Human-resources executives have aspired to be strategic advisers to business leaders for at least a generation. But it's been a struggle for many because it's so difficult to measure the business value of HR approaches. Questions such as "What is the ROI of training?" and "Which screening techniques yield the best performing recruits?" or "What target-setting approach will best motivate performance?" have been met with imprecise answers.
Today, however, new tools and methods for analyzing data enable HR to define the link between "people practices" and performance more effectively.
Why now? For starters, the widespread adoption of enterprise resource planning and HR information systems has made data on business operations, performance and personnel more accessible and standardized. Furthermore, the rise of HR information systems has generated a community of software and technology intermediaries that can help HR and business executives use data to find links between talent management and labor productivity. Finally, the consolidation and outsourcing of transactional HR work has compelled many leaders of the function to take a first step toward quantifying and reporting HR costs and performance.
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