Almost everywhere you turn, articles that address the effectiveness or failure of human resources (HR) talk about how data and analytics must become an essential part of any organization’s people agenda.

Gauging HR’s impact

I have the opportunity to talk with many senior HR leaders in both large and small organizations. Consistently these leaders say their CEO wants them to be proficient in data analytics, much like marketing and finance organizations have become in the past five years. They need to be capable of predicting outcomes of investments in HR — not just offering intuition about what might or might not work.

Those who cannot meet this challenge are likely to be replaced by someone from finance or operations that understands this critical business competency.

Organizations invest millions of dollars in learning and leadership training in an effort to attract and retain the best people. The reality is that there are very few companies that I have met that are actually measuring the impact of that investment. Can you imagine an executive team agreeing to purchase a multi-million dollar piece of hardware or investing in a marketing campaign without being able to predict the impact on productivity or increased sales or market penetration? Why then do we in HR feel we can work off our intuition or what we think will be good for our employees?

New mediums of success

Today’s business world is more competitive than ever before. We are seeing large established organizations struggle and, in some cases, disappear. In addition, most HR teams I talk with are not getting more headcount or budget. They must rethink how they deliver HR services.

Traditional HR solutions, which are often complex and user-unfriendly, are not the answer. HR leaders need to be able to mine data quickly and simply so that the correlation between investments and increased company performance are best delivered in a cloud-based, agile environment.

“Traditional HR solutions, which are often complex and user-unfriendly, are not the answer.”

The second key component to success is segregating work by cost and efficiency. One-to-many conversations are more effectively handled by a shared service center where routine but important questions are answered quickly and accurately. These include questions on benefits programs, compensation and systems access and permissions, to name a few. The people who work in these centers need real-time, accurate information to be effective in answering questions in the moment. By consolidating these inquires, the more expensive — and hopefully more skilled — people, such as HR Business Partners and leaders of the Centers of Excellence, can focus on truly strategic topics.

The necessary tech

The only way to effectively execute this is with a robust technology backbone that is capable of integrating multiple systems, such as HR, payroll and finance, in a way that can seamlessly and simply present data to support business assumptions and what-if scenarios.

Unfortunately, many organizations are still using legacy solutions or generic spreadsheets and presentation tools to try to illustrate and communicate potentially breakthrough thinking on where to invest in people programs — and where to avoid. The gap in this approach is that it is dependent on the knowledge of the individuals involved, not the collective knowledge of many customers acquired through an effective cloud HR solution. In addition, the correlation between people data and finance data is essentially unattainable, which limits the ability to predict the impact on productivity and profitability.

Running a modern cloud-based human capital management system won’t guarantee a successful HR transformation, but without it the chances of survival are minimal.