Data is the oil of the modern era, or so the common phrase goes. Whilst many organisations understand that data should be important, they are not always entirely sure how they can transform it into valuable and actionable business insights, especially when it comes to their HR and payroll functions.

With a renewed focus on the resilience of people and processes since the start of the pandemic, the HR function is under increased pressure to employ data more effectively to make important, business wide strategic decisions. Here are our four steps that organisations can take to enable their payroll and HR professionals to harness data to the full:

Step 1 – Unify your data to create a single source of truth
One of the most probable causes of inconsistencies in an organisation’s HR data is that it’s held in multiple, disparate systems located in a number of different departments and functions. This means information is likely to be siloed, with duplication in some areas and gaps in others.  The dispersed nature of this kind of data makes it almost impossible to use analytics software to obtain enterprise-wide insights.

When choosing an HR system, organisations should ensure that it can integrate data reliably and securely from a wide range of sources to enable consistency and guarantee a single source of truth across the organisation.

Step 2: Simplify, standardise and cleanse your data
If an organisation’s data has been sitting in disparate systems, it is more than likely that it will appear in a range of different, possibly incompatible formats. There’s also the likelihood that this disparate data contains a good number of inaccuracies.

Before transferring data to a new HCM system, it’s imperative for organisations to rationalise and clean its data to ensure it is both accurate and readable by its analytics tools. Organisations should make sure that their chosen system includes the necessary tools to help with this standardisation and cleansing.

Step 3: Analyse your data with easy-to-use tools
Data analysis is not necessarily top of most HR practitioners’ skills list, not least because in many instances they do not have the time or resources to be manually pouring over information to look for patterns, trends, and other insights. Even if software tools are available, they are frequently seen as nice-to-have add-ons that are too complex to bother using.

This means it is important to ensure an organisation’s HCM supplier does not simply treat analytics tools as an afterthought. Such software is vital to provide HR leaders with the necessary insights to take strategic action, which means having access to easy-to-use tools that require minimal intervention from the IT department.

This also allows for more efficient report building. For many organisations, HR report building is a very manual and time-consuming process based primarily on spreadsheet analysis. This situation leads to inconsistent and sometimes even inaccurate findings. The best HCM systems will provide tools that enable a fully automated and secure report-building process; these tools make it quick and easy for HR leaders to deliver boardroom-ready insights for discussion with key stakeholders in areas ranging from compliance and auditing, to possible areas for workforce transformation.

Step 4: Take action to ensure a process of continual improvement
The area that many organisations find the most difficult is properly using data insights to take constructive action. The difficulties in this crucial step often stem from the fact that data-driven transformation should not be a step at all, but rather an ongoing and iterative process of continual improvement.

The first and most important part of this process is for an organisation to define its goal (a common example being “how can we reduce the number of people leaving the organisation in the first year of employment?”) Before insights are even looked at, there should be a clear objective in mind to help guide the exploration of the data. Clarifying the outcome organisations want to achieve from the outset ultimately means they are in a stronger position to obtain the insights actually required.

What sets a best-in-class analytics tool apart is its ability to not only present the data in a way that is visually impactful, but also deliver insights that proactively point organisations towards the appropriate actions to take in pursuit of a goal.

Data is a goldmine of potential for organisations, especially when it comes to the HR and payroll functions. When combined with qualitative insights from key stakeholders, data can help to transform operations and help businesses reap the rewards of more efficient and effective processes. Digital transformation has set the tone for the past year. Organisations cannot afford to let their HR and payroll functions be left behind in this data-driven revolution.