HR ANALYTICS

UNIT 1
513C4B
HR ANALYTICS
• .What is HR analytics?
• Using data to make educated decisions about
a company’s employees is known as HR
analytics.
• What is HR Analytics?
• • HR Analytics, also referred to as workforce
analytics or people analytics, is the process of
• collecting, analyzing, and interpreting data related
to human resources. It involves leveraging data
• to gain insights into your workforce, measure the
effectiveness of HR initiatives, and inform
• strategic decision-making.
• •
• Key Functions of HR Analytics:
• • Workforce Planning: Analyze data to forecast future talent needs, identify potential skills
• gaps, and develop strategies for recruitment and development.
• • Talent Acquisition: Utilize data to assess the effectiveness of recruitment channels,
improve
• candidate selection processes, and predict employee performance.
• • Performance Management: Track key performance indicators (KPIs) to evaluate employee
• performance, identify areas for improvement, and design effective development programs.
• • Employee Engagement: Analyze data to understand employee sentiment, identify drivers
of
• engagement, and implement strategies to improve employee satisfaction and retention.
• • Compliance: Use data to ensure compliance with labor laws and regulations, such as
tracking
• training records and work hours
 FUTURE OF HR ANALYTICS
• The future of HR analytics is bright, with continuous advancements in
• technology and data science expected to:
• • Rise of Artificial Intelligence (AI): AI can help automate tasks,
identify
• patterns in data, and generate predictive insights to support HR
• decision-making.
• • Focus on Employee Experience: HR analytics will likely play a bigger
• role in measuring and improving employee experience, leading to a
• more engaged and productive workforce.
• • Emphasis on Ethical Considerations: As HR analytics becomes more
• sophisticated, there will be a growing focus on ensuring responsible
• data collection, use, and protection of employee privacy.
• What is the history of HR analytics?
• Since businesses began using data to make HR
decisions in the 1970s, HR analytics has been a
thing. Since then, the discipline has developed
tremendously as a result of technological
developments and rising awareness of the
value of data-driven HR decision-making.
 EVOLUTION
• 1. 1978
• An article titled ‘The measurement imperative’ proposed the idea of measuring the impact of HR activities.
This was with the collected data on the bottom line of the business. The proposed activities include staff
retention, staffing, compensation, competency development, etc.
• The idea marks the beginning of the data-capturing activity in HRM and its application in organizations.
• 2. 1990
• HR measurement integration and assessment models are now subjects of study due to growing development
in the field. But still, the field of HR analytics remained unknown to many organizations and they couldn’t
realize its potential.
• The developments led to the concept of ‘Bench-marking’ to compare the HR measurement data in various
functions and with other companies. Companies discovered that while “Benchmarking” theoretically
promises strategic business insights, it failed to deliver in practical business scenarios, leading to its loss of
recognition by the early 2000s.
• 3. 2000
• The emergence of HR accounting and utility analysis witnessed the addition of new dimensions and
measurement data to quantify HR. Researchers not only drew inferences from business firms but from other
sources too. One such study is on the metric model adopted by Billy Beane, the general manager of the USA
baseball team to select team members.
• The study led to a breakthrough metric-based selection model development called as ‘Moneyball’ concept in
2003. It has found its adoption at a large scale by organizations since 2006.
• HR Analytics has undergone a significant transformation in recent years:
• • From Manual to Automated: Traditionally, HR relied on manual data
• collection and analysis. Advancements in technology have led to
• automated data collection and reporting tools, making HR analytics more
• efficient and accessible.
• • From Basic Metrics to Strategic Insights: The focus has shifted from basic
• metrics like headcount or time-to-hire to deeper insights that reveal the
• impact of HR activities on business outcomes like revenue or customer
• satisfaction.
• • From Reactive to Predictive: HR analytics is no longer just about reporting
• on past data; it's about using data to predict future trends and proactively
• address potential issues.
• • Rise of Big Data and People Analytics: The availability of vast amounts of
• data (Big Data) has opened doors for more sophisticated people
• analytics, allowing for a more holistic view of the workforce
 EARLY ADOPTERS
• . Google
• In 2009, Google started ‘Project Oxygen’ to find the
qualities and attributes of an effective manager. The
project gained global recognition in 2011.
• 2. IBM
• IBM acquired an employment and retention service
company, Keneya, in 2012. With its cloud-based
solutions combined with Oracle, Tableau, and SAP. It
discovered ways for talent management by analyzing
the voluminous big data of HR.
 BENEFITS
• Practicing evidence-based HR: Making decisions based on data and
research rather than intuition.
• Improved recruitment and talent acquisition: Enhancing hiring
processes and improving the quality of hires through recruitment
process data analysis.
• Better employee performance and productivity management:
Identifying top performers and areas for improvement.
• Effective workforce planning: Forecasting future workforce needs
and planning accordingly.
• Skills gap analysis: Identifying and addressing gaps in employee
skills.
• Employee turnover prevention: Understanding and addressing the
reasons behind high turnover and reducing flight risk.
 BENEFITS
• Identifying inefficiencies: Spotting and
rectifying inefficiencies within the organization.
• Cost savings: Reducing unnecessary expenses
through informed decision-making.
• Improving workplace safety: Enhancing safety
measures based on data analysis.
• Uncovering trends: Gaining insights into
workforce trends to inform HR strategy.
 challenges
• Data quality: Ensuring data is accurate and high
quality
• Data privacy: Addressing concerns about data
privacy
• Algorithmic bias: Addressing potential biases in
algorithms
• Lack of skills: A lack of data analytics skills in the
workforce
• Insufficient IT resources: A lack of IT resources
• Data variety: Dealing with the variety of data
 challenges
• Employee resistance: Employees may be resistant to
HR analytics
• Lack of alignment: A lack of alignment between HR
and business strategy
• Multiple databases: Having multiple HR databases
with little integration
• Outdated technology: Using outdated or
inadequate analytic tools and technology
• Ambitious projects: Taking on projects that are too
large to manage
 TYPES OF HR ANALYTICS
• Descriptive analytics: Analyzes historical data to
understand what has happened in the workforce over a
specific period.
• · Diagnostic analytics: Examines data to understand the
causes of past events and behaviors within the HR domain.
• · Predictive analytics: Uses statistical models and forecasts
to predict future HR events and employee behaviors based
on current and historical data.
• · Prescriptive analytics: Provides recommendations on
how to handle future situations and challenges in HR by
analyzing potential outcomes and scenarios.
• Descriptive analytics advantages
• – The simplest form of data analysis.
– Requires only basic math skills, and it allows you
to present complex data in an easy-to-digest format
• Descriptive analytics disadvantages
• – Limited to a simple analysis of a few variables after
the fact.
– For instance, an employee headcount summary
captures a time period and reports the “what” but
not the “why” or “how.”
• Descriptive analytics can help with:
• Assessing behavior
• Comparing characteristics across time
• Spotting anomalies
• Identifying strengths and weaknesses
• examples:
• PTO: Using descriptive analytics, HR can analyze the average
number of paid time off days that employees use in one year.
• Employee turnover: Descriptive analytics could be used to
analyze employee turnover rates to compare the annual
turnover between two teams or two departments.
• diagnostic analytics techniques, including::
• Data drilling: Taking information from a more general overview
and providing a more granular view of the data.
• Data mining: Extracting patterns from data to help predict future
events
• Probability theory: Quantifying uncertain measures of random
events
• Regression analysis: Determining which variables will impact an
outcome
• Correlation analysis: Tests the relationships between variables
• Statistical analysis: Collecting and interpreting data to determine
underlying patterns
• Diagnostic analytics advantages
• – Shows a more comprehensive interpretation
of the data for informed decision-making.
• Diagnostic analytics disadvantages
• – Focuses on past occurrences which makes it
very reactive.
– Can’t provide actionable insights to support
your planning process.
• 1. Employee absenteeism
• If your absenteeism rate is climbing, you can use diagnostic
analytics to find out why employees are missing work more
often. You can also review pertinent information from
employee feedback surveys and exit interviews.
• 2. Employee engagement
• Diagnostic analytics can be used to improve your
employees’ engagement and your company culture. Digging
into the data from internal surveys and exit interviews
should uncover the areas that make employees feel
connected and satisfied in their work and those that don’t.
• Predictive analytics advantages
• – It can reduce human error, help you avoid risks,
improve operational efficiencies, and refine the
forecasting for your organization.
• Predictive analytics disadvantages
• – It requires substantial and relevant data (big data
sets).
– It’s also challenging to ensure that all of the
variables are considered, and the model must be
updated as data changes.
• . Recruitment
• Predictive analytics can analyze data from the
hiring process (resumes, job descriptions, etc.)
to narrow in on the desired skill sets.
• . Retention
• With predictive analytics, you can forecast
various talent management outcomes, such as
who will quit.
• Prescriptive analytics relies on big data and
uses an assortment of technical tools,
including:
• Machine learning
• Algorithms
• Artificial intelligence
• Pattern recognition
• Prescriptive analytics advantages
• – Equips HR leaders to make informed, real-time decisions to improve
performance, solve complicated problems, and take advantage of
opportunities.
– For example, it can recommend strategies for training that will boost
• Prescriptive analytics disadvantages
• – An iterative process that requires time. Also, the quality of
recommendations is dependent on the quality of the data, so it won’t be
effective if your data is incomplete or unreliable.
– You must also be careful about weighing the options presented and
ensure that taking the recommended action is reasonable from an HR
perspective.
– Algorithms can’t always reflect the diverse intricacies of dealing with
human beings.
• 1. Staffing
• Prescriptive analytics can help you prepare for
upcoming staffing needs.
• 2. Attrition
• As mentioned above, Experian is using AI to
predict high-flight-risk employees.
• Understanding Your Workforce: Two Key
Approaches
• • In today's data-driven business world, human
resources (HR) and
• workforce management rely heavily on
analytics to make informed
• decisions. Here's a breakdown of two
prominent frameworks: LAMP
• and Workforce Information Systems (WIS).
 LAMP Framework: A Strategic
Measurement System
• The LAMP framework focuses on creating a strategic measurement system
• for HR. It emphasizes the importance of going beyond basic metrics and
• delving deeper into the reasons behind them. LAMP stands for:
• • Logic Model: Clearly defines the cause-and-effect relationships between
• HR activities, processes, and desired outcomes.
• • Analytics: Identifies and utilizes relevant data to measure HR initiatives and
• their impact on the organization.
• • Measures: Defines and tracks key performance indicators (KPIs) that align
• with the logic model and organizational goals.
• • Process: Establishes a continuous process for data
• collection, analysis, interpretation, and communication of HR insights.
• • The LAMP framework helps HR professionals move beyond simply
• measuring activities to understanding their impact on the organization's
• strategic objectives.