ABC of HR Analytics for Dummies
Not being an expert on Analytics part 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).
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 efficiencies 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.
Is big data starting to have an impact on the HR function?
Companies that are moving ahead are doing an incredible amount of analysis around selection and recruitment processes and staff turnover to figure out if they can identify what is happening with their workforce. The focus on data is a real winner for HR if handled correctly. The biggest problem for HR people managing talent has been a lack of numbers and a lack of data to put on the table in business discussions.
A quite good explanation can be seen further in the blog Does HR Really Need Big Data Analytics?
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.
HR analytics must extend beyond reporting from present or past to predicting and analyzing what will be in the future. And the best analytics is most likely focus on certain areas according to TIBCO Spotfire:
- Creating value in human capital. Many organizations will have strategies to engage and motivate employees – not just to meet short-term business goals but to ensure the employees continue to be successful. The most useful questions to ask about these strategies will relate to how they can best be further developed. Companies have to take analytical approaches to these strategies not just view them as measurements. To create value through engagement, organizations could use a range of demographic factors to identify groups of similar individuals who could be engaged in similar ways.
- Social capital. social capital is often one of the greatest opportunities for organizations to develop new capabilities. That’s because in most organizations, how people work together is more important than the quality of the individual involved. Together with other measures of engagement activities, a social network analysis can help companies understand what types of people are most able to work together as a community.
- Sources of performance. Organizations should use analytics to better understand the qualities that indicate which employees will perform well in their jobs. For example, companies could look at whether someone has ever held a leadership position, and for how long, as well as his competencies and other factors like tenure, and number of promotions etc.
- Leadership performance. Companies should analyze the things that make the leaders of an organization effective, and maybe even analyze what effective leadership looks like in the first place.
- Human capital supply chain. For example, organizations should also analyze how well they are investing in their employees.
Below diagram is showing the HR and employee relationship management cycle and here as well the analytics is always be a part of every processes.
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.
According to HR People + Strategy (HRPS) is the premier network of executives and thought leaders in the field of human resources many HR processes have become universal in nearly all organizations. The opportunity is now to assess and demonstrate the actual business value of these processes. To that end, two strategies to analytics should be taken to maximize their effectiveness and influence in organization. First, HR Process Analytics helps connect an individual process, to important business outcomes. Each process can be analyzed separately to show the return-on-investment and drive action and a sense of urgency for the results across the organization. Second, HR Integrated Analytics combines the key business drivers from the Process Analytics approach into an integrated business-focused strategic plan. Succession is an important area that consists of several processes, but can be focused upon by an integrated analytics approach.
Examples of Process Analytics
• On-boarding • Selection • Performance Management • Employee Opinion Surveys • Competencies • Leadership Development • 360 Assessments • Work-life Balance Initiatives
Examples of Integrated Analytics
• Succession Planning • HR Strategy Development • CEO People Dashboard
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 lakes, Hadoop, NoSQL, Predictive analytics, In-Memory analytics and so many.
I would be interested further to know about these trends and will try to gather knowledge on these technologies for better outcome in the area of Human Resources. Hopefully come up with some new interesting blogs. 🙂