Running head: HR ANALYTICS 1

HR Analytics

Student’s Name

Institutional Affiliation
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HR Analytics

While the employees are the engine that drives the proverbial company vehicle, human

resources (HR) are the mechanics that oversee the smooth running of the organization. They are

responsible for recruiting and managing employees, monitoring the organization’s administrative

functions, and ensuring optimal organizational productivity. Thus, periodic analysis and

assessment of the workforce is crucial for HR professionals. HR analytics is one such data-

driven assessment practice that enables HR to manage employees effectively, plan development

strategies, and improve the organization’s overall performance. The analysis is performed

through data collection comprising employee information, company statistics, and turnover rates.

HR analytics is categorized into four levels: operational reporting, advanced reporting, strategic

analytics, and predictive analytics. The levels are determined by the depth of analysis and

assessment.

Operational Reporting

The first level of HR analytics is operational reporting. It details regular or periodic

information pertaining to the organization’s workforce from available resources. The information

is presented in the form of reports or formal summaries that is distributed among the HR of

different departments and employees. The reports are used for tracking daily performance,

historic trends, and analyzing the effectiveness of the HR strategy or operational models.

Preparers and users regard annual reports as the most important sources of corporate information

compared to other sources (Ghazali, 2010). However, operational reporting is comparatively less

insightful and cannot model or predict the future of organizational trends.

The first step of operational reporting is gathering data from available sources. Data such

as employee demographic data, salary and promotion history, turnover rates, headcount, FTE,
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absentees, etc. are collected from Excel files, in-house HR systems, and employee databases.

Organizations use business intelligence and analytics software such as Tableau and Power BI to

produce picturesque formal summaries. The graphs, charts, and imagery make the data less

mundane and easy to review. For instance, Tableau creates data queries from raw data entered by

HR professionals that are interactive and aesthetic. An example of operational reporting would

be to record employee attendance and create a monthly attendance report using Tableau. Data

collected from HR systems is entered into the analytics software, processed by the software, and

manifested through graphs and images. The data can display which employees have the highest

and lowest attendances respectively. Moreover, including comparative baselines such as the

employee’s years of employment and work hours will add detail to the report.

Formal summaries generated through operational reporting track the performance of the

employee and organization. The reports are tailored according to the needs of the organization.

A sales and marketing company would track employee performance based on the number of

sales. On the contrary, a construction company would track its progress by measuring

expenditure, status of projects, and number of workers per project. Regardless of the needs,

operational reporting helps the organization to highlight its immediate requirements, needed

changes, and also provides HR professionals the necessary analytics for decision-making.

Advanced Reporting

An organization reaches the second maturity of talent analytics after the company’s

operational reporting becomes frequent and automated. The maturity is determined by the

company’s ability to report proactively. The difference between level 1 and level 2 of analytics

maturity is the frequency of the data reporting (Wattendorf, 2018). A Human Resources

Information Software (HRIS) system that efficiently organizes and manages data, records
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headcounts and absentees, and tracks performance is included at this stage of HR analytics. The

system is automated and integrated into the core HR systems. This helps to keep employee and

company data updated with reduced time and effort. The time is devoted to strategic planning

and analysis instead of collecting information and making reports. HR professionals graduate

from reviewing formal summaries to contemplating the effects of the information on the

business.

The quality and relevancy of the information is prioritized over the quantity of data

during advanced reporting. Organizations generally rely on old metrics that offer immense

strategic value and those that have been tailored according to the company’s needs. The addition

of new metrics is avoided as either the old metrics help business decision-making or the

company shifts its focus to finding solutions to existing problems. Talent management platforms

and payroll software are two digital tools that propel advanced reporting. These tools are

integrated into the company’s HR system and offer analytics such as employee retention,

company expenditure, customer satisfaction, work schedules, wages and bonus reports, etc.

The main function of advanced reporting is to direct the company’s decision-making

process. The automation of data collection enables the HR department to focus on data analysis

and strategy planning. Information such as a worker’s monthly wages and performance allows

the company to review his or her performance, grant promotions to deserving employees, and

analyze company expenditure.

Strategic Analytics

The organization acquires the ability to make better decisions from the collected data

during the third level of HR analytics. While data is automated, reviewed and analyzed during

advanced reporting, it is integrated, analyzed, and used for strategy-building in the strategic
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analytics maturity level. Data such as employee demographics, individual and company

performance, and payroll are integrated into a system for collective analysis. A business

intelligence system is used for integration of the compound data. Furthermore, the organization

shifts to the use of statistical modeling for predicting future trends. Statistical modeling is the use

of mathematical equations to establish relationships between real and approximate values. This

advanced analytics technique makes predictions, highlights the need to solve immediate

problems, and aid stakeholders in realizing how different variables effect outcomes.

The objective of strategic analytics is to identify issues and find pragmatic solutions.

Techniques such as statistical modeling, causal model, SWOT analysis, and PEST analysis are

used for the identification and solving of problems. The HR department can identify drivers of

high employee turnover rate by implementing strategic analysis techniques. In a software

company, a strategic analysis by the HR department deduced that minimizing voluntary turnover

of top performing sales associates required causal identification and change initiatives leading to

increased job satisfaction (Taylor, 2016). The independent variables of employee turnover were

analyzed and then different strategies were recommended to solve the problem.

Valuable information that helps organizations meet its goals and objectives can be

retrieved from strategic analysis. Furthermore, it also aids organizations predict future trends

through statistical modeling.

Predictive Analysis

While basic predictive capabilities are achieved in the third level of HR analytics, the

company develops predictive as well as planning strategies in the final HR maturity level.

Advanced data science techniques, tools, and models are used to forecast future trends from past

and existing trends. The data are collected through the combination of analytics tools and
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models. Analytics tools include software such as SAS and SAP. Moreover, popular models

include decision trees and regression technique.

Big data and Artificial Intelligence (AI) are the booming sectors of the IT industry that

aid companies achieve predictive analytics capabilities. Thus, information retrieved in this level

of analytics is complex and large. For instance, a retail company may use predictive analysis to

analyze customer behavior, review current trends, and deduce a model that forecasts how the

trends will affect sales and company revenue. In HR management, predictive analysis can be

used to predict how employee turnover can affect company profits.

Predictive analytics is crucial for an organization to forecast future trends and stay ahead

of the curve. It assists in creating practically useful models and also plays an important role

alongside explanatory modeling in theory building and theory testing (Shmueli & Koppius,

2011). It performs the pivotal role of projecting the success and limitations of an organization.

References
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Ghazali, N.M. (2010). The importance and usefulness of corporate annual reports in Malaysia.

Gadjah Mada International Journal of Business, 12, 31-54. 10.22146/gamaijb.5516.

Shmueli, G., & Koppius, O. (2011). Predictive analytics in information systems research. MIS

Quarterly, 35(3), 553-572. doi:10.2307/23042796

Taylor, P. (2016). Strategies software company sales managers implemented to reduce voluntary

employee turnover [Walden University].

https://scholarworks.waldenu.edu/cgi/viewcontent.cgi?

article=3799&context=dissertations

Wattendorf, K. (2018). The practical guide to HR analytics. SHRM. Retrieved August 14, 2020,

from www.shrm.org/hr-today/news/hr-magazine/book-blog/pages/the-practical-guide-to-

hr-analytics.aspx.

preparers and users in general

regard the annual report as one of the
most important sources of corporate
information as compared to other
sources
preparers and users in general
regard the annual report as one of the
most important sources of corporate
information as compared to other
sources
preparers and users in general
regard the annual report as one of the
most important sources of corporate
information as compared to other
sources
preparers and users in general
regard the annual report as one of the
most important sources of corporate
information as compared to other
sources.