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Strategic HR requires accurate data and a broad perspective

Human resources managers hungering after a 'seat at the table' can achieve strategic HR by connecting metrics to business outcomes, one VP of HR says.

If human resources leaders want the C-suite to make room for one more at the executive table, they'd better show up with data in hand. That's according to Karen Hilton, HR vice president at Atlanta-based travel and expense technology vendor TRX Inc., who led a session on strategic HR at last week's Human Capital Institute conference on workforce planning and analytics. She stressed the importance of not only providing accurate and useful data, but also building data interpretation skills.

Hilton cited research from nonprofit HR organization WorldatWork to lay out the current state of strategic HR. While 75% of survey respondents reported that their company's senior leadership had requested workforce projections and predictive modeling data, one-third said they didn't have the skills to meet these requests.

Considering these results, Hilton said, it's clear that the C-suite wants HR "at the table." In her view, the problem stems from confusion about what strategic HR entails, so she laid out a concrete definition. "Here's what strategic HR should mean: It should be aligned to business-centric metrics and outcomes," she said. "Initiatives are quantifiably tied to outcomes that are tied to the balance sheet [and to] finance, IT, operations and so on."

Hilton encouraged HR leaders to broaden their perspective by interacting with leaders of other business units and finding out what data is important to them, then planning a way to provide it. She also said to steer away from "reporting for reporting's sake," even if it feels counterintuitive.

Hilton relayed an anecdote about TRX's HR scorecards to illustrate this point. Although her team was distributing reports faithfully each quarter, she suspected that they weren't as useful as they could be. "I went to the business [executives] and [asked], 'How many of you are actually using this data?' Do you know how many of them responded, 'I'm not'? Every one of them," she said. "[So,] we stopped reporting on time to fill and time to hire. Stop doing anything that doesn't matter to the business."

HR managers should foster analytical skills and organizational knowledge

The importance of consulting with business leaders to determine meaningful HR metrics was echoed in presentations from three HR managers who are using HR analytics. David Eberhardt, director of HR strategy and systems at Devon Energy, said what's critical to measure at one company might be irrelevant at another, which is why getting the executive point of view is crucial.

Hilton also said that HR leaders should deepen their understanding of their organization's industry, an opinion that was supported by the report "CEO Perspectives: How HR can take on a bigger role in driving growth" released on Monday. Based on research conducted by the Economist Intelligence Unit and co-sponsored by Oracle and IBM, the results revealed that 37% of the 135 CEOs surveyed said the head of HR didn't understand the business well enough to effectively address talent gaps within the organization -- an issue that 56% said had the potential to harm the business financially within the next year.

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In terms of building analytical skills, using technology is only part of the solution, Hilton said. "Our reality needs to be that we anticipate workforce trends. It's got to be more than just purchasing a system [that] pops out information -- we need to be analytical," she said. "We do that by giving insights and recommendations that accurately anticipate where the business needs to be going."

And data interpretation can lead to disruptive change. After she analyzed an employee survey, Hilton decided TRX's entrenched performance review cycle -- two per year -- was no longer benefitting the company. The company has since implemented a new review system and cut back reviews to an annual basis, which she said has had a positive impact on employees' level of organizational trust. While Hilton admitted she proposed the change to the performance review model "with knees knocking," she encouraged her peers to be similarly bold in their assertions if data supports change.

She also recommended that HR leaders look into additional education to expand their skills, not only in analytics, but also in other areas of the business. She encouraged HR leaders to consider attending accounting classes, joining industry associations or even earning a master's degree in business administration.

Finally, Hilton reminded the audience that because implementing strategic HR requires a cultural shift within the HR function, it's not easily done. "Remember that "strategic" is earned," she said. "Know what strategic looks like from the perspective of someone other than yourself and your team, and then do a gut-check."

Emma Snider is the associate site editor for Follow her on Twitter: @emmajs24.

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