Importance of HR Data for a CEO

By: Gireesh Sharma
Date: August 9th, 2009
Posted in: Employee Appraisals, HR Best Practices, HR Technology, Human Resources, Motivation, Performance Management | 1 Comment »

I used to believe that HR Data was useful for HR Departments only since the department was responsible for employee development & management activities. Alternately, the CFO and CEO were only interested in metrics such as cost of hire, total compensation, cost for training etc which were more oriented towards financial goals and treated employee costs as a “cost-center”. My perception changed in a recent customer interaction.

It was during an EmpXtrack training session for one of our clients in India, when their HR Director asked that we provide extensive HR dashboards to their CEO. While these reports were available for the HR Managers, I wasn’t sure if it could benefit the CEO in any way and hence I resisted.

Since the HR Director seemed to be a nice & patient gentleman, I thought of arguing a little and also better understand why he believed that the CEO would want to look at all this data. There were over 25 crucial dashboards already available for the CEO and what could be the benefits of having access to 100s of additional reports. Many questions came in my mind like –

• Will the CEO have time to go through the reports,
• What will be the implication of training him in using these?
• What if one of the reports doesn’t work correctly? (It does happen!!!)
• Was the CEO from an HR background or believed in Jack Welch’s theory of HR Management etc. etc.

The HR Director was obliging and I got some deep insights into how CEOs think and work. This also helped me better understand the needs of an effective HR department – especially for a company that has global ambitions and aggressive growth plans.

The HR Director said that they are into a Knowledge Intensive Business Services and their core strength lies in the quality of their people. While meeting potential investors and even large customers, our CEO is often asked following questions:

1. What is it about your management team / people that makes them uniquely capable of executing on this business plan?

AND/OR

2. Do you have the Right Leadership?

AND/OR

3. Does the team have passion for the business? Have they done it before: experience; market experience; intimate contact with potential customers, partners, and suppliers; etc.

A typical answer to these may not be based on facts and figures – what the investors typically love. On the basis of this feedback I did a web research. Not surprised, I found lot of web references and blog posts that said, the question of team capability (read strength of Human Resources) is an important question in all investor interviews. Here are references useful for entrepreneurs preparing for a VC meeting:

1.http://www.toptechnology.co.uk/Twenty%20Questions.pdf
2. http://www.ventureden.com/Blogs/2009/05/15/5-questions-you-should-ask-yourself-before-you-approach-vcs/
3.http://www.venlogic.com/vl2/downloads/white_papers/Top_VC_Questions.pdf

This reminded me of an earlier post on Talent Junction by Saigun’s President Tushar Bhatia “Evolution of HR Function” where he says:

“Around 5 years later, we were asked a similar question where another customer evaluated our HR practices at a significant level of detail to gauge our competence.

In subsequent discussions, I have found that the question on HR maturity is being asked frequently by potential customers, investors and even prospective employees. The answers indicate maturity, stability, long term sustainability and delivery capabilities of your organization and hence are very important.”
Many companies quote phrases like “People are our strength” in their mission statement or value statement. When people are the strength, no wonder investors would like to measure it. And obviously, without detailed HR information available in hand, the CEO would have a hard time answering the questions accurately and in a timely manner.

Based on this feedback, I sat with EmpXtrack Project Managers to help them add relevant HR reports and provide them in CEO’s Dashboard. I am sure this will help other aspiring CEOs to quickly find the relevant data about their employees which would not only help them pitch appropriately to investors but also help realize their dream of a successful enterprise.

What Next?

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