HR Analytics- The Next Frontier for Workplace Transformation
Posted in Human Resources Articles, Total Reads: 1744
, Published on 31 October 2014
“I am convinced that nothing we do is more important than hiring and developing people. At the end of the day you bet on people, not on strategies.”
– Lawrence Bossidy, GE
Image Courtesy: freedigitalphotos.net, David Castillo Dominici
Human resource and analytics! What are you talking about? It seems to be a common notion in the traditional workplace environment. But with the advent of computational era when every field needs to be justified by the numbers, virtually all business verticals are notched with BI software and analytical tools to enable them to take critical decisions, hence HR is also not an exception (Fig.1.).
Fig.1. Evolution of analytics (Source: http://www.jobscience.com/blog/reducing-employee-turnover-predictive-hrms-software/)
Although, HR analytics is still in its nascent stage, it is gradually evolving with the change in business environment.
HR analytics-Why and How?
HR forms one of the pillars for any business to build its base and further expand upon it. It is a strategic asset to any organization but when involved with analytics, it can identify the skill gaps and opportunities for development. In an era of economics uncertainty, human capital can be managed tactically and strategically to derive the competitive advantage. Here HR analytics can play a great role to gauge the trends in workforce optimization, retention and remuneration strategies.
Just like the IT investment, the drive to infuse analytics in HR is governed by short term visibility of results. Organizations have to think that only when they can explore the workforce trends on a micro level, they can manage it more effectively and this process takes time. Using workforce analytics, employee’s job satisfaction can be increased and churn can be reduced by a significant level. Investment can be redirected to right employee initiatives that can have critical impacts on the business and value for the shareholders. The ROI on such investments can be quantified by measuring their effects on the top and bottom lines. Due to quantification of their impacts on business, HR department can be held accountable and can thus be included in the major business conversations.
A rough skeleton can be devised to implement HR analytics to provide strategic advantage to the business:
• Identify and structure the central problem
• Design a conceptual model to guide analysis
• Collect relevant data
• Apply analytical methods
• Communicate the statistical results to the stakeholders
• Design the action plan
Big data-a new perspective
According to a research conducted by “Bersin by Delloite” in 2013, 60 % of the companies were investing in Big Data and analytics tools to drive their HR department by data. But only 4 % of them were able to achieve the skill to perform “predictive analysis”. So what is the remaining companies doing? Majority of them were still banging their heads on operational reporting issues and data management (Fig.2.).
Fig.2.Talent Analytics Maturity Model by “Bersin by Delloite” (Source: http://www.forbes.com/sites/joshbersin/2013/10/07/big-data-in-human-resources-a-world-of-haves-and-have-nots/)
According to the same research, intertwining Big Data with HR analytics enables a company to generate higher returns and delivering high impact results in a lesser time frame. But can only tools make the business successful? Obviously no and the real force behind the success of the integrating Big Data and HR analytics lies in the organization’s capability of efficient data management, inter department collaboration ,communication skills and focus on the right problem. So the efforts should be on combining “business” and “data” and thus translating the “finding” into the business solutions.
One of the biggest hurdles is to change the mindset of the executives from “belief and experience” to “data driven science” and the other is “reluctance to try”. Most of the companies have huge chunk of data with them but they don’t want to experiment with it-What they really need is the analytical skills and of course an instigation to try it!
HR Predictive analytics-the future!
HR analytics is shifting from the traditional approach towards the predictive approach. HR predictive analysis is analogous to a crystal ball which can show glimpse of the future. Although it cannot predict the exact future, it is able to anticipate the future trends and therefore enables the company to prepare for the coming threat or opportunity. While traditional HR analytics focuses mainly upon cost per hire and turnover, predictive analysis helps the companies to calculate the potential workforce problems down the road, and to prepare a roadmap as how to overcome them. Predictive HR analytics mainly revolves around the findings of the patterns related to employee performance, turnover and workforce planning. An efficient mixture of data mining, algorithms and historical data is used to derive the solution to the problem.
There are various factors that are seeking attention of the companies to shift towards HR predictive analytics:
• Ease of access to the huge base of information about the employees across social media platforms
• Availability of increased range of analytical tools and technologies
• Companies’ ability to create efficient algorithms from turnover rate, GDP, growth, unemployment rates and other trends
• Proactive approach of the companies with respect to their hiring process
• Understanding of engagement and development of employees so as to retain them for a longer time.
But still HR predictive analytics is taking baby steps towards its adoption. The threat of failure is still surpassing its capabilities. The need of the hour is to try, fail and then learn from it. In fact predictive model requires the companies to test their intuition and many a times the intuition may not be correct because of the lack of right quality of data and so the approach needs to be tweaked. In summary, the cycle to fail fast, apply new approaches and iterate is the key for the successful adoption of this predictive model.
In general sense, HR analytics is constricted to head count measurement, turnover reporting, catalogue building of employee’s skills, abilities and knowledge, reporting of engagement scores of the employees and buying analytical tools and software. But, the changing business environment seeks the original capabilities of the HR analytics to be discovered and implemented. It is high time to expand its current reach to embrace the new frontiers for workplace transformation.
This article has been authored by Vivek Kumar from IIM Indore