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Everything to know about HR Analytics - eBook

What is HR Analytics?

HR analytics is defined as the systematic identification and quantification of the people drivers of business outcomes: as per Heuvel & Bondarouk 2016. 

In organizational set up now there are no more promotions, salary raises, or training opportunities abroad on relational or intuition-based; (commended by Kremer and Kristian in 2018) and rather the data-driven approach is followed in letter and spirit for not only the said strategic decisions but even departmental coordination, inter-departmental transfers, human resource postings at different job locations on diverse changing roles, growth avenues, and so on are all made on decisive approach which in truly quantified along with qualitative in nature, what we call in academic research as the mixed approach, we may say some of the HR analytics domain.

HR Analytics is also defined as HR data analytics, predictive analysis, human resource analytics, workforce analytics, long-term data collection, talent analytics, and employee data analytics. Whereas people analytics is concerning human functions but HR analytics is people plus systems in place.

HR Analytics is the process of strategic decision making through several steps:

  • Step # 1: Business Problem or Question: In HR research, we focus on the applied research for finding a solution to current problem(s) at Organizational level – that is “what” part of the question is replied here. And, the basic research targets the recurrent nature of such problems that is “why” portion of the question being addressed therein. Similarly, Business problem to be known is necessary for HR Analytics to carry on to its better next step of collecting data for the same = for solution purpose of that problem indeed.
  • Step # 2: Relevant Correct Data Collection: After an HR analyst is well versed with the current problem for conducting toward a solution which is on applied research based, the step two is collecting relevant data from all the available cum reliable sources, where reliable sources of data are often known in HR language as data selection as well (in other words: data reliability in academic HR research world).
  • Step # 3: Data Cleansing: After HR personnel dealing with HR Analytics is done with prior two steps, it is time to cleanse the data - in terms of taking out the outliers which are of no use - For example: if you want to know the average salary of a person in any company, you have twenty people out of those nineteen are taking approximately near to $ 15000 per annum, and the one employee is making $22,000 annually, this case needs only nineteen people to take data for, because if you put the 20th person drawing much salary would disturb the average wage of the year of that team. Therefor analysis needs proper cleansing i.e. considering/ taking required data only.
  • Step # 4: Data Analysis: This is the crucial most part of the HR Analytics action plan for strategic reasons. Proper data analysis need the expertise in the HR area of working domain. For example if someone claims s/he is going to change the organizational design and culture dramatically within no time OR it is easy to change economic indicators for an organizational set up; remember that these are far cries only! Therefore the workable SMART goals orientation based data analysis work for your proper applications of HR analytics at organizational levels – both micro (inside organization like strengths, weaknesses, diversity of workforce, organizational design and culture, people, policies, resources, rules, inter-departmental coordination; etc.) and macro (outside organizational factors: opportunities, threats, economy, technology, politics, societal corporate responsibility; etc.) .
  • Step # 5: Decision making as per HR Analytics: The last but pivotal step in HR analytics is the decision making process - with referring back to the last four steps, the decisions which are in favor of the organizational visionary strategies. And the decisions taken by utilization of HR Analytics, as research suggests so, are far better than before, towards accomplishment of organizational goals and objectives.

Therefore, if the major recession worldwide is facing your organizational several aspects too, one is not there to follow the steps above and the recession will diminish! But then again at the same time if one employee concerning HR analysis knows the real data which is relevant and reliable too, and that is sorted cum selected data, done proper analysis of; hence after it is the possibility near to a better percentage of the business decisions so far that the selection of the business decision(s) with the help of HR Analytics steps, even in recession or like phase(s) of global business cycle, would be sane and informed, thereby HR analysts are immensely helped by HR Analytics to take business decisions.

What is more to understand it, is to simply put: HR analytics is HR metrics interplay of statistical figures and facts finding some conclusive point of view inferred from the available data. That conclusive viewpoint is the decision making in terms of not only employees’ professional progression but that too in line with the organizational strategic vision and mission at the back of the mind and at the forefront of the tasks.

Everything to know about HR Analytics

There are five major characteristics of HR Analytics that must be known to your employees who are working for you in your HR section:

Turnover Awareness Analytics

Your employees working for you in the HR domain must know the employee turnover rates from the several past years’ slab history of switching jobs; not only this but using that data should estimate the manpower requirements for you in future. Succession planning is the inevitable task of HR by way of the utilization of past turnover experiences, to-be retiring employees, and/or accidental/routine deaths in the company. Hence in HR analytics, turnover awareness analytics is one of the necessary areas to be known by your HR working employees or HR business partners.

Competency Cognizance Analytics

What competencies and capabilities your employees have, is another important part of HR Analytics to identify for employees working in your HR unit. HR is not only HR but your strategic partner looks into the very details, through HR Analytics, of the peoples’ capabilities, qualities, competencies, knowledge, skills, and abilities profile (say: CQC-KSA profile). This profiling is then cross-matched within the working employees’ profiles to bridge the CQC-KSA Profiling gaps if any. The employees’ good traits are shared and the bad ones are tried to be decreased.

Culture of your Company Analytics

What organizational culture your company has is a question of key concern for HR Analytics to dive into. Either it is a mechanistic culture in nature having a strict chain of command and controls like military organizations and bureaucratic ones featuring a stringent and tough chain of communication as well, or it is organic culture the one where the communication is easy to make say both vertically, as well as horizontally that, is anyone can walk-through into the office of your Chief Executive Officer without an appointment. When the Culture of your Company Analytics is known to you, you are in a better position to look into the AFIs (Areas for Improvement) into that and work upon them accordingly.

Capacity Analytics

The operational efficiency and capacity to improve that - of your employees and hence Organization - are necessary to have details about in Capacity Analytics within HR Analytics. The AFIs within people and systems can only be implemented when there is a capacity for that. And if not, the capacity can be developed through capacity-building programs initiation and its application.

Leadership Analytics

Leadership is the way a supervisor leads and rules the subordinates; and how procedures and directions are used to implement and motivate team members. What leadership stage your company strategic people have, is very important to know for HR domain, in HR analytics known as Leadership analytics.

Before Leadership Analytics to conduct, one must know how many leadership stages are there. Maxwell defined there are five:

Leadership Stage 1 as per Title

Some people join organizations, due to their past experiences, on managerial or supervisory levels. Their subordinates have to follow their orders because they are authoritative. Maxwell does, but others not, count this stage as leadership as leaders are to be followed by people at peoples’ own will and not due to the authority of the leader. To Maxwell, this stage is a start but not a destination in a leadership hierarchical journey, people obey you because they have to. On the contrary, Collins put, this stage is for individuals working and making their worth in the organization.

Leadership Stage 2 as per Relationship

When supervisors and managers spend time working with her / his team member subordinates, s/he has a relationship with office people, hence at this stage, people start obeying her/himself due to the obliging relationship. That relationship is positive when someone has made worth. When communication and connection is given a chance to flourish between you and your subordinates, now they have confidence in you and they let you lead them voluntarily. Their subordinates become followers.

Leadership Stage 3 as per Results

This is stage 3 of leadership when people follow you because you have a proven results track record. If you are not producing results, you cannot be a good leader as well. This is also known as effective management by you, where you being a leader is self-motivated and an example for others to be followed. Your discipline and systematic way of doing things are your work ethics, and these things inspire people around you. People are inspired and get along with you, they make themselves productive like you and bring other productive coworkers near to your team or they want to be alike your team.

While management is about maintenance of the status quo and leadership is about bringing a change, they are not interchangeable - as per Maxwell, but then again the effectiveness of a manager counts when a manager is an inspiring leader as well, Collins put.

Leadership Stage 4 is based on Empowering people

This has been Maxwell's view that when producers of results become developers of people are leaders at stage four. Here you produce results but you also develop people to produce as you have been so far. Collins calls those “leaders”. Here the gear shifting works, the multiplied production is gained through working on people development. It also gives leaders personal fulfillment.

Leadership Stage 5 Legacy based

The peak of the leadership, as Maxwell believes, is the Legacy leaving. That stage is where leaders leave behind their inheritance. They build and leave behind an organization that works even after they leave. This stage leaders leave the organization in the good hands of upcoming leaders. They are of view for organizational goals success rather than own self. The company-oriented mindset – “the organization first mindset” - is the thing that takes organizations to successful heights. The legacy-based leaders create for your company level four leaders and leave a performance heritage as an ever asset for you.

Importance of HR Analytics and Benefits of HR Analytics

The importance and benefits of HR Analytics will be well understood by the following WebHR e-book encompassing that how HR Analytics enables the HR team and HR department to work on the below-mentioned sub-domains of HR:

  • Data Processing to Understand

After gathered data is available to evaluate from the data sources of HR wherein there are every employee’s: basic profile information, educational qualification, experiential years, training, professional bodies’ certifications, and related data, the HR professionals now have ready at hand data to process to see into how many people are working on which positions.

  • Employee Demographics Tracking

For example: Like we at WebHR present in our software the customized search of your company employees, say if you need the people working with you on what educational qualification graduates or undergraduates, masters, etc., age-wise, search workers having the certain number of years experience, field stationed employees as per their geolocation, or any other customization you need. Therefore, HR Analytics is made easy to understand, for HR Professionals.

  • Commute smart talent acquisition via timely hiring process

Through HR Analytics HR professionals become able to track the talent requirements for your company and acquire the same from the market through a timely hiring process in place.

If you know the last five years' trend of firing, hiring, and exiting through resignations or retirement employees, you will be better positioned to take new hiring decisions with vision in the mind as per your business requirements.

  • Track employee performance

Tracking employee performance through software analytics is via e-report generations which is an attribute of HR Analytics. It has made things easy to do for managers and supervisors for performance assessments and tracking.

Through correct data in hand, the past performance trending helps to give next targets to your employees.

  • Improve Employee Performance

Problems identified are half solved, is an ancient axiom. Hence, through HR Analytics team leaders are at ease to know the Areas for Improvement (AFIs) or in other words weaknesses. And hook up the improvisation tools there with the peoples’ and processes’ points where the improvement is required.

  • Improvised machine learning

Machine learning is the understanding of statistical data and patterns where computers conclude data made as per human given instructions and programming therein. HR Analytics has the aspect attached to it of improvised machine learning for computers and improved programming for a human to do to get the most out of it.

  • Data-driven HR Decision Making

Data-driven HR decision-making is well supported by HR Analytics as one of its key features. When supervisory level people have the complete data of their teams on one screen and that is easily accessible as well as repeatedly referable on screen, it pushes better decisions that are performance-based.

  • Increase Employee satisfaction via Performance-based rewards systems and Organizational Performance Assessments

If pay for performance is given through utilization of tracking performance through e-reports timely, the employees get for what they do are satisfied better than before for performance-based rewards they receive. When employee satisfaction improves, it increases individual performance resultantly organizational performance boosts up.

  • Employee Pay Reviews, Performance Appraisal of Employees

Once the HR professionals have performance data in hand routinely, they are not at a hardship to review pay structures of people who are working for the employers. This way HR Analytics work for employee benefit for pay raises if needed any. Also, HR analytics assist as an employee retention tool to decrease HR turnover rates.

  • Tracking employee disengagement impact on organizational financials

Through infotech systems, introduction and administration employee engagement can be seen through with transparency and the same will be improved when monitored closely. The impact disengagement, on the contrary, is on organizational financials heavily, as can be tracked with the numbers of hours input work by each employee through electronic attendance and e-report submission systems in place like one in WebHR.

  • Leadership and Progress Projections

Leaders are projected and forecasted through performance e-tracking of employees (that which employee is doing what when how and how much producing units per hour of work input utilizing organizational resources per hour), if HR analytics is in practice in-vogue.

The data provided for the peoples’ attitudes trends during jobs they do, problem-solving aptitudes, relationship management, and persuading principles by setting examples, is a way to trace leadership qualities with your human resource.

  • Interventions Creations

Training, Development, Education, Growth Opportunities, and even interventions are created for better employee and organizational performance using HR Analytics like market intelligence of competitors. The very need assessment of the development around your area of business is seen through the eyeglasses of the microscopic view of HR Analytics. The leading HR trends are just one moment away, till you see through them on your info-tech devices.  

  • Employees’ Turnover Diagnosis & Costs Scenario against HR Turnover

How many employees left you this year was never an easy question rather HR had to look into the number of resignation letters in files physically or even in computer database systems. But HR Analytics has made it easy through a click only and see the required on-screen.

Thereafter, HR Specialists are comfortably estimating the upcoming turnover rates and find the solutions for evading that through policy initiatives like pay raises, or promotions to existing workforce talent. Hence too it makes clearer the cost scenarios against HR Turnover that what it will cost for the new recruitment process: referring to the last years’ recruitment costs traced by HR Analytics.

  • Quantification and Qualitative-ness of HR Prospects

Who has done what, how much (quantification) and at which required level (qualitative) helps to chase the next new supervisory level employees/managers, in HR succession planning. These are known in HR language as prospects that are future related to clients/managers.

  • International and Local Audits made easy

If you have HR Analytics put in practice, your all big data of HR is with you accessible anytime and that with minimal errors, if any. This is the major requirement of audits, both local, as well as international, and internal and external auditors, ask for your datasheets, your financial spreadsheets, the amount you incurred on utilities, transportation, HR training, your payroll and salaries you paid, with bonuses - if any, the inventory utilized, the chemicals in your plant, the gases at your stations, the electricity chips and boards if you have in stores, the paints if you use, house-keeping materials purchased and utilized, techno equipment in place, gym expenditures if so, and so on as per your earning. Your assets, business profit earnings, and expenditures are to be kept available with audits. All these are also immensely assisted by HR analytics.

Moreover, HR analytics is there for you to help you predict your ways forward for your business strategic forecasts. From hire to fire and recruitment to retire, from employee turnover, long-term absenteeism, and regulations to policy effects, and from engagement to performance of the diverse workforce, HR Analytics helps you for continuous learning, improvement, and development for your strategic business cause and profitability creating a win-win situation for you and your employees.

What Chronological Research has to tell us everything about HR Analytics

The chronological research in the HR Analytics domain has the following data facts to share with us based upon empiricism (practical-based):

  • Application of data in HR dominion is never been a novelty concept so far! As it is evident from the HR literature review that it was given emphasis upon in the last century’s second-last decade – that is the year 1984 – by a pioneering book namely How to Measure Human Resource Management by Jac Fitz-enz, therein emphasizing the vitality of human resource functions’ need for its measurement management.
  • Data Dispensation, Data Measuring, and Data Analysis is the basis for HR Decision making, but it depends upon largely the skills of HR Professionals regarding the said domain: uncovered Lawler et al. 2004, therefore HR Professionals are required to have such skills to cope up with these complex tasks of HR Analytics.
  • Thomas Davenport in 2010 proclaimed HR Analytics as big data in the HR revolutionary landscape to come forth.
  • Moreover, Bassi L. reported in 2011 that: data analytics in HR and expansion of HR metrics have created new possibilities in HR management, but then again it highly requires two things: (i) the data itself (ii) the Skills of HR Professionals to deal with the available data
  • Although, Aral et al. disclosed in 2012 that: measuring and monitoring of individual’s performance have been made available but it needs the moderator of HR info-tech.
  • Levenson A. in 2013: Perception broadening of HR has helped HR Decision making for the creation of strategic value but it necessitates the moderating impact of data collection, data utilization effectively, and analyzing data at a strategic level.   
  • In 2015 Rasmussen and Ulrich found that organizations' data-driven approach in HR is helpful for HR decision making but that too requires HR managers to understand the business.
  • From Administrative HR to Strategic level HR progression is evident at the organizational level with the help of moderator pertaining to HR broader aspect connected with the business framework: such claims made by HR Analytics domain researchers Ulrich and Dulebohn in 2015.   
  • Similarly, Delloitte (2015) reported that HR Analytics is a high priority for companies.              
  • Pape T. in 2016 said HR data-driven approach helps in HR decision making but that needs data collection as moderator.
  • Marler and Boudreau in 2017 reported that the talent management applications have invoked the idea of HR Analytics but it does have prerequisites of three moderators: one is HR Professionals, second is Management buy-in and the third is HR Info-tech.

HR Analytics and Success of the Businesses

  • As per Nucleus research published by Academy to Innovate HR: Analytics pays you back $ 13.01 against $ 1 you spend!
  • Bright reported in 2016 that out of 81% of organizations who have developed analytics, have at least one HR analytic project having a proven impact on the business.

Future of HR Analytics as per Research

Here we go hand in hand with academic empirical research to forecast HR Analytics future, which says so far as follows:

  • In the organizational setup now there are no more promotions, salary raises or training opportunities abroad on relational or intuition-based; (commended by Kremer and Kristian in 2018), and rather the data-driven approach is followed.
  • Vicenc Fernandez, Eva Gallardo – Gallardo published their research in the year 2020 telling therein there is still confusion in HR Analytics notion perception. And organizations face their own fences against such jumps-in, categorically those are numbers and figures, prototypes, software and technology aspect, people; and the management.           
  • Even though the concept is nothing new but then again it is the neglected most area so far in the organizational setups! Cedar Crestone’s 17th annual HR Systems reports that the progress in such a domain is slower and claim that only 16% of the organizations apply such systems within. 

Wrap up

Worldwide, nowadays, the hi-tech times are trendy, and these days HR Managers are HR Specialists. With it, at the same time, HR Specialists have been considered as Advisors to Strategic Partners / Competent Authorities, calling the domain to be known as Strategic HRM & D.

It is high time to focus upon HR Analytics tools and it is advised for organizations/employers to opt for data-driven decision making systems to put in place if you are ready to be in line with the international HR standards in a run to technological processes development at a global level of the day for making your HR the next level HR.