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HR Analytics for Business Decision - Part 1 of a series

Author: Nipsy Jhamb | Categories: Analytics, HR Management

The Human Resource department is no longer just an administrative function. It is now significantly contributing to business decisions and organizational strategies. In partnering with the company leaders, HR leaders have realized that whatever activities they engage in, have to be integrated with business outcomes. Due to this inevitable shift in the thought process, HR analytics has emerged as an active tool in designing of HR strategy and contributing towards business decision-making.

Companies like IBM, SAS, Cargill and Gap have pioneered in the application of workforce and HR analytics for maximization of business potential and realizing practical organizational objectives. Microsoft and Facebook have set new precedence by using HR Analytics to take recruitment decisions. HR Analytics is expected to generate 4.4 million new jobs globally, by the end of 2015 itself. But what is HR analytics and how exactly does it work?

HR Analytics

“Less than half of the global companies use objective data when making workforce decisions, and fewer than 20% were satisfied with the ability of their current data management systems to manage talent data.” - SHL global assessment report

At its most fundamental level, HR analytics is the process of collecting, analysing and interpreting employee data for deriving business value. As most businesses are increasingly becoming dependent on the service element of their value proposition, a human asset is becoming undeniably important. To improve sales, enter new markets, handle high net worth customers, understand customer needs through customer behavior and improve the effectiveness of HR processes, companies have started relying on Big Data and analytics. Employee data is collected at various stages of employee-organization interface and used for determining the impact of individual employees on company performance.

But despite all that, HR analytics is clearly NOT meant for the following things –

•    Merely conduct statistical analysis of employee opinion data

•    Perform analysis of employee performance metrics

•    Determine correlation between various factors that may or may not be contributing to company performance

•    Perform gap analysis between departmental performances

•    Create benchmarks of organization performance vis-à-vis the industry performance

Go ahead and check out in Part 2 of this series 'How HR Analytics works'.