What is HR Analytics?

Human Resource Analytics is an area of study using the mix of art and science on human capital in hope of getting the measurable return on investment and to take meticulous strategic decisions without losing the essence of term “Human” from HR. This is also referred as People Analytics or Talent Analytics.
-Prabhakar Pandey

As an outcome, organizations are able to select high-quality employees, Identify high performer’s departure risk, Find characteristics of high-performing employees, predict compliance risks, analyzing engagement and satisfaction, defining clear pathway for top performers, identifying successor for your leadership etc. therefore getting a better return on investment and to take better strategic decisions. This allows the leaders to deep dive into the problem statement using fact-based prediction for better decision-making ability.

According to Deloitte Press University survey in 2016, 77 percent of executives now rate people analytics as a key priority. In response, companies are building people analytics teams, rapidly replacing legacy systems, and combining separate analytics groups within HR into one strategic function. In 2016, 51 percent of companies are now correlating business impact to HR programs, up from 38 percent in 2015.

As per “Google Trend”, HR Analytics has gained tremendous popularity in last few years and here is how trend graph looks like. It’s almost from nowhere, to becoming one of the popular buzzwords.

The above numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular, likewise a score of 0 means the term was less than 1% as popular as the peak.

Why HR Analytics?

If you look at the McKinsey & Company’s  7S framework for successful business. The first three (also called as hardware of success): strategy, structure, and systems. The next four (also called as software of success): style, skills, staff, and shared values.  In each of the elements you will find that they are all highly dependent on right set of talents and an appropriate analytical method is required to take fact based decisions. This makes it very clear why HR or People analytics is important.

According to research by MIT and IBM, top performing companies are three times more likely than lower performers to be sophisticated user of analytics. A recent survey by MIT and IBM reported that companies with a high level of HR analytics had:

  • 8% higher sales growth
  • 24% higher net operating income
  • 58% higher sales per employee

Also, ROI is another key  factor as we all know hiring, developing, engaging and retaining talent has a major impact on our business success and with no doubt, a lot of cost involve in the entire process. It is also important to understand what type of analytics is applied on each of the areas to ensure you are getting right return on Investment from your people.

How HR Analytics benefits the organization?

Of-course analytics gives us some patterns, trend, insights and actionable information from large set of data available with us however the real question here is what should be the problem statements if you are asking HR Analytics to solve it for you.

Here are some list of problem area which can be addressed if HR Analytics is applied:

  • Recruitment: Identifying the best prospective candidates using the existing employee’s data. Potential offer drop out (predicting renege) based on historical candidates data? Are we hiring according to plan? Which recruiting sources provide the quality employees?
  • Absence Management: Based on patterns of unscheduled absences can I predict when the employees are likely to take day off so that I can plan my staffing roster.
  • Learning and Development – Have my employees really become more efficient in processing after 2 day of process training? Is there any correlation between employees being terminated due to non-compliance and not being trained on compliance training? How many employees you need on a certain skills in future? Are we utilizing the entire course module subscribed from third party vendor on your learning portal?
  • Performance Management: How do you improve the performance of individuals? What key factors limit the ability of employees to perform well?
  • Diversity and inclusion: Are my hiring managers gender/ethnicity biased? Does recruitment team even sending diverse candidates for interview?
  • Health and safety: What circumstances, roles and locations are at the highest risk of accidents and expensive claims? Is there a trend.
  • People Management Analytics: Do you reward and promote right people? What factor influences retention? What factors triggers employees to look out?
  • Employee Survey: What impact I may have if employee’s satisfaction and engagement scores are low this year in a specific department? What are the sentiment of my employees based on verbatim provided in survey (using text analytics)?
  • Compliance and Risk: Can I predict a potential compliance and risk related issue from an employee?

This brings me to the end of this topic, I am hoping this must have given you some idea about HR Analytics. I will try to cover more on this subject area in my next blog.

Looking forward to hear from you in case you liked this blog or have any suggestion for improvement.

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