Most organisations require their human resources function to produce reports on human resources developments in the organisation. My discussions with most of the human resources professionals and what I have seen points to a challenge in producing meaningful reports. The starting point with the human resources reports is that they are a tool that must be used to help the business make business decisions. The biggest challenge I see with most of the reports is that they lack business context. Human resources functions are producing reports for their own consumption and not for the business. This is a tragedy for the profession and the business.
The starting point is that the human resources function must understand who the consumer of the report is. They must understand that the reports are produced for the business leaders to assist them in making business decisions and not human resources decisions only. The majority of the reports do not attract the attention of the business leaders because they are of no relevance to the business. The problem seems to stem from the fact that most human resources professionals have no capacity to connect what happens in human resources to business outcomes. They are practicing human resources for human resources instead of human resources for business. I do not blame the individuals entirely but I blame how they are trained. There is a general obsession with being a specialist who has no idea about how businesses make money.
One of the biggest hurdles to producing credible and useful reports is that despite a huge swath of data being generated daily in human resources and in business, the human resources function is lagging behind other functions in terms of digitisation and making use of data to make business decisions. The only data that you find in human resources inside some form of database is the payroll. All other transactions happening in human resources have no digital footprint. If you are lucky to find a human resources function in an ERP system for the business, the human resources module is the least utilised.
On the actual quality of the reports I will look at a few examples to demonstrate wasted opportunities in human resources reporting. One of the statistics often reported in human resources is the number of employees absent from work due to sick leave. They report absolute numbers and if you are lucky, they show month on month changes. They end there. The key question for any business leader is so what? This question is rarely answered. The starting point in understanding this statistic is to ask so what are the implications for the business? The obvious immediate consequences of people being absent from work is whether or not the absence was unplanned, and if unplanned it means there will be immediate disruption to work. The work will need to be done and if so by who? Does this mean that we will have to pay people overtime to cover up for the gap? What impact has been felt by the customers? Did it affect our sales? Before putting the full story together in terms of numbers you need to understand which departments are experiencing this upsurge in sick leave. What could be the cause? Do they work in high a stress area? If not, what other possible causes are available? By exploring your data using statistical analysis all these questions can be answered for the benefit of the business.
Let us now assume that we have explored the data and discovered that sick leave absence is more prevalent in two departments’: Sales and Production. Further investigations reveal that sick leave in production started going up when we installed a new plant and further investigations show that the production staff feel that they have no control over their work. Work is no longer meaningful as before when they were doing most of the work manually. The employees are stressed and therefore high frequency of sick leave absenteeism. The company lost close to $150 000 in paid time off to employees off sick. On average we lost 180 days sick days and we had to pay overtime to cover up and the cost to the business was $230 000 in overtime in the month of May alone. Besides the overtime, we had delayed production due to absenteeism of critical staff resulting in cancellation of orders worth $650 000. In May, sickness absenteeism cost the business over a million dollars without factoring the long term impact of the cancelled orders. With regards to the sales department, we had 8 of the sales representatives absent for an average of 12 days for the month of May. Our instigations show that the upsurge in sick leave started when the department got a new General Manager for Sales. Before this new development, the department had the lowest average sick days per employee per month in the whole company. For the month of May alone, the company paid time off cost of $58 000 in the sales department. Based on the average daily sales of each of the affected Sale Representative the business lost an equivalent of $820 000 in sales due to sick leave absenteeism. The business has lost for the month of May alone from the two departments over one million eight hundred thousand dollars in potential revenue and through actual costs incurred. This amount is more than our annual profit for last year.
With the above analysis any sensible business leader will pay attention because we have given meaning to the human resources numbers. The human resources function can produce reports that will force the business leaders to act if they avoid producing plain statistics like number of employees trained, employee engagement index, number of disciplinary cases, staff turnover, number of new employees etc. Every number coming out of the human resources function can be given business meaning and it will make sense to any serious Chief Executive. If HR Professionals continue to chain out plain numbers they will continue to be ignored.
For those more advanced with the right capacity and data infrastructure, more value can be gained by doing predictive analytics and prescriptive analytics using human resources and business data. No other analytics areas has the capacity to change the course of the business using these results than human resources. Unfortunately, capacity issues and lack of interest have slowed the migration to higher level of HR analytics by businesses in Zimbabwe.
Memory Nguwi is an Occupational Psychologist, Data Scientist, Speaker, & Managing Consultant- Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. https://www.linkedin.com/in/memorynguwi/ Phone +263 0242 481946-48/481950/2900276/2900966 or email: firstname.lastname@example.org or visit our website at www.ipcconsultants.com