Business Intelligence
Business intelligence can be described as the ability to use information to
gain a deeper understanding of an organization and its parts, to see how. The
whole organization and its parts are performing (through business metrics) and
to make sound business decisions that are grounded in relevant and accurate
facts rather than assumptions or "gut feelings." A commitment to good
governance requires more informed, transparent, and accountable decisions, and
better business intelligence makes those decisions possible.
An organization's business
intelligence system has three basic components:
·
Data gathering.
Data is routinely gathered through different computer systems in all
parts of the organization (for example, point-of-sale performance, purchasing
and sales transactions, employee and customer records, security terminals).
·
Data warehousing. Data gathered from different systems is translated into a
standard format, cleaned (or "scrubbed") of errors and duplications,
and then stored in databases related to specific uses (for example, operations,
finance, sales, HR). Organizations that have invested in an enterprise resource planning (ERP) system are able to integrate
these distinct databases. This allows everyone in the organization access to
the same current data and improves communication and coordination. ERP products
are "suites" of integrated applications for special purposes, such as
those shown in Exhibit 36. The data warehouse is integrated but divided into
separate sections or data marts that share reporting and analytical needs or
interests. For example, the human resources information system (HRIS) captures
data related to managing tasks such as payroll, workforce planning, performance
appraisal, training and development, and succession planning. Some ERPs
actually extend outside the organization by supporting electronic data
interchange (EDI). Among other purposes, EDI is often used to automate
outsourcing and vendor payments.
·
Query and reporting capabilities. Users can
access the data they need and use stand-alone or integrated (ERP) business
application software to sort, describe, and analyze data in myriad ways and to
create report graphics, such as bar or pie charts.
Business Intelligence Portals
A business intelligence portal is
a user's point of access to the data and applications stored on an information
system. An effective business intelligence portal:
·
Can be customized to the needs of specific users
so that they view only the data and applications they commonly use. This
simplifies navigation and avoids overwhelming users with visual options and
requiring layers of actions. This is an important factor for HR when selecting
or designing self-service portals for managers and employees.
·
Presents information logically. A well-designed
screen uses visual cues (for example, color, size, screen location, adjacency)
to denote logical relationships.
·
Supports easy navigation from the home page to
and within desired files.
· Uses automated tools such as "click to open" and "drag and drop."
·
Can be scaled to different media. Screens and
information should be readable on monitors, handheld devices, and mobile
phones.
·
Provides security by restricting access to
authorized users and limiting actions according to users' privileges.
Balanced Scorecard
A useful tool for gathering
business intelligence is the balanced scorecard. A balanced scorecard can
provide a concise impression of an organization's overall performance. It can
be used to focus the organization and its functions on key strategic activities,
to craft responses to goals, and to create metrics to assess the effectiveness
of these responses. Balanced scorecards help support a clear line of sight from
strategic goals to strategic performance. An organization can have multiple
balanced scorecards, as the organization-level scorecard can be deconstructed
to a departmental level, incorporating departmental-level metrics.
The creators of the balanced
scorecard, Robert S. Kaplan and David P. Norton, identified four ways that the
scorecard can be used in strategic management by linking short-term activities
to long-term objectives. From the perspective of HR, a balanced scorecard can
help achieve this objective in the following ways:
·
Translating the vision. All balanced scorecards must include accountability
and measurable results that are agreed upon with management. HR can use this
information to tailor its efforts to best serve achieving these results.
·
Communicating and linking. Using a balanced scorecard gives the entire organization
a clear idea of what the overall objectives are and allows departments to
ensure that their objectives are aligned with the overall long- term strategy.
HR can look to the balanced scorecard in order to ensure that talent
acquisition strategies will serve the overall strategy.
·
Business planning. Balanced scorecards make it clear what goals have been set by the
organization and therefore enable departments to better integrate their own
plans. In this way, HR can ensure not only that the organization allocates the
correct resources to workforce management but also that resources are allocated
in the right way and place-for example, through hiring more or specific talent,
offering skills development, or adjusting travel budgets.
·
Feedback and learning. A balanced scorecard provides organizations with more
opportunities to learn from ongoing performance. This allows HR to adjust its
strategies based on real-time feedback and modify activities accordingly.
Analytical Processing
Business analysis has been
greatly enhanced through the use of analytical processing. As the computer processing
power and Internet accessibility available to organizations has improved,
online analytical processing (OLAP) has become more common, embedded into many
of the available HRIS products. Because of the way the data is stored, analytical
processing applications can analyze the data faster and in more ways than
traditional relational databases, offering a multidimensional analysis of
business data.
A relational database stores data
in separate tables (for example, employee training records, training products).
Each table is composed of rows and columns. Each row is a data record (for
example, an employee name); each column is an attribute (for example, a
training course). The database is queried to find the relationships between the
data-for example, all the employees who have completed a particular training
program.
An analytical processing
application uses a server sited between the user and the organization's
database. The OLAP server takes the data from the database and stores it in a
compact, multidimensional "cube." Each dimension (for example, employees)
contains all the attributes in the database (for example, gender, age,
function, pay grade, promotions, education, source of recruitment). These tools
can quickly find all the varied intersections of the dimensions.
This means that, with the right
analytical processing application, a user can analyze the same data and produce
different types of analysis, for example, a time series that shows trends in
hiring certain demographic groups or a regression analysis that compares
retention with the date of the employee's last promotion.
Data can also be organized
hierarchically, which allows the user to "drill down" for a more
granular look at the situation or "drill up" for a bird's-eye view.
HR analysts can, for example, drill down from all employees to managers, to
female managers, to female managers with a college education, and so on.
Advanced Business Analytics
Business intelligence analytics
can be distinguished in terms of the analyses' temporal focus: backward,
current, or forward.
Some reporting analyzes
historical data. For example, an analysis of recruiting statistics might
compare the effectiveness of various recruitment channels in meeting different
criteria (such as cost, numbers of responses, time to fill, long-term retention).
This is often referred to as trend analysis. One way this can be used by HR is
to extrapolate future labor demands.
Dashboard analytics focus on
current data that measures performance in key areas. For example, an HR
dashboard might report employee retention rates in comparison to current
objectives. It could present the data in different ways: geographically,
functionally, by age or gender.
Predictive analytics use
historical and current data to get a better sense of the future and even to
shape the future. These analytic approaches apply formulas and algorithms to
data warehouses in order to predict outcomes. For example, a dashboard
application may have the ability to extrapolate from historical and current
data to forecast a problematic or beneficial trend-perhaps a decline in hiring
due to non-competitive wages. Simulations can be run to see outcomes based on
different wage scenarios.
Advanced analytics can also take
advantage of machine learning, the ability of an information system to make its
own decisions based on the data it is receiving. For HR professionals, this
type of capability can improve the self-service experience for managers and
employees. It can predict certain interests based on the accumulating interactions.
It can, for example, review a bank of résumés on file, select the applicants
most likely to be interested in a new opening, and send e-mails or texts to
advertise job opportunities.
Predictive analytics and trend
analysis offer some valuable applications to HR professionals:
·
Identifying objective performance and engagement
metrics, used to identify top-performing employees, and culture fit
·
Facilitating retention and succession planning,
by tracking success indicators and factors that might point to potential flight
risks (The latter should be approached cautiously.)
·
Enhancing talent acquisition processes by
identifying the best hiring sources and potential future high-performing
employees and helping to determine the effectiveness of diversification efforts
·
Improving the chances of fraud detection through
pattern recognition
The ability to create strong
forecasts can help organizations improve their decision-making processes, their
responsiveness to changes in the business environment, and the effectiveness of
their long-term planning. However, it is important to remember that prediction
is by no means flawless, because one can never truly know what is going to
happen in the future. Crises, for example, tend not to be predictable.
Similarly, it is possible that technological developments could offer up a new
process or tool that could have an impact on an organization's workforce
growth- for example, new automation technology that might mean retiring
employees don't need to be replaced, which could reverse an upward trend in
workforce growth.
Scenario Planning
Another approach to looking ahead
is scenario planning. Organizations are often subject to events beyond their
control-from political disruption to natural disasters, to pandemics. While it
is impossible to predict every potential scenario that might affect an
organization, being able to engage in some "what if" planning can
help organizations mitigate the severity of potential risks in the future. HR
can take information gathered from past experiences and events and use them to
devise plans to confront possible challenges in the future. For example,
information gathered about the response to a pandemic can inform plans to
manage a potential future pandemic or other public health crisis. To approach
the exercise, team members can pose such questions as:
·
Did the organization have appropriate employee
supports in place (technological, health)?
·
What preparations are in place to make
adjustments to remote or hybrid work conditions?
·
Was the organization able to locate and
repatriate employees who were overseas?
·
After the crisis ended, was the organization
able to meet any new staffing needs?
Any plans generated by this
exercise will have to be revisited on occasion to ensure that they are based on
the best, most up-to-date information. Engaging in scenario planning can ensure
that an organization has some plans in place to help navigate potential future
crises or challenges.
No comments:
Post a Comment