Not long ago, marketing and finance industry experts were debating whether or not collection and analysis of big chunks of historic data will be of any use for future decisions. Currently, big data analytics has made its impact felt not just in the above two but in almost all data-oriented industries. However, human resource management has by nature been more people-oriented. Thus, it has not seen data analytics being used as much as the other industries. Even those companies which are sitting on large heaps of data are not utilising it to the best possible extent. So, does data analytics fit in HR management?
HR analytics is defined as an approach to utilise human resource data maintained by the organisation to measure the direct or indirect impact of HR campaigns on important business outcomes. Even without using HR analytics, businesses spend a significant amount of money on HR functions. But in absence of solutions which can measure the effectiveness of HR decisions, HR leaders would always be shooting in the dark. HR analytics helps in predictive analysis to make and execute the decisions in a rational way.
An example of such implementation is LinkedIn’s purchase of Bright.com for $120 million in 2014. The latter has analytics software which assesses resumes to find match with job openings. According to Infor, an HR software vendor firm, as many as 14 million people take these predictive assessments every year when they apply for jobs.
Based on various logics and algorithms, these tools assign scores to candidate basis how they turn out in comparison to an ideal profile for the job. For employee retention and growth mapping, complicated correlations between standalone metrics like pay comparison, turnover, resignation, job satisfaction, etc, can be studied using clustering algorithms to identify finer HR trends within the organisation and take a corrective/progressive measure.
Organisations have been using a separate lens to measure the impact of HR decisions on the bottom line of the business as compared to other functions. This approach was used in the absence of definite measures to identify and assess the correlation between these two variables. HR analytics bridges this gap and sets more accountability and transparency for HR leaders, just like other functional leaders. Xerox used an HR analytics tool named Evolve to profile potential candidates for job stability. The tool helped the company to hire those who are better cultural fit for the organisation. As a result, Xerox reduced call centre turnover by 20% during 2012-14.
Now, how to successfully activate HR analytics?
As many as 61% of Indian HR leaders surveyed for the 2015 Randstad Talent Trends Report, HR Game Changers, agreed that they use talent and workforce analytics as part of their talent strategy and workforce planning process.
This indicates that the industry understands and accepts the significance of these solutions. Despite this, the effort by most organisations remains limited to capturing the data without significantly leveraging it. To reiterate, the broad objective of the HR function is to align human resources with the overall business objectives of the organisation. Hence, HR analytics should not be seen merely as IT implementation to optimise HR decision-making.
It should rather be treated as an add-on to the experience and skills of HR leaders. Effort should be to seamlessly integrate these IT solutions with HR leadership and the business objectives of the organisation. In other words, successful future HR executives will understand and pro-actively utilise employee data to improve workforce planning, talent analytics and optimise employee cost for the organisation. They can help managers to start recruitment planning six months in advance, keeping the future business goals in mind. Similarly, HR analytics can enable programmes to identify, train and retain talent with high potential. The need is to identify the areas where HR analytics can add value and then implement specific tools to do so. However, these technologies are still in infancy and some time away before these become a reliable and affordable partner of HR managers.
By Rishi Bhatnagar
The author is director, Capacity, Sapient Global Markets
