How Analytics Are Becoming Important For HR

Not being an expert on Analytics but, I was always curious about how one can use analytics for better optimization, forecasting and reporting. How HR can get benefited by investing for stronger analytics?

But before understanding further it is very important to know what HR analytics is!

HR analytics, also called talent analytics, is the application of considerable data mining and business analytics techniques to human resources data. The goal of human resources analytics is to provide an organization with insights for effectively managing employees so that business goals can be reached quickly and efficiently. The challenge of human resources analytics is to identify what data should be captured and how to use the data to model and predict capabilities so the organization gets an optimal return on investment on its human capital.

HR analytics does not only deal with gathering data on employee efficiency. Instead, it aims to provide insight into each process by gathering data and then using it to make relevant decisions about how to improve the processes.

So how can companies use HR data analytics to make strategic personnel decisions? First, they’ll need software, which isn’t hard to find. Huge vendors such as Oracle, IBM and SAP compete with many smaller vendors to deliver the best HR analytics software as a service in the market.

But buying only HR analytics software won’t help at all if nobody in HR knows how to mine and interpret data. Some larger companies are addressing this HR analytics talent shortage by hiring Big Data Architect/Analyst or data scientists to work in human resources.

I think we have come across many times over “Big Data”, always sounds bigger to me but what is it? In 2012, Gartner updated its definition as follows: ‘Big data is high volume, high velocity, and/or high variety information assets that require new forms of processing to enable enhanced decision making, insight discovery and process optimization.’ i.e. we need new tools and technology because it is so big, fast changing and potentially unstructured.

So what does big data look like? let’s see some examples.

  • VISA processes more than 150 million transactions each day.
  • 500 million tweets are sent per day. That’s more than 5,700 tweets per second.
  • Facebook has more than 1.19 billion active users generating social interaction data.

Too much! Right? Actually the big data and analytics market will reach $125 billion worldwide in 2015, according to IDC & The International Institute of Analytics (IIA).

Analytics is always an important topic and trend in every part of business and HR is also not far behind. Today many organizations are looking for metrics or analytics in HR which are not just related to people but also on processes such as recruitment, retention, compensation, succession planning, benefits, training & development, performance and appraisal and many others. In short Talent analytics is becoming more popular these days as companies are doing lot of efforts to cultivate and align HCM with core business objectives in order to achieve a competitive fringe.

HR analytics does not only gathering data on employee; instead it aims to provide insights into each process by using data to make relevant decisions, improve the processes and operational performance. HR collects enough data on employee’s personal information, compensation, benefits, retirements, attrition, performance, succession time to time so it is important to use it properly to interpret the outcome and spots the trends.

Some typical benefits and use cases of analytics are as follows:

  • Improve organizational performance through high quality talent related decisions
  • Forecast workforce requirements and utilization for improved business performance.
  • Optimization of talents through development and planning.
  • Identify the primary reasons for attrition and identify high-value employees for leaving.
  • Provide the source of competitive platform for the organizations
  • Manages applicants in better way on basis of qualification for a specific position.
  • Recognize the factors which turn the employee satisfaction and productivity.
  • To determine the individuals KPIs on the business.
  • Enabling HR to demonstrate its benefaction to achieving corporate goals.

Analytics also used in HR to prepare cost and investment on their talent pool like cost per hire, cost per participation on training, revenue and expense per employee. It provides opportunity for defining strategy for retention and hire plan. It can also give complete picture of an organizational head counts based on demographics – age, gender, geographical, departmental, qualifications etc.

The facts are also not different on HR analytics. A 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

As mentioned before as well though there are currently many analytics options in HR but few of they are really becoming popular these days.
One such is Talent analytics; which is more qualitative and is basically for processes from talent management like personal development, recruitment, succession planning, retention etc. It can help organizations to better analyze turnoveridentifying top performers,identifying the gaps and develop the proper training for them. It can also find out reasons for attrition and provide options to take strategic decision for retention as well.

Workforce analytics is another common one which is more quantitative; it helps leaders todevelop recruiting methods and specific hiring decisionsoptimizing organization structure,identify quantify factors for job satisfactiondetermine the need of new departments and positions. It also helps the organization to identify, motivate and prepare its future leaders.Align and motivate workforce and continuously improve the way of work.

Workforce Analytics and Planning is the most common systematic identification and analysis of what an organization is going to need in terms of the size, type, experience, knowledge, skills and quality of workforce for ensuring that an organization has suitable access to talent to ensure future business success.

Workforce planning is a set of procedures that an organization can implement to maintain the most efficient employee/management team possible, maximizing profits and ensuring long-term success. Workforce planning falls into two broad categories: operational and strategic.

Almost every organization does conduct some form of workforce planning, like headcount/FTE planning and workforce analysis. They recognize the need to transform that planning. What they may not know is that most barriers are tactical in nature and require small hops and not a big leap.
Workforce analytics are more inherent, based on knowledge transfer, not on data based. But every organization wants to back up their decision from data and facts. Predictive Analytics, based on statistics, data and becoming more attractive. It helps leaders to take more strategic decisions based on the facts. Data are generally presented in graphic, statistical reports, dashboards which are easy for leaders to understand. It offer leaders to provide solutions to some complex decision making processes and helps them in determining critical situations like tacking pay gapsset of workers who are always at risk of resigning,understanding the psychographics (personality, interest, work styles etc.) of employees,behavioral qualities of applicants and many more.

What is Big Data for Human Resources?

By definition, Big Data in HR refers to the use of the many data sources available to your organization, including those not traditionally thought of in HR; advanced analytic platforms; cloud based services; and visualization tools to evaluate and improve practices including talent acquisition, development, retention, and overall organizational performance.  This involves integrating and analyzing internal metrics, external benchmarks, social media data, and government data to deliver a more informed solution to the business problem facing your organization.  Using these tools, HR organizations are able to perform analytics and forecasting to make smarter and more accurate decisions, better measure inefficiencies and identify management “blind spots”.

The ability to capture and analyze big data has enabled many companies to both increase revenues by better understanding and more accurately targeting customers and cut costs through improved business processes.

Big data also has attracted the attention of human resource managers who now can analyze mountains of structured and unstructured data to answer important questions regarding workforce productivity, the impact of training programs on enterprise performance, predictors of workforce attrition, and how to identify potential leaders.

Trends are changing rapidly so it is very hard to catch up with all new technologies especially in analytics which are not at all easy.

Big Data lakesHadoopNoSQLPredictive AnalyticsIn-Memory Analytics and so many.

According to the Cornell study, many organizations use dashboards to collect and share this engagement information. HR staff should be encouraged to use dashboards as tools to plan for the future, rather than just reviewing the data before heading into a meeting. One way companies could use these dashboards is to predict potential problems or monitor how HR practices affect the workforce.

Most HR leaders understand the importance of HR analytics. Now they have to figure out how to use analytics to enable their organizations to thrive because doing that will give their companies a leg up on the competition.

So now organizations are involving themselves more into data management, analysis and further interpretation of data. To get this complex analysis working they need off course mastery in data science and statistics. Organizations those who taken this step already understand the benefit that data brings to their decisions and the value that these decisions bring to the organization. 

We should also keep in mind that analytics is not measured based on size but by the impact that the results have on decisions. Also it is basically increase organizational effectiveness so just creating only reports with no such value on decision making and optimization will increase cost for the companies.

In other words analytics is a journey not a goal…