Data Analytics in HR
Learn how HRs are using data analytics to use the maximum potential of their workforce
Use of IT and analytics enabled firms to grow in terms of their products and services, revenues, profits, customer base, etc. Analytics is now used in every domain ranging from Marketing, finance, operations, strategy, HR, etc. to extract various insights and indicators to enhance their performance.
The role of HRM is transforming with the application of statistical techniques that make HR more evidence-based and accountable; from being intuitive to quantitative in its decision making and overall functioning. HR analytics includes the application of statistics, research design, identifying meaningful questions, using appropriate data, applying scientific standards to evaluate the results into meaningful business reports.
HR analytics is understood to be the application of mathematical, statistical and data mining techniques to human resources and business data to explore concepts and ideas and solve or respond to HR related business problems. HR analytics warrants for processing of HR data with advanced algorithms as well as statistics to get the meaningful interpretation of existing data.
Some of the key benefits of HR analytics are:
- To identify the areas where the efficiency can be improved through automation– Recruitment through robots is such an example where it saves the time of the workforce as well as free of individual biases while hiring.
- Identification and improvement of employees and workforce management– through the data analytics certain key performance indicators and dashboards can be made to reflect the part where an individual lacks and that can be improved via proper mentorship/training. Also, nowadays companies are using analytics as a tool for performance management which used to be done annually or half yearly by the concerned HR manually.
- Talent pool– Many organizations conduct interviews keeping future requirements in mind and they make a database of available talent resources, analytics can be used to identify the right candidate from the pool of database of such skilled employees.
- Identify attrition and its causes– Today every firm is suffering from high rates of attrition for the youth tends to switch after a few years in order to keep developing. HR analytics can help in identifying the departments suffering from the maximum attrition and the reasons causing it. Recruiters can recognize a pattern of high performing employees and accordingly modify their employee hiring and retention strategy. It can also help HR in identifying the activities which have the maximum impact on employee engagement and thus allow organizations to invest in such activities.
- Prediction of future needs of an organization– HR analytics can help predict the changes that may be in the organization’s future. Using HR analytics, one can predict the skills and positions which are needed to improve business performance.
- Inclusion of HR in top management in taking business decisions– HR executives can be included in the business conversation as they can now quantify their numerous impacts on business outcomes.
But the analytics in HR does have some challenges too to surpass. Following are the challenges of HR analytics:
- Lack of Business/ Management support and interest– Lack of business expertise, lack of interest from the business and support from management, lack of HR for asking the right questions (that will provide insights) and lack of business support.
- Data & Tools– There is no ideal data; cleaning the data is time-consuming; general knowledge about the different methods is necessary, facing multiple data sources and having no proper tool for making statistical predictive analytics.
- Legal and Compliance– Using HR data with respect to legal and compliance without violating any rules and policies.
- Roles– What kind of roles are needed for an HR analytics team.
- Training and skills– Lack of knowledge about what skills are needed; HR needs to develop technical skills as well, lack of statistical skills such as analytical skills.
- Communication– Lack of communication between HR, IT and the business, not a solid communication between the business and the HR metrics and analytics team.
Despite these challenges, organizations are committed to utilize the benefits of HR analytics and use it in the following ways:
- Long term planning and strategic decision making: Most top performing businesses use data not to make windfall gains but to forecast and plan for the future. Using data to analyze the ROI of various programs and initiatives helps make better decisions for the company’s future.
- Using automated tools: Using automation tools and automated processes not only reduce data errors due to human factors but also give time for more important strategic tasks. Evolving to these tools is one of the easy ways to utilize the real power of HR analytics.
- Building an analytics-savvy HR team: It is good to have data but without a team which feels comfortable with data, one is still stuck with age old methods. Therefore, building a HR Tech savvy team of human resource professional, either by training or reskilling or new hiring, is going to be mandatory in future. Top performing organizations are already working towards enabling digital transformation in their human resources department.
-Mohit Jindal (IIM Rohtak)