This column is part of Globe Careers' Leadership Lab series, where executives and experts share their views and advice about leadership and management. Follow us at @Globe_Careers. Find all Leadership Lab stories at tgam.ca/leadershiplab
For managers and entrepreneurs, having a thriving business in the 21st century involves harnessing the power of big data to make the right business choices.
Wendy's, one of the world's largest fast food chains, has started using a mapping solution to decide where to set up its next store, similar to other cafes and retail businesses that have been collating and analyzing data to track down the pulse and geographic concentration of target customers.
American International Group, which insures boards of directors against class action lawsuits, is also reportedly using vast amounts of online data to analyze key features of these lawsuits to predict the potential for dismissal, and to help decide on whether to settle.
Big data analytics are buzz words that define the action of processing volumes of data to glean insightful information – and it has become a driving force when making business decisions. Since last year, the number of organizations that have deployed or implemented data-driven projects has increased by 125 per cent, according to International Data Group Enterprise's 2015 Big Data and Analytics Survey.
More data-driven business decisions are expected this year as companies are forecasted to have spent an average of $7.4-million in 2015 on big data-related initiatives. Enterprise organizations are expected to invest $13.8-million, and small and medium-sized businesses are expected to spend $1.6-million, according to the International Data Group survey. While tapping into the power of big data analytics has proven valuable in making effective customer-related decisions, it is equally crucial to address pain points within companies' core assets: their employees.
Human resources managers look at how well their talent is performing to promote future leaders, and find solutions to issues that are hindering talent development and productivity. However, most do a poor job of managing human capital, particularly among mid-sized companies. A survey by Bersin & Associates of 725 firms with 100 or more employees revealed that 93 per cent of them had no formal talent management strategy. According to an ADP study, The Importance of Total Cost of Ownership: How Mid-Sized Companies Can Find Competitive Advantage, senior staff's daily human capital management concerns include finding ways to reduce overhead costs and total cost of managing all of their employees; and spending too many hours manually entering employee data.
When asked what senior executives think about when considering their human capital management total cost of ownership, they typically point to payroll and benefits administration. Time and attendance was the lowest in priorities, among those surveyed.
Alleviating payroll and benefits administration pain points isn't easy, but some companies, such as PT Health Care Solutions Corp., a network of Canadian physiotherapy clinics, have managed to crack the code. The organization was challenged with administrative and payroll process issues during a period of rapid expansion, quickly growing to 100 clinics and 1,800 staff. The clinics didn't have visibility into their operations and needed reporting to track payroll vs revenue. PT Health Care started using an outsourced technology solution to allocate staff time to the right service or clinic. Their executives then used this real-time data to help make strategic staffing decisions.
Now, with timely and accurate information, PT Health Care can pro-actively manage clinic performance, knowing they're working with accurate data. They analyze revenue and staffing levels to maintain optimal ratios and aim to keep HR costs within 50 per cent of total revenue, and administrative costs to roughly 10 per cent. This predictability means a lot to growing businesses and helps managers plan strategically. Undeniably, big data analytics is a crucial component to delivering value for customer and workforce management. With the speed of technological advancement and the exponential amount of data available worldwide, businesses in all sectors are able to uncover patterns that are crucial for driving efficiencies and supporting decision-making. It's tempting to look to the IT department to lead the charge toward big data; however leaders in all parts of the business, including HR, finance and operations, should be looking for opportunities to leverage new insights.
Russell Wong is chief financial officer, ADP Canada.