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Every business unit is a profit centre – including HR

3 May 2016 12:00 am - 0     - {{hitsCtrl.values.hits}}


By Mahadevan Natarajan
The lifeblood of any commercial organisation is sales, generating revenue and profits. That’s of course abundantly clear to the sales organisation as their goals are directly defined in those terms. However, as we move away from the sales department down the corridor to other business/supporting departments, the link to the bottom line can become less clear.
Take human resources (HR) for example. In lean times the HR department can be tasked as a cost-saver, by reducing head-count, but far better to avoid those lean times by ensuring that the HR is an effective business driver. That starts with achieving headcount and reducing staff turnover. But you need to go much deeper than that to make sure the right people are in the right place so the company is better equipped to reach its goals.
Highlighting the recent PwC Annual Global CEO Survey, Oracle’s Mark Hurd noted that the talent gap is presenting CEOs with significant challenges:
n31 percent said they couldn’t innovate effectively;
n29 percent couldn’t pursue attractive market opportunities; and
n24 percent had to cancel or delay a strategic initiative.
So how does the sum total of employee effort get channelled into business value in line with corporate priorities? To tackle the problem effectively, C-level executives must have a complete commitment to accommodate transformation and understand more about their workforce. This necessitates a willingness to become more data-driven. 
Fortunately, in today’s digital world, enterprise measurement and analytics systems allow companies to gain insights into every aspect of their business, including HCM, to plan ahead and act with confidence. And these systems are available in the cloud, meaning any size of corporation can rapidly get on board and enjoy the benefits.
According to research by MIT and IBM, early adopters of talent and workforce analytics best practices have 8 percent higher sales growth, 25 percent higher net operating income growth and 58 percent higher sales per employee! (Refer to Next frontier in HR Analytics)
Cloud-based performance management technologies facilitate flexible and powerful approaches to transforming HR to become more data-driven and more effective enablers of revenue. Oracle APAC Vice President Human Capital Management Strategy Aaron Green said, “One specific area for HR leaders to look at is potential revenue leak resulting from a lack of appropriate resources at the moment when those revenue-generating resources are in demand. A professional services organisation, for example, should be able to understand availability of skills supply from employee profiles, time-tracking systems and project timeline databases and match this with demand for resources from CRM, demand generation and proposal generation systems. 
When HR has complete visibility into the demand and supply equation of talent resources, then they can appropriately prepare the workforce. Won’t that directly have a financial impact? Such visibility would make them more business savvy and help to contribute to the top and bottom line. Again, this requires an efficient performance management system that connects all the dots.”
As much as revenue leak, talent leak also is costly to a company. A good starting point for identifying potential leak of talent is to look at echo from employee feedback on compensation, work environment and work-life balance. Combining this with history of turnover and exit interviews can provide more complete insights. However, this requires technologies that can combine analysis of free-text feedback and performance metrics such as quota attainment to allow a reasonable prediction of talent turnover.
A complete performance management system would facilitate:
nPrediction of potential turnover
nEvaluation of possible options such as career change, organisational alignment, compensation adjustment, training and host of other HR actions to curb turnover 
nManaging and measuring the effectiveness of such action plans and linking it to financial impacts of annual operating plans and forecasts.
An integrated approach
As with every aspect of the business, cloud-based enterprise performance management technologies facilitate flexible and powerful approaches to transforming HR to become more data-driven and a more effective enabler of revenue. With a clear commitment from business leaders, integrating HCM into the corporate-wide process of setting predictable business goals with constant monitoring allows companies to stay on course in today’s dynamic marketplace. 
(Mahadevan Natarajan is Senior Director, EPMBI Sales Consulting)

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