By Coenette Bosman, Head of Product Management and Product Development, Sage X3 People

I’m currently at Sage Summit, the world’s largest gathering of entrepreneurs and leaders of Small & Medium Businesses. I am presenting on how a modern Payroll/HR and Talent Management suite helps businesses leverage the latest HR trends.

A few years ago, the tech and statistics geeks revolutionised the ways in which corporate marketing departments work. They transformed them into digitally-powered teams that use data to make decisions in real-time and to deliver personalised experiences to customers. Now, they’re set to do the same to the human resources (HR) function.

The result is that HR is about to change dramatically with data analytics becoming a way of life for HR directors and HR managers. The trend behind this shift is automation. HR departments have been able to automate most of their business processes through business management solutions (like Sage X3 People) and use digital channels for employee self-service, recruitment and other employee-facing functions.

Suddenly, HR departments no longer spend as much time doing routine administration as they did in the past.

What’s more, they also have more data (gathered through digital interfaces like employee self-service) about employees and the business at their fingertips than they had before – data that they can use to drive better decision-making and to shape superior employee experiences.

This means HR departments can transform from administrative hubs into senior partners in the business, using data to add value to employees and stakeholders. They can use HR analytics to help managers and senior leaders make better decisions for the business.

The benefits of HR analytics

HR analytics tools enable HR managers to use the internal data from their HR and other enterprise systems as well as external data sources (for example, industry salary surveys or social media) to gain insight into talent-related business questions. Some examples of these questions might include:

· Where did we find the best hires for our business, i.e. top performers who have we retained for a good while?

· How many people will we need in our service department to support our forecasted revenue growth of 10% for the next financial year?

· What are the possible reasons for high staff turnover in the call centre?

· What skills gaps do we have in our organisation?

HR analytics can pay off in the following ways:

1. Better employee engagement and satisfaction

The HR team will have actionable insight into the factors that boost individual motivation and overall engagement. They can use this to inform and even personalise the employee value proposition for different employees.

2. Higher staff retention

With the right data at their fingertips, HR managers can learn more about why employees leave and why they stay. They can, for example, use a mixture of employee satisfaction surveys, data from performance reviews, and demographic data to understand and predict employee churn.

3. More effective training and development

Analytics data can help HR and line managers identify skills gaps as well as to measure the effectiveness of training initiatives. For example, they can track whether training investments are driving better performance and whether employees are capitalising on the training and development opportunities offered to them.

4. More successful talent acquisition

HR departments can use analytics tools to understand where the best applicants are coming from, what they have in common, and how successful the business is in hiring the best talent. The data can also help them avoid bad hires.

5. Performance management

HR analytics provides insight on which employees are performing well and which are underperforming. This can provide insight into the factors driving performance.

Managing the shift to data-driven HR

HR departments have a unique opportunity to embrace people analytics and digital technology to transform the way they operate. But to succeed, they will need to start thinking about the skills and platforms they need for the future. For example, a successful HR analytics implementation needs to be built on a robust HR management system.

With HR management platforms such as Sage X3 People, HR departments have access to systems that can be deployed quickly and with low risk.  A healthy partnership with the IT organisation is one starting point; the IT team can provide the HR department with valuable guidance as it looks to implement the systems it needs to become more data-driven.

Finding the right skills to become a data-driven HR department is arguably a bigger challenge than rolling out the technology. HR managers need to think about how they will sharpen their own digital skills as well as find specialists such as data scientists to help them exploit their data. Do these skills exist in the organisation or must they be recruited from the outside?

Increasingly, running a successful HR department will be about blending geeks’ technical and analytical skills with the intuition of a seasoned HR leader.

Sage is ready to support HR teams as they make the transition. In a time of seismic technological change and digital invention, Sage’s smart people use the smartest technology to reinvent and simplify HR.