be focusing: turnover analysis, cost analysis, workforce planning and employee development.
Turnover Analysis
Understanding turnover can help to manage staffing needs and their associated costs. Looking beyond the basic data and seeing how it can relate to information gathered from other spheres is a key concept in turnover analysis. There are several important factors that can be taken into consideration when analysing turnover statistics, such as total company turnover, positional turnover, and turnover within specific functions.
Identifying key trends in the factors listed above and understanding the reasons behind them is a vital component of analysing turnover. An HRIS can be applied here to dig out valuable information by placing side-by-side previously unrelated fields of data, for instance exit interviews can contain precious insight into the morale and motivation of departing employees. The HRIS makes the job of taking turnover data and cross-referncing it with the information gleaned from exit interviews far easier, allowing the HR department to paint a far fuller picture.
Having information that is both detailed and comprehensive at your fingertips will make it easier to retain key staff members. The faster you can identify turnover trends and the reasons contributing to those trends, the faster you can put measures in place to rectify the situation.
Cost Analysis
Labor costs are some of the biggest expenses incurred by any organisation. With this in mind, ensuring a handsome return on such an investment, is a prime concern for every HR manager in China. Incentives, benefits and compensation are the key factors contributing to labor costs and, just as with staff turnover, comparing these factors with external information can bring valuable added insight.
A basic analysis of incentives, benefits and compensation can tell you where your money is going and what it is being used for, but it does not let you know if that money is being well spent. Factoring in performance data can determine whether rewards are going to the correct people. If your company is spread across China, different sites can be brought into consideration to discover which ones incur the greatest costs and which produce the best performance.
Workforce Planning
Workforce planning is the ongoing process of reviewing and managing an organisations employee needs. It entails processing data of the current workforce, forecasting future workforce needs and identifying current talent gaps. Again an HRIS can bring together data from different spheres to make workforce planning a slicker, more efficient process.
The distribution of your workforce could be analysed alongside information on staff qualifications, allowing you to ascertain whether you have the best best qualified people where you need them most. Similarly for a mutlinational company workforce distribution could be examined in the light of language skills to determine, which individuals are best suited to positions overseas.
Employee development
Gaining a competetive advantage through a highly trained and talented workforce can also be aided by good data analysis. Making the most of the information available can both enhance the skills and knowledge of the workforce and increase retention amongst key staff members.
There are three separate areas that can be analysed in regards to an organisation's training needs: cost, usage and impact. An HRIS can use the data from each to provide a comprehensive overall picture. For instance cost can be compared to impact so as to determine whether a certain training course is providing a good return on investment. Similarly the content of the training program can be analysed in comparison with usage; the best training package in the world cannot produce results or bolster competetive advantage if it is not implemented correctly. An HRIS could also be used to measure pre-training and post-training performance of staff to add extra detail to the investment information.
Effective data-mining can help any organisation become far more efficient and far more competetive. Using a technological approach can make things much easier, saving both time and money. The key is taking the next step and allowing your HR department to evolve.
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