The Power of HR Analytics

Published by MBA Skool Team, Published on December 08, 2014

Why does every economic downturn decimate HR functions such as training? The answer is simple. No reported value. HR has always been considered an expense. More so, people in HR actually believed and accepted the idea that they were nothing more than an expense. The reason behind it was that HR never talked about the value they were generating simply because they had no language for it.

HR, being an enabling function of an organization, needs to be able to explain what, why and how it is doing what it does. In order to claim value, it needs supporting data. The HR fraternity needs to speak in quantitative, objective terms to express their activity and value added. HR Analytics which is combination of art and science is the answer. HR Analytics teaches us not only how to look at things (art) but also, what to do about it (science). It is the way to measure the ROI of HR and make them strategic business partners.

Image Courtesy:, Stuart Miles

The process can be broken down broadly into six steps:

1. Recording the work – All the activities under functions such as hiring, training, retaining etc. should be recorded. Only if we can measure it, can we can improve it.

2. Alignment to organizational goals – Every HR function should have a direct impact on the organization’s quality, innovation, productivity or service.

3. Benchmarking – The results should be compared to other organizations and customized best practices should be adopted.

4. Descriptive Analysis – This involves exploration and understanding of the past behavior and outcomes.

5. Prescriptive Analysis – This involves predicting future trends based on past behavior and present situations.

6. Causal Analysis – This is basically a combination of descriptive and prescriptive analysis. It involves finding the root cause of a problem based on understanding drivers behind trends, identifying consistency, change in patterns and having tools to determine a future problem.

Some important points to take note of in the process are:

1. Two or more people should interpret the information provided in the same way i.e. it should be consistent.

2. Not everything can or needs to be measured. So, that what is measured should be important and value adding.

3. The factors that are being measured should be directly linked to the strategic goals of the company.

4. A system is only as good as the person implementing it. Hence, unless implemented properly, there is no meaning to developing the latest systems.

Key deliverables for the organization:

1. Higher return on data investment – Instead of documentation being done as a routine process, analytics combines the information on what happened in the past, what is happening now and what is likely to happen in the future to give a complete picture.

2. Mitigate risk – Evaluates risk using a combination of business rules, predictive models and past employee actions thus minimizing exposure to unforeseen events. Helps in responding with greater speed and certainty to emerging challenges and opportunities.

3. Competitive Advantage – While human behavior is unpredictable and variable, any predictability that an organization can garner using analytics becomes a key competitive advantage.

4. Employee Value Proposition – It helps the organization have a better understanding of its EVP had hence be able to attract and retain its best talent.

Some of the companies that have started using HR Analytics are Google and HP. It is being used in the core functions of HR such as Talent Acquisition, Performance Management and Attrition Management. The challenge is to able to realize an organization’s full potential using HR Analytics.

‘HR Analytics is not just an HR solution, it is a business solution’

This article has been authored by Piyali Das from NMIMS Bangalore


HR Analytics by Jac Fitz-Enz

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