HR ANALYTICS

UNIT I

INTRODUCTION TO HR ANALYTICS

HR analytics, also known as people analytics or workforce analytics, is the practice of using
data analysis techniques and tools to derive insights and make informed decisions about human
resources (HR) management. It involves collecting and analysing data on various HR metrics
such as recruitment, employee engagement, performance, turnover, and retention. HR analytics
helps organizations to identify patterns and trends within their workforce, which can inform
strategic decisions about recruitment, talent management, employee development, and
organizational design. By leveraging the power of data and analytics, HR professionals can
make more informed decisions and develop evidence-based HR strategies that align with their
organization's goals and objectives.

HR analytics involves the use of various data sources, including employee surveys,
performance evaluations, financial and operational data, and external data sources such as
social media, job boards, and industry benchmarks. HR analytics also involves the use of
advanced analytical techniques such as predictive modelling, machine learning, and natural
language processing to extract insights from large and complex data sets. Overall, HR analytics
has the potential to transform HR from a reactive, administrative function to a strategic business
partner that uses data-driven insights to inform organizational decisions and drive business
success.

EVOLUTION OF HR ANALYTICS

HR analytics has its roots in the early days of computerized HR systems, which allowed
organizations to store and manage employee data electronically. The use of HR data for
decision-making began in the 1980s when HR managers started using basic statistical methods
to analyse data on workforce demographics, compensation, and performance.
In the 1990s, the rise of data warehousing and business intelligence tools allowed HR managers
to analyze larger amounts of data more easily. This led to the development of HR scorecards
and dashboards, which provided HR managers with a visual representation of key HR metrics.

The 2000s saw the emergence of more sophisticated HR analytics tools and techniques. The
widespread adoption of HR information systems (HRIS) and the increasing availability of
employee data paved the way for more advanced analytics methods such as regression analysis,
predictive modelling, and data mining. HR analytics also began to incorporate external data
sources such as social media and job boards to provide a more comprehensive view of the
workforce.

HR METRICS AND HR ANALYTICS

HR Metrics and HR Analytics are essential tools for Human Resource (HR) professionals to
measure the effectiveness of their HR programs, identify areas of improvement, and make data-
driven decisions.

HR Metrics refers to the quantitative measurements used to evaluate HR programs' success and
the impact they have on an organization's bottom line. These metrics can include turnover rates,
employee engagement levels, absenteeism, time-to-fill vacancies, and training and
development costs.

HR Analytics, on the other hand, is the process of using data to gain insights into HR programs'
effectiveness and predict future outcomes. HR Analytics can involve analysing vast amounts
of data, including employee demographics, performance evaluations, compensation data, and
hiring patterns, among others.

HR Metrics and HR Analytics can help HR professionals identify areas of improvement,

develop more effective HR programs, and make better-informed decisions. HR Metrics should
be aligned with the organization's strategic objectives, and they should be regularly reviewed
and updated to reflect changing business needs. HR Analytics can help organizations identify
trends and patterns that can help them better understand their workforce, such as turnover rates
and employee engagement levels.

HR Analytics can be used to predict future outcomes, such as the likelihood of an employee
leaving or the impact of a new HR program on employee engagement levels. HR Metrics and
HR Analytics should be used together to provide a comprehensive understanding of an
organization's HR programs' effectiveness.

In recent years, the rise of big data, cloud computing, and artificial intelligence has led to even
more significant advances in HR analytics. Organizations are now using machine learning
algorithms and natural language processing to analyse vast amounts of unstructured data such
as employee feedback, social media conversations, and performance reviews.

Today, HR analytics is a rapidly evolving field that is increasingly critical for organizations
looking to stay competitive in a rapidly changing business environment. The future of HR
analytics is likely to involve even more advanced techniques such as prescriptive analytics,
which use AI and machine learning to provide actionable insights that can inform strategic
decision-making.

HR INFORMATION SYSTEMS AND DATA SOURCES

In HR analytics, information systems and data sources play a crucial role in gathering and
analysing data related to human resources. These systems and sources provide the necessary
data to perform various HR analytics tasks, such as workforce planning, talent management,
employee engagement analysis, and predictive modelling. Here are some common HR
information systems and data sources used in HR analytics:

❖ Human Resource Management System (HRMS): An HRMS is a comprehensive

software solution that integrates various HR functions and stores employee data. It
typically includes modules for personnel administration, payroll, benefits, time and
attendance, and performance management. The HRMS serves as a central repository of
employee data, making it a valuable source for HR analytics.
❖ Applicant Tracking System (ATS): An ATS is a software application used to manage
the recruitment and hiring process. It collects and stores data on job applicants,
including resumes, application forms, and assessment results. By analyzing ATS data,
HR teams can gain insights into candidate sourcing, selection processes, and
recruitment efficiency.

❖ Learning Management System (LMS): An LMS is a platform used to deliver, manage,

and track employee training and development activities. It captures data on training
completion, skills assessments, and employee competencies. Analyzing LMS data
enables organizations to assess the effectiveness of training programs, identify skills
gaps, and make data-driven decisions about employee development.

❖ Employee Surveys: Organizations often conduct employee surveys to gather feedback

on various aspects of the work environment, employee satisfaction, engagement, and
other relevant factors. Survey data can be analyzed to understand employee sentiments,
identify areas for improvement, and measure the impact of HR initiatives on employee
experience.

❖ Performance Management Systems: Performance management systems provide a

framework for setting goals, conducting performance evaluations, and tracking
individual and team performance. These systems generate data on performance ratings,
goal achievements, and feedback. By analyzing this data, organizations can gain
insights into employee performance trends, identify top performers, and develop
targeted performance improvement strategies.

❖ Time and Attendance Systems: Time and attendance systems track employee work
hours, breaks, and leave requests. They generate data on attendance patterns, overtime
hours, and absenteeism rates. Analyzing this data helps organizations optimize
 workforce scheduling, monitor productivity, and identify potential issues related to
attendance and time management.

❖ Exit Interviews and Turnover Data: Exit interviews and turnover data provide valuable
insights into why employees leave the organization. Analyzing this data can help
identify factors contributing to turnover, such as poor management, lack of growth
opportunities, or dissatisfaction with compensation. This information enables HR teams
to develop retention strategies and address issues that may impact employee retention.

❖ External Data Sources: In addition to internal HR systems, organizations may leverage

external data sources for HR analytics. These can include industry benchmarks, labor
market data, demographic trends, and economic indicators. External data sources
provide context and comparison points to assess the organization's performance and
make informed decisions.

LAMP:

In the field of HR Analytics, LAMP refers to an analytical framework used to analyze

and measure employee performance and potential. LAMP stands for:

L: Learning and Development: This component focuses on assessing and enhancing

employees' skills, knowledge, and capabilities through training and development
initiatives. It involves identifying skill gaps, designing learning programs, and tracking
the effectiveness of training interventions.

A: Alignment with Goals: This component emphasizes the alignment of individual

employee goals with the organization's strategic objectives. It involves setting clear and
measurable goals, monitoring progress, and ensuring that employees' efforts contribute
to the overall success of the organization.

M: Measurement of Performance: This component involves measuring and evaluating

employee performance based on predefined performance metrics. It includes setting
performance standards, conducting regular performance appraisals, and providing
feedback to improve performance.

P: Potential Assessment: This component focuses on identifying and assessing

employees' potential for growth and advancement within the organization. It involves
evaluating employees' skills, competencies, and aspirations to determine their readiness
for higher-level roles or additional responsibilities.

The LAMP framework provides a systematic approach to HR Analytics by integrating

these four key components. By leveraging data and analytics, HR professionals can
gain insights into employee performance, identify development areas, and make
informed decisions regarding training, talent management, and succession planning.
Using the LAMP framework, organizations can create a comprehensive view of their
workforce, align individual and organizational goals, and optimize performance and
potential across the board. It enables HR departments to make data-driven decisions
and implement targeted interventions to enhance employee productivity, engagement,
and retention.

HR SCORE CARD AND WORKFORCE SCORE CARD:

HR Scorecard and Workforce Scorecard are two performance measurement tools used
in human resources management. While they share similarities, they focus on different
aspects of HR and workforce management. Let's explore each of them:

HR Scorecard:
The HR Scorecard is a strategic measurement system that helps organizations assess
and manage the effectiveness of their HR functions in contributing to overall
organizational goals. It aligns HR activities with business objectives and provides a
framework for measuring HR's impact on organizational performance. The HR
Scorecard typically includes a set of key performance indicators (KPIs) that reflect
various HR dimensions, such as recruitment and selection, training and development,
employee retention, performance management, and compensation and benefits. By
tracking and analyzing these metrics, HR professionals can identify areas of
improvement and make data-driven decisions to enhance HR effectiveness.
Workforce Scorecard:
The Workforce Scorecard is a measurement tool that focuses on evaluating the
capabilities and performance of an organization's workforce. It provides a holistic view
of the workforce by assessing key factors related to human capital and talent
management. The Workforce Scorecard incorporates both quantitative and qualitative
metrics to measure workforce performance, such as employee engagement,
productivity, skills and competencies, diversity and inclusion, leadership effectiveness,
and succession planning. This scorecard helps organizations understand the strengths
and weaknesses of their workforce and enables HR to develop strategies to attract,
develop, and retain top talent while ensuring alignment with organizational objectives.

In summary, the HR Scorecard primarily evaluates the effectiveness of HR functions,

while the Workforce Scorecard assesses the overall performance and capabilities of the
organization's workforce. Both scorecards provide valuable insights for HR
professionals to drive improvements in HR practices and achieve better organizational
outcomes