Data centricity and people centricity in digital HR

Becoming data-driven is a major driver for becoming people-driven, said KPMG at its 11th press briefing in spring 2023. Data-driven HR holds huge opportunities for companies that work with big data and are sufficiently open, with interesting technology solutions.

Workforce: the number one operational priority, it remains

KPMG CEO Outlook[1] research published in October 2022 showed that despite inflation and an expected recession, companies' long-term goals remain unchanged, with CEOs tending to be positive about the three-year economic outlook, but many may be faced with a choice between long-term goals and short-term adjustment tasks.

The surveys also showed:

labour risks pose no small challenge to the global economy and firms' growth ambitions.

For 71% of CEOs, the biggest challenge is the long-term impact of pandemic and geopolitical tensions, and retaining a talented workforce in the face of rising inflation and cost of living, but executives saw that they may still be forced to stop staffing and make redundancies in the short term.

In anticipation of the recession, the majority of companies have already frozen or plan to freeze hiring (75%) or reduced or plan to reduce headcount (80%) six months after the report's release. But retaining critical skills and talent will be even more important to meet the three-year targets.

25% of companies identified employee value proposition as the top operational priority for attracting and retaining talent.

71% of company leaders believed that

retaining talent is a top priority, which is increasingly difficult due to rising inflation and cost of living increases.

Companies are therefore taking a complex approach, focusing on the employee experience. Businesses today are often unable to retain employees by increasing wages above inflation, especially when you consider the difference between statistically proven inflation and the psychic perception of inflation. Therefore

the importance of non-wage factors in attracting and retaining workers is growing.

And this includes not only organizational processes - although this has a big impact on work-life balance - but also flexible benefits and working conditions that are value to the employee experience.

Attracting and retaining talent 

Talent attraction and retention practices are changing and will become a top priority for growth objectives in the long term. In several sectors, nearly half of managers see a lack of suitably skilled colleagues as a major barrier to the uptake of digital technologies. Based on the responses of managers participating in the Future of HR survey[2]

more than half of companies have invested in analytics platforms for new HR functions.

Companies are increasingly collecting and using more data types to make HR decisions.

"Analytics, channeled from all levels of the organization, help to accurately understand the needs of employees so that more targeted and effective actions can be developed. The analytics and analysis will help to create a proactive, responsive organization that is ready for the challenges of the future, rather than an afterthought,"

- said Erika Halász, Director of Strategy and Operations Business Advisory at KPMG, whose core expertise is in people-centric design and its implementation in corporate operations.

The growing role of the HR function

The pandemic has facilitated a transformation in which HRM has broken out of its former status as "administrator, executor" and taken the initiative. The pandemic situation increased the visibility of HR departments and involved them at a strategic level in day-to-day decision-making.

An important question is how to link HR and business thinking, how to connect HR processes to business needs in a transparent, comparable way, with as little human thinking bias as possible. The level of strategic HR is the linking of corporate vision and strategic goals with HR strategy and related HR processes. Ideally, HR is not a follow-on function, but thinks strategically, supporting the best delivery of business objectives. Communicating the company's ESG efforts and results to employees and in recruitment is an important HR function, among other things, because value-creating, responsible, inclusive, diverse workplaces can be more attractive and retain more employees.

Current capability vs. future relevance

KPMG's Future of HR study looked at the relationship between current skills and future relevance in six themes in the HR/workforce context, and identified several where there is a significant gap in current skills, despite the high future relevance of the theme.

For example, while 50% of businesses rated the implementation of a culture of organizational agility as the most important issue for the future, only 19% rated that they already have this capability. Similarly, there is a wide gap in the extent to which businesses understand how to prepare their organization for future challenges - 57% consider this to be very important in the long term - but only 25% of respondents rated themselves as already being able to do so.

In several other areas, there is a significant gap between how prepared companies are now and how important they consider it to be in the future. For example

the issue of implementing digital HR solutions, improving employee well-being and mental health, or the importance of building an internal 'talent market'.

A common challenge faced by HR and digital solutions is that many business leaders believe that Hungarian workers are more challenged than their foreign counterparts in managing change and coping with the resulting stress, which is not typically learned in higher education in Hungary. This would send an important message to education and to employers that they need to support their colleagues, the growth mindset, with awareness and tools for resilience, stress management, in a practical way and with a toolkit.

Internal talent market

An important - relatively new - concept is the internal talent market. After getting to know the organization and clarifying the business needs, a new definition of talent or key employee can be given, through which process training needs and opportunities can be better assessed and, where appropriate, made more flexible. KPMG is involved in talent management projects, including research into external talent markets. It is becoming more and more typical for a company to select not "current knowledge and experience" but skills or a "talent" that it can "integrate" into its daily operations, even in the long term - even across multiple areas. Creating and continuously reviewing and developing an internal talent market not only helps retention, but also greatly enhances organizational performance and information flow, and is useful in career and succession planning.

Digital solutions in HR

As in corporate governance, digitalisation is playing an increasingly important role in HR, with more and more people using it in areas such as recruitment, training, change management and even talent identification and support, in addition to classic administration.

But it is essential to think ahead when it comes to digital HR solutions. 

It is also important to know exactly what information we are linking and why, when identifying and using the information that is available or that can be found in processes.

"When analyzing workflows, data becomes available that can be used to make more objective decisions, without any thought bias,"

- says Anna Kálmán, Senior Manager at KPMG. She believes it is important to make employees understand that the improvements are for them, to make their work more efficient, better organized and more effective through a better understanding of their motivations and strengths. What may seem like a control in the first instance can, in the longer term, improve efficiency, reduce monotony or even stress.

Hot topics: AI, teleworking and hybrid work

Artificial intelligence is already being used in many areas within HR functions, such as taking over some of the background work associated with recruitment, helping to identify skills gaps, or even answering frequently asked questions from employees, getting them answers faster. It is clear that technology will play an increasing role in supporting hybrid working as this model becomes a permanent feature in more and more organizations, with the right security settings built into the system.

KPMG estimates that as many as 1.1 billion jobs could be transformed by advances in technology over the next decade, creating many opportunities. With the right use of digital technologies, better allocation of employees' work and time - to value-creating processes - is becoming a fundamental expectation, and can give companies a significant competitive advantage.

Source: KPMG Hungary

[1] KPMG CEO Outlook – KPMG 2022 CEO Outlook – KPMG Magyarország

[2] KPMG Future of HR – Válaszok a HR legnagyobb kihívásaira a következő három – KPMG Magyarország

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