Can HR data save your organization millions?

HR leaders often cite the potential for productivity gains as a reason for investing in new technology. These gains can be difficult to substantiate, however. Wes Wu, a long-time HR consultant who’s now vice president of advisory services at Visier, believes HR leaders should be seeking to improve the business instead–if they’re successful in that, the savings will follow. At the HR Tech Conference, he’ll lead a session (How to Save $10M Using HR Data, in the HR Executive track) that explores this topic in greater detail. In the Q&A below, Wu addresses what HR should keep in mind when it comes to winning support for tech initiatives and proving their ROI.

What are some examples of how HR data can help companies save hard dollars?  

Hard dollar savings can come from many places, but some of the obvious are areas like recruiting costs (associated with turnover), reducing overtime and other types of payroll (through better planning and management), and top-line growth that comes from better sales performance. Hard-dollar savings can also come from less likely places such as span of control analysis and absence management.  We should also remember that it’s not about measuring the process savings, but about measuring the outcomes. For example, the financial impact of workforce planning accuracy of free cash flow is critically important to CFOs.

Why are justifications such as “productivity gains” insufficient these days for building support for HR investment?

HR should not decide that “soft” productivity and efficiency gains are insufficient, but acknowledge that decades of HR business cases that justified investments with efficiency savings and “more strategic time allocation” have generally not proven to be accurate. Almost every business case that promised “efficiency equals HR headcount cuts” or “efficiency equals better HR strategy” have failed in the eyes of the CFO. These business cases are still important but have lost credibility in the eyes of financial leaders without the augmentation of hard-dollar savings.

What’s one or two important thing HR should keep in mind when evaluating ways to save money?  

Don’t seek to save money unless that is the mandate coming from the executive team or is the stated strategy.  Instead, seek to accurately triage all of the business problems and requests that the team is receiving, and figure out how to find the low-hanging fruit that you can solve quickly, or assess for larger business impacts. Once you’ve helped create solutions, your people analytics team can create traction and credibility to do more great work, and you can quantify the results later. If you seek the business impact, saving money will follow.

What’s an important takeaway you’d like attendees to get from this session?  

HR has been fairly inwardly focused for many years. We have known that being strategic business allies is the necessary direction, but without easily accessible workforce insights, “being strategic” has been a challenge.  Technology and process have evolved to a degree that business insights that lead to real business impact are within easy reach, and without large time or capital requirements.  More and more people analytics teams are gaining quick traction with the business, and accelerating HR’s renewed credibility in their organizations.

Andrew R. McIlvaine
Andrew R. McIlvaine is former senior editor with Human Resource Executive®.