Introduction to HR Analytics
Analytic
Value
Chain
Introduction to HR Analytics
• Descriptive and historic metrics in HR is an age old
practice. Eg. Time to hire, cost per hire, number of
participants in a training programme, employee
satisfaction survey reports.
• HR and Predictive Analytics help organisations in
measuring he future outcomes – most effective
decision making tool.
• Eg. Google developed its own algorithms for
predicting the likely performance of an employee
throughout his/her work-life cycle. Also, Google
developed a series of algorithms for a critical HR
decision-making process, which have direct bearing
with their success.
HR Analytics
• HR Analytics is defined as the application of an
analytic logic for a HRM function, so that it can
benefit organisations in improving the performance of
employees, help in rationalizing HR decision-making
process and also improve ROI fro human resources.
• Employees’ perspective – HR Analytics provide
opportunity to assess how employees contribute to the
organisations and to assess the extent to which they
can meet their career expectations
HR Analytics includes…
• Use of statistics
• Developing queries and research design,
• fitting data to research designs
• Evaluating the results and translating them into useful
decisions.
• Behavioural modelling,
• Predictive modelling
• Impact analysis
• Cost-benefit analysis, ROI, etc…
These tools help HR decision- making to move ahead of
HR metrics, HR dashboards and scorecards.
Importance of HR Analytics
• For organisations, HR analytics provide scientific
facts to HR
• HR managers use HR analytics to predict how HR
decisions influence business results and align with the
strategies of the organisation.
• HR analytics help in diagnosing HR issues, which
can facilitate in taking prevention actions through
appropriate interventions.
• HR analytics helps in fixing responsibilities and make
people accountable for their work.
What HR Analytics cant do?
• Measure the direct effects of Employee Engagement
programme.
• Use of HR analytics differs with culture of
organisations.
• HR analytics requires HR managers to have cross
functional knowledge.
Benefits of HR analytics
• HR managers can predict the trend
• HR analytics also benefit in scenario planning
• With interpretive skills, HR managers can even take
data-driven information across the functional
boundaries.
• HR managers can adapt their HR plans and
programmes which can help in achieving the strategic
intents
Steps to implement HR Analytics
1. Clarity on HR Analytics: Managers need to
understand the difference between HR Metrics and
HR Analytics.
For example: HR metrics can help in measuring the
rate of attrition, while HR analytics with big data can
help precisely to predict who are going to stay or leave
the organisation. HR analytics facilitates future decision
making.
2. Top management acceptance: HR analytics require
investment in terms of buying technology support,
software solutions, training and so on. So top
management support is needed. HR managers have to
showcase the improvement in quality of decisions if HR
analytics is used and present the requirement analysis.
3. Incremental approach in implementation of HR
analytics: This requires the HR managers to start with
choosing to implement HR analytics only in 1 or 2 HR
functions to improve the HR decision-making process.
This will help them get adjusted with technology-
enabled decision-making processes.
4. Design common glossaries and definitions on HR
analytics: This will ensure common understanding of
the terms and clarity in the process encompassing HR
analytics. The whole idea is to ensure consistency.
5. Develop cross functional teams: Reasons: 1. to
understand the Implications of HR decisions on
business goals and strategies of organisations. 2. To
relate the HR decisions to other functional areas such as
operations, marketing and finance. 3. To be confident in
comprehending statistics and mathematics to design
predictive decisional models.
6. Train the people: Along with the vendor-supported
training, HR department has to organise training for all
who will be using HR analytics.
Aligning Human Resources to Business through HR
Analytics
1. Recruitment: HR analytics not only measures the costs
of recruitment, but also, cycle time on hire, attrition rate
in new hire, costs of training and onboarding, culture fit
of new hire, performance trend of new hire and so on.
2. Simple cause and effect relationships between HR
functions and business goals substantially reduce the
risk of bad investments in HR initiatives and focus on
those HR initiatives which can have positive impact on
business results. Example, avoiding investment in
training with poor transferability or post-training
employee performance has not improved.
3. With predictive modelling, HR analytics can align
with the business and strategies of the organisation in
a) Manpower planning: The demographic data of
existing employees’ attrition rate, normal manpower
wastage and son on when analysed against future
business goals of the organisation can help develop a
predictive model of manpower forecasting.
b) In talent management, predictive analytics helps in
attracting talent from target organisations, identifying
potential talent in existing employees, developing such
identified potential employees, framing appropriate
strategies on talent retention and so on.
c) Performance management: HR analytics can help in
predicting how performance data assessing satisfaction
level can help in predicting how its cascading effect can
churn to customers’ satisfaction and customers’
intention to purchase.
Steps for alignment of HR Analytics with Business
goals and strategies
1. Framing of the right questions: dealing with What
can be measured in HR functions.
2. Understanding appropriate data and metrics
3. Building an appropriate platform for HR analytics:
ERP modules or CRM modules.
4. Gradual enhancement of HR analytics capabilities:
systematically investing on technology, training and
enhancing the quality of HR decisions with more
and more cross-functional inputs.
5. Disseminating the importance and value of HR
analytics: Effective communication.
Predictive HR Analytics
Meaning:
It blends data to develop algorithm, based on which HR
managers can pre-assess the future events, as
consequences of current HR decisions.
Application areas of Predictive HR Analytics
1. Preparing manpower inventory and segmenting
employees.
2. Preparing attrition risk score
3. Prepare loyalty score
4. Manpower planning, recruitment and manpower
redundancy data
5. Recruitment and selection based on profile matching
6. Mapping employees’ emotions and sentiments
7. Potential fraud and risk mapping of employees.
Benefits of Predictive Analytics
1. Helps in recognising the strengths and weaknesses
of the human resources which facilitates in
identifying talent for future leadership roles.
2. Can help in identifying future competency gap and
decide strategies to overcome the same.
3. Can help organisations become future ready
building the capabilities of people with critical skill
sets.
4. Can help organisatins in assessing he attrition rate
and can frame strategies in overcoming the same.
5. ’Can integrate HR decisions with strategies and
business goals of the organisation.
