Application of Business Analytics in HR

When it comes to creating a successful corporation, the people inside the organization are arguably the most
important asset. Business Analytics in HR field, also known as HR Analytics, is a technique that unifies and
analyzes quantitative and qualitative data for employees using statistical techniques and processes, helping to
provide valuable knowledge to create successful future decision-making. As reported by Deloitte in 2017, 71
percent of companies said they considered analytics a high priority for their company, with 31 percent calling it
"very significant."

Here are different applications of data analytics to HR and in order to foster employee growth and build high-
performing organizations.

1. Measuring Performance

In order to develop employee performance indicators, organizations should use analytical approaches and then
coach current and incoming workers to recognize those characteristics and their effect. To help people improve
their professional performance, as well as their health and finances, Deloitte analyzes data on human
performance, travel data and billing hours, along with other organizations.

2. Understanding Attrition and Increasing Retention

Performance-based analytics is used to predict which employees of the organizations are most likely to quit
along with informing the organization about the factors that may lead to increasing attrition rate. According to
the management consultancy company McKinsey & Co, money could be less of a consideration than the
efficiency of managers and supervisors. For example, McKinsey cites a case study by a major U.S. insurance
corporation that introduced an incentive program in order to retain its employees but did not achieve the
required success. In order to recognize at-risk employees, the organization then started to implement data
analytics, and they noticed a trend: People who were on smaller teams, went longer between promotions, and
were all more likely to leave while reporting to lower-performing executives. The organization started investing
resources to create better managers instead of dumping money on these workers.

To grasp patterns and fix abrupt spikes, businesses can also collect data on their turnover rate (both voluntary
and involuntary attrition separated by average headcount). For example, an increase in involuntary turnover
may be a sign that a review is required for the recruitment and training process; deeper dives into individual
departments or executives could include an increase in voluntary attrition.

3. Examining Employee Engagement

For any HR department, employee satisfaction is a key measure. This data is currently collected through
employee engagement surveys administered by outsourced survey providers (i.e. Gallup). In their HR divisions,
however, more organizations see the advantage of doing this in-house for both faster results and retaining
ownership of the data of their workers.

Gamification is another approach that is both an additional source of employee data and increased
communication. GamEffective, a company that develops business gamification apps, has one edition where
workers can predict how their day will go, based on their daily goals. This can reinforce not only the
commitment of the employee, but also inspire the employee to achieve their individual and team goals, as
organizations can select unique KPIs within the app to calculate.

4. Measuring Employee Development and Learning Outcomes

A vibrant training program would support businesses with a more involved workforce and higher retention.
Instead of asking workers a few static questions at the end of the training, companies should move emphasis
from training satisfaction to understanding the program, evaluating the employee's actual progress during the
training. Businesses can go one step further by using predictive analytics to tailor training materials that best fit
employee learning styles at an individual level. At an organizational level, predictive analytics will determine
weak points in training (like when employee engagement dips). Ultimately, this understanding will help the
organisations identify patterns that tend to make the training successful which will eventually lead to correct
preparation of the content of the training.

Some examples of companies that are using HR analytics successfully are as follows:

1. Google: The relevance and significance of HR analytics seems to have been fully recognized by Google.
Nearly all of their decisions about people and talent are supported by data and analytics. In order to measure
what successful managers do, their Project Oxygen analyzed their internal data. They find that there are eight
core behaviors of basically productive managers. They developed a management training curriculum that
integrated these eight behaviors, resulting in a substantially higher output of managers.

2. Microsoft: For possible leavers, Microsoft develops predictive profiles (hired straight from college for
example). On the basis of these observations, the organization then introduced several HR programs, such as
tutor delivery, stock vesting improvements and income hikes. Originally, they focused on two business units
with especially high attrition rates and were able to reduce those rates by more than half in each case.

3. ConAgra Food Inc.: To find out which main workers were likely to quit and why, ConAgra Foods Inc. used
predictive analytics tools. The firm took into consideration the issues of high turnover and low attrition rates
within the organization and thus assessed 200 factors that may have led to leaving workers. To the
organisation’s astonishment they found out that it wasn't the monetary value of pay that the employees received
troubled them but the internal recognition that the employees received in the organisation was more related with
retention.

Some Factsheet for application of business analytics in HR:

1. Analytics pays back $13.01 for every dollar spent (Nucleus Research, 2014)

2. 81% of developed analytical organizations report at least one HR analytics project with proven business
impact (Bright, 2016)

3. HR business partner capabilities are crucial in the implementation of analytical outcomes. 65% of developed
analytical organizations have Business Partners and HR managers who can explain analytical outcomes and
translate them into clear actions, versus 35% of starting analytical organizations (Bright, 2016)

4. 87% of front runners report analytics to be part of the HR roles description (Bright, 2016)

5. 69% of companies are integrating data to build a People Analytics database (Bersin, 2017)
6. 87% of front runners report high data quality (NTM, 2016)

7. 77% of organizations report dispersed data across multiple HR systems as their main challenge to analytics
(NTM, 2016)

Providing us the advantage of deep insights into important issues and also even and accurate predictions, big
data analytics has become the latest force in contemporary HR world. Companies using this HR model spend
less time and resources in recruiting decisions and improve the engagement, performance and retention rates of
employees.

Reference for Facts

1. Vulpen, E. (2020, January 8). What is HR Analytics? AIHR Analytics.

https://www.analyticsinhr.com/blog/what-is-hr-analytics/