Why CFOs Should Consider Big Data for HR and Compliance
This article was updated on Aug. 29, 2018.
The use of big data for HR and compliance functions is becoming critical to many organizations' success. According to Jenny Dearborn and David Swanson, co-authors of "The Data Driven Leader," businesses that fail to incorporate big data into HR functions will suffer.
Given this, even chief financial officers who've had only a passing acquaintance with their colleagues in human resources will want to forge closer relationships. CFOs increasingly are expected to be strategic partners with their companies; to not only report the numbers, but inform decision-making in ways that improve the numbers. And that requires a handle on all the information available about employees.
The term big data typically refers to data so voluminous and unstructured that traditional technologies struggle to manage and process it. It can include structured transaction data, such as payroll records. Finance can work with HR to tap into this information.
Big data also can include unstructured records like emails and social media posts. It can even include data from outside sources, such as demographic or salary studies done by third parties, or reviews from sites that let employees rate their employers.
Big Data Benefits
Big data can help human resources professionals comply with government regulations and enhance decision-making in ways that improve the organization's financial performance. For instance, analyzing an organization's recruitment and hiring processes across all locations may reveal that job candidates with unusual names are less likely to be called for interviews, and that even if they do land an interview, they're less likely to be hired. Or, an analysis may reveal employees at multiple locations haven't undergone required safety training. In addition to the legal, reputational and (in some cases) moral implications of these situations, all can affect financial performance.
In addition to compliance, big data can help HR professionals ensure the decisions they make align with and advance their organizations' strategic objective. For instance, by analyzing the educational levels and backgrounds of job candidates filling similar, entry-level positions across the company, big data can help HR professionals identify attributes common to those who remain with the company for at least a couple of years. They can use this information to better target their recruitment efforts. Finance will want to be aware of those efforts, as reduced turnover can boost morale, operations and the bottom line.
Big Data Challenges
Because big data resides across multiple departments and computer systems and encompasses information from outside the company, it can be a struggle to identify, access and aggregate it. Departments may balk when asked to share systems and information. Intelligently analyzing the data may require specific skills certain departments do not possess. And any analysis of personal information should adhere to both the spirit and letter of privacy regulations.
While those challenges are real, they're not insurmountable. CFOs and human resources professionals will need to offer reassurance that sharing data won't lead to a loss of control. They'll also need to let others know the systems and processes they're using comply with privacy and other regulations.
Of course, part of the solution is technical. Since big data is dispersed among myriad systems, HR professionals need a way to access it efficiently. Solutions like a data mart can help. A data mart is a repository of data designed to serve a particular community of knowledge workers, according to TechTarget. Generally, an organization's data marts are subsets of its data warehouse.
When implementing the systems needed to work with big data, CFOs can collaborate with the IT department to ensure the systems work as intended and provide value both to human resources and the organization overall. To ensure they're intelligently analyzing the data, CFOs can also engage individuals with expertise in data analytics.
The work required to use big data for HR and compliance effectively can be significant. At the same time, it can pay off in heightened compliance and improved decision-making — a boost to the bottom line.
