Australian academic cites need to implement 'HR analytic capabilities to measure effectiveness of HR practices in relation to business goals'
A recent report from ELMO suggests there is a critical gap between HR initiatives and business performance.
It identifies the ability to establish quantifiable links between HR and business goals as the top challenge facing Australian businesses.
“To bridge this, organisations must enhance analytics capabilities that clearly demonstrate HR’s impact as a business driver,” the report states.
The research notes that HR professionals are increasingly turning to standalone technology solutions to gather and report on key metrics. With growing confidence in HR data and expanding budgets, there’s strong momentum for HR to adopt a more strategic role — backed by tools, technology, and analytics that support smart workforce planning and evidence-based decision-making, says ELMO.
So, how can HR do a better job in bridging that gap?
According to Professor Jennifer Loh, Management Professor at the University of Canberra, the answer lies in going beyond what HR has traditionally been known for.
“Over the years, HR has evolved beyond the traditional ‘human’ side of things like payroll, annual leave, salary. I think, increasingly, there needs to be more of an alignment between HR activities and what the company focuses on – like growth and profitability,” Loh told HRD.
“These new activities within HR will still focus on existing HR practices – like training and onboarding – but will also go beyond that now to be directly involved in key decision making. The key is collaboration.”
Loh underscored the importance of using HR as an enabler instead of a separate entity within the C-suite.
“The gap, for me, is implementing HR analytic capabilities to measure the effectiveness of HR practices in relation to business goals. There is nothing currently in place to measure this. Things like turnover rates and employee surveys – businesses can start tapping into this more to see how well things are or aren’t going,” she says.
“It’s about how you can manage things like engagement and productivity to direct business outcomes like profitability – and then work on new ways of working, like changing management programs to better fit what the CEO, for example, wants.”
To achieve greater success, it’s about support from the top, according to Loh.
“It’s all down, ultimately, to the buy-in you get from the C-Suite. Accepting this change and aligning the human element to business objectives will give you the best results. It’s like adopting other things like AI – adopt new ways of training, working, onboarding.”
Data is at the core of this strategic transformation. For HR to thrive, it must embrace data not just as a reporting function, but as a predictive, proactive planning tool, says Loh.
“Data should be used as an analytical tool,” she said. “One key area is using it to anticipate future trends, such as talent or skill shortages. With increasing global uncertainty — like political changes affecting immigration and education in places like the U.S. — predictive tools can help organizations identify risks, such as potential turnover, and make proactive decisions.
“In today’s environment, relying on data and insights is crucial for business sustainability and profitability.”
