HR Analytics and Its Importance to Create Impact in Business

Mohan Thapa

HR has always been working hard to get a seat at the table. It was Dave Ulrich, Father of Modern HR who challenged this and ensured that HR got the respect they truly deserved.

HR MIS analysis from onboarding to off-boarding helps provide insights that help businesses to function more efficiently and effectively. However, before we proceed into HR analytics, it is important to identify the real need of the company and its business goals.

Do we want to improve our current HR processes and systems in order to make them more effective? or do we want to help the business to improve strategy execution?

The goal of HR 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 (ROI) on its human capital.

HR Analytics is not only about establishing a Cause and Effect relationship, between what HR does and business outcomes it also enables us to take preemptive measures to avoid situations and thereby helps us in creating strategies for the future of the organization.

1. The first step in HR Analytics is identifying the key strategic objectives of the organization. Accordingly, we have to craft the HR Strategy in alignment with the objectives of an organization through the use of the Balance Score Card and Strategy Map.

2. The second step is to quantify all the crafted HR Strategies using the leading and lagging indicators. We could use the metrics in order to quantify the leading and lagging indicators with formulas to make them measurable. Leading indicators give you an opportunity to influence the future since they are forward-thinking and apt for insights and predictions. It can also serve as evidence that the HR is meeting expectations or act as a warning sign that the current HR activities need modification to ensure HR objectives remain in line with those of the business. Persistently high turnover rates can, for example, indicate a need to modify or increase employee engagement efforts while reaching goals in reducing customer service problems can tell HR, it’s time to switch from active to occasional refresher training.

Broadly used leading indicators could be in Recruitment, Learning & Development, Culture and Diversity, Employee Retention, etc.

Lagging Indicators are output-oriented measurements that mostly focus on a business’s bottom line. The term lagging reflects the delay or gap between your actions and a change in the final end result. To assess the business’s actual performance against the HR strategy map, HR might, for example, evaluate lagging indicators such as sales per employee, absenteeism rates, and average customers service calls per day.

Broadly used leading indicators could be in alignment with cultural aspects, competency development, performance, and human capital readiness.

3. The third is to conduct the Predictive Analysis using correlation, regression, and trend analysis in order to find out the real problems. It is a logical process that leverages business intelligence (BI) tools such as data mining and statistics to make predictions of future events. The predictive analytical model enables HR departments to be ahead of the curve in identifying staffing and performance opportunities and to anticipate problems before they happen.

Predictive analytics involves a set of various statistical (data mining) techniques such as correlation, regression, and trend analysis, that analyze historical data and outcomes. These techniques then try to create a formula, or algorithm, that best mimics these historical outcomes. This algorithm then uses current data to predict outcomes in the future.

Predictive analysis empowers the HR to find answers for critical organizational challenges like,

Which candidate would be the best cultural fit for the organization?

What are the critical skills and skills gaps? Should we up-skill or should we hire?

Which employees are at risk of leaving the organization?

Are employees productively contributing to business outcomes? etc.

4. The fourth is to conduct the Prescriptive Analysis of what can be done to make the correction and to address the problems. Prescriptive analytics combines the historical capabilities of static and descriptive models, with a forward-looking perspective. As a result, we can gain insights on not just what will happen next, but also on what we should do next.

Prescriptive analytics is more pre-emptive in its approach and recommends which of the possible actions or decisions would most likely lead to the desired outcome. Due to the pervasive use of analytics in all fields and industries today, there are several success stories of businesses that are powered by prescriptive analytics.

In conclusion, HR Analytics is a useful tool for HR to become an invaluable part of an organization by being able to properly predict, analyze and find solutions to ensure a well-run company. Additionally, HR analytics gives insights on whether the organization’s goal and the employees’ roles are in alignment with one another.

Thapa is Chief Manager-Human Resources at MAW Group of Companies

Leave a Comment

Scroll to Top