From a senior manager’s point of view, the most important part of an HR or human capital management solution is its reporting and analytics capabilities, explains PA Consulting Group’s Bettina Pickering.
Good HR reporting tools deliver value from employee data in two ways. First, they help organisations understand their employee cost base. Good and combined information from HR-related information databases such as departmental budgets and headcounts, salary and appraisal reviews, attendance records, leavers interviews, employee satisfaction reviews and training management systems can give senior HR and business managers clear views to support better business decisions. They can spot trends earlier and understand what they’re spending in a way that may enable them to make savings without undermining the efficiency or motivation of the workforce.
The second benefit of decent reporting tools is that they can help the HR function show where it adds value to the business. A lot of the good things HR may have achieved in terms of employee satisfaction, retention or reduced training costs are seldom measured. It can be difficult for HR managers to prove they’ve been successful and demonstrate the value they’ve added, for example in increasing employee productivity, reducing employee churn and managing talent. Good reporting and analysis tools can help them do this.
Since many organisations have several employee-driven HR management and HR learning management databases scattered throughout the organisation, including everything from accident recording to payroll systems, new thinking is developing around HR management information systems (HR MIS) that pull all employee-related information into one single view of HR and employee-related data.
Organisations are also looking for tools to better analyse workforce patterns, predict resource needs, manage talent, succession and skill levels, and assist HR functions in demonstrating their contributions to the firm as a whole. Ideally, a single MIS or business intelligence system should be considered to cover all business management information needs, not just HR, to help managers analyse information consistently across the organisation.
In order to demonstrate its value to the business, the HR function cannot solely rely on the implementation of an MIS. Value can only be demonstrated through having the right measures in place which show increased value delivery over time. These measures should be developed and agreed first before choosing an MIS, as not all of these systems may fit HR performance management needs.
The HR reporting challenge
The big questions to ask when selecting any HR system should be, what kind of reports can you get out of it? And how flexible/easy to use is it in terms of ad-hoc analysis? The reports your system produces will be the main source of evidence to assess the value that it delivers.
HR and finance, especially, often have conflicting reporting and analysis requirements in terms of headcount reporting, budgeting and planning. In order to fulfil both requirements the base data needs to be collected in the right structures and detail and then presented according to the requirements of the two audiences. Reporting/analysis requirements must therefore be clear and agreed before the MIS is chosen to avoid having to make major compromises.
Most HR packages arrive with a portfolio of ready-made reporting templates designed to meet the needs of the typical user. But they may not cater for the specific performance measures that apply to your business, or may not be able to incorporate information from the systems used in finance or on the front lines.
Do the report templates you have or that are on offer provide the performance measures you want to track? And does the system provide reporting and analysis tools that let HR managers – rather than someone in the IT department – respond to the ad hoc enquiries that always crop up?
The reporting side of many HR and ERP systems is still not intuitive enough for users and often does not support more advanced HR trend reporting and analysis. The ideal is to have a simple report creation module that will let users put together their own queries and report templates as well as supporting professional looking output.
If the native reporting tools in an HR application do not meet your requirements, you may need to turn to specialist report writers such as Crystal Reports from Business Objects, or business suites such as ProClarity, Board MIT and QlickView.
Typically, these business intelligence (BI) applications will not be specific to HR, but will be available as part of a performance management suite, which pulls in and handles information from financial, operational, sales and HR systems. If you do not have day-to-day familiarity with these tools, colleagues in your finance or IT departments may be able to help.
However HR and finance by nature have different views of the organisation and success measures. Finance will have very different measures for HR than HR will for itself. Any HR reporting system, either built-in or added on later, needs to demonstrate that it can handle these measures in a way that both parties understand. Often that doesn’t happen – HR will provide figures and finance will say they’re wrong.
It is also a good idea to review the base data and understand if that is collected and held in the right structures and level of granularity required. No reporting tool will be able to perform well if the base data is not in the right shape or has major gaps. An organisation will only be able take advantage of its data if it is of good quality and collected in a consistent manner, whatever the source system.
Changing business requirements often force changes to how HR operates and measures itself, and will also require changes to management information systems. Any reporting system needs to be flexible enough to cope with this change. An HR MIS implementation also needs to cater for the differing perceptions and requirements of HR, finance and business managers, which will need to be reflected in different organisational reporting structures.
It’s very much a function of sitting down and working out what the organisation wants out of a reporting and analysis system, bearing in mind potentially conflicting requirements from various functions such as finance and HR. It is also key that HR together with finance defines what the key HR measures and trends should be that clearly show HR’s contribution to the success of the organisation and clearly articulate what data is required to report on these measures and trends.
