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Harnessing People Analytics For Future Proofing Human Resource Management
Harnessing People Analytics For Future Proofing Human Resource Management
Abstract: The prevalence of the HR Analytics concept in the field of HRM is very minimal. To take
effective decisions in Employee Retention, HR consultants adopt data-driven approaches. Predicting
employee attrition are published incorporating various methods but here the most influential parameter that
impacts the employee attrition the most is determined. HR consultants can make effective decisions using the
data-driven approach. While numerous HR experts consider analytics as a component of HRM intervention,
is study aims to expand the scope of HR analytics in the field of HRM aiming at Employee Attrition. Human
resource departments started to concentrate on building a strong analytics capability to best indurate the
data-driven world. There are critical monetary and immaterial expenses related to losing steadfast, loyal, and
high-performing employees. HR analytics functions serve as a supply for data required by HR management,
enabling it to act as a strategic alliance for the welfare of the organization. The research strongly proposes
that analytics be integrated with Human Resource Management, which help to formulate strategies to future-
proof human resource management.
Keywords: HR analytics, Employee turnover in IBM, Employee attrition calculation using HR
analytics, HR analytics for predicting retention.
Introduction
Human resource analytics is an area in business analytics that signifies applying processes
of analytics to the human resource department of an organization in the hope of enhancing
employee performance and thus getting a better return on investment. The four types of
analytics are descriptive, diagnostic, predictive and prescriptive analytics. A well-framed
HR Analytics serves as a base for the accomplishment of the HR system as a strategic
business partner of the organization by leading its focus from personnel management to
Human Resource Management. Human Resource Management is referred to as the art of
managing and coordinating people in an organization in order to attain its goal in the best
optimized and efficient manner. In spite of the fact that in the current era, majority of the
organizations are data-driven, still, human resources remain as the base that needs to run
these advances, substantiating themselves as the most imperative, dynamic, and creative
resources of any organization. The 12 key functions in Human Resource Management
include Human resource planning, Workforce Recruitment and Selection, Career planning
and Grievance Handling, Performance management, Learning and development, Safety
and Health, Function evaluation, Rewards and Recognition, Industrial relations,
Employee participation and communication, Administrative responsibilities, and Personal
wellbeing. The responsibility of the Human Resource executives is to frame the work and
manage the work holder. To recognize the optimal individual for a specific work, notice
ought to be given which contains job description - obligations and duties - and
specifications - academic qualifications. In order to check the rightness of the candidates
welcomed, they ought to be tried by reasonable choice strategies for getting the ideal
individual. In the aftermath, chosen candidates ought to be supplied with the correct
coaching for acting their duties and responsibilities mentioned within the notification.
Afterwards, associate analysis of workers' performance has to be compelled to be done to
grasp whether or not employees square measure acting to the perfect principles set by the
administration. The most significant thing is adherence and not disregarding business and
labour laws that administer all the above-said activities for work. People analytics is the
*Corresponding Author
ISSN-NO- 1671-9727 ISSUE 8 2021
VOLUME 26 Journal of Chengdu University of Technology
retaining employees. As the future scope, a larger sample size can be taken with different
demographic features for better analysis and more reasons for attrition can be formulated
and checked for devising an effective strategy of retention. [2] Latha Lavanya (2017),
paper is on the context of employee attrition in the software sector. Gender, the
association between employees searching for a new job, age, and departments’ employees
working in are taken as independent variables for the study. A sample of 100 employees
from the software sector of India is taken and the survey was done through a
questionnaire. Correlation analysis, factor analysis, t-test, one-way ANOVA, chi-square,
and multiple regression, and SPSS version 20 are employed for the purpose of data
analysis. The analysis concludes that Employee attrition has a positive correlation with
organizational effectiveness, job satisfaction, organizational performance, and quality of
service. For generalization, a larger sample should be taken. The study is solely
constructed on the private limited companies, so all the sectors can be studied and only a
single company was taken so different companies with different structures can be
examined for further extension. [3]
K. Sunanda (2017), an empirical study on employee attrition in Information Technology
industries- with reference to Wipro Technologies was done. A sample size of 100 (age
group- 20 to 40 years) employees was taken from Wipro, Hyderabad, India. The objective
of the research was to see the impact of working conditions, organizational culture, work
pressure, career growth opportunities, and lack of mutual trust on employee attrition.
Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy, Factor Analysis, Bartlett’s
Test of Sphericity are the data analysis tools used. 5 factors that are arrived after the study
are- working conditions, work pressure, career growth opportunities, organizational
culture, trust factors that cause attrition. Study in the future can be carried on by choosing
the different location of the same company as well as by taking different companies to get
more generalized and effective results. [4] V.Antony Joe Raja and R. Anbu Ranjith
Kumar (2016), the article focuses on reducing employee attrition in IT industries and
figure outs various influential parameters such as Work experience; a sense of
belongingness and value; promotion, respect, and fair treatment; personal needs; policies;
workload and timings for the same. Response from a sample of 300, IT sector employees
from Chennai, India was collected and the time duration for the research was 72 weeks.
Questionnaire and Secondary data from the company website were implanted as the
survey method and simple percentage analysis and hypothesis testing (chi-square test and
correlation & coefficient test) are used as the data analysis tools. To retain employees, it is
important to provide competitive salaries, challenging jobs that use employee skills
efficiently, sufficient opportunities for development and growth, and good managerial
guidance. The future survey can be conducted by eliminating time constraints, sample
size constraints and duration constraints. Other new parameters can also be studied. [5]
P. Madhavi Lakshmi and P. Siva Pratap (2016), the article brings to the table HR
Analytics as a Strategic Approach to HR Effectiveness. Theoretical study is done to come
up with various steps and models for how HR analytics work and impact. To play a more
pertinent and vital job in the association, the HR function needs to move ahead of simply
answering to precise prediction. Instead of simply creating receptive reports, it needs to
grasp advanced analytics and predictive techniques that help key authoritative objectives.
The utilization of predictive analytics in HR involves using significant information to
confront explicit business issues. [6] Shilpy Verma and Prof. Rajesh Mehrotra’s (2017)
article focuses on the role of analytics in renovating Human Resource Management.
Contribution of factors like- Retention, Planning, Recruitment and selection,
compensation and benefits, training and development, performance management system
on effectiveness of HR analytics in improving HRM productivity is looked for during the
research. The producer company of Jaipur, India is picked for the research where more
than 300 employees were divided into diverse groups with 6-8 members each, and
focused group discussion was conducted. Secondary data was also utilized to arrive at a
conclusion. The examination unequivocally calls attention to the significance of analytics
Christopher Boomhower and David Mumford (2018), this article answers one of the very
important questions in an organization “What Makes an Employee Quit?” Parameters
taken here to answer the question of employee attrition are- Job Involvement, Job
Satisfaction, Environmental satisfaction, work-life balance, stock options level, monthly
income, Years at the company. Dallas, US- Domestic workers, aged 20 and greater and
white-collar jobs (full-time) are taken as samples. IBM Dataset is taken as the secondary
data. K-Nearest Neighbour, Random Forest, and Logistic Regression are the data analysis
tools used. In looking into the model's most effective highlights, the examination revealed
a critical decrease in chances of a worker stopping as their administration length builds,
chances increment or reduction relying upon representative age, and chances of stopping
are less if the representative is in the standard compensation plan. Looking at age and
length of administration, stops spike around 6.25 long periods of administration, paying
little mind to age. The region of additional exploration is investigating other work
information. One such application would be to explore employee perceptions of various
employment benefits. [28]
Chandrakant Varma, Chandrahauns, and R Chavan (2019), this article on HR Analytics
focuses on understanding the effect on Employee Turnover. Employee performance,
Compensation, Training, and Development are taken as the independent variable and
Employee Turnover as the dependent variable. A privately owned medium-size firm with
an employee strength of 310 samples is taken. A questionnaire, Exit Interview forms, and
employee surveys are done. The study focuses on how HR practices could be innovated
and transformed from their traditional transactional roles to transformational roles, and
more strategic in nature. The study tries to explore and understand the role of analytics in
this transition of HR role from traditional to modern business times. The study can be
further carried on by choosing the different locations of the same company. Different
companies can be taken to arrive at more generalized and effective results. [15]
I Setiawan, A C Nugraha, S Suprihanto, and J Hutahaean (2019), this research paper deals
with employee turnover analysis incorporating logistic regression. Impact of parameters
like gender, business travel, department, marital status, education field, working hours,
job involvement, work-life balance, environment satisfaction, education, job satisfaction,
job role, performance rating on employee turnover. A sample of 4410 employees covering
261 days from Indonesia is taken. Employee dataset is used for data. R studio for data
integration, data preparation, exploratory data analysis, model evaluation, logistic
regression, and visualization are implemented. Two factors can drive Employee turnover.
The first factor is driven by the employee factor itself, and the other is the company
factor. Some employees, especially “junior” employees still want to have more
experience. An employee with a small number of working years and companies worked
has a more significant probability of attrition. [16]
Anshu Sharma and Tanuja Sharma (2017), the research deals with HR analytics and
performance appraisal system, a conceptual framework for employee performance
improvement. The study was done by clubbing the work of academics and practitioners in
the field of HR analytics and performance management. The paper suggests that the
utilization of HR analytics will be adversely identified with subjectivity predisposition in
the PA framework, accordingly decidedly influencing workers' apparent precision and
decency. This further decidedly influences workers' fulfilment with the PA framework,
which consequently expands representatives' readiness to improve execution. Can be
empirically tested in the future set up in different organizations as a future scope. [9]
E.Mascalu and A. Serban (2014), this paper focuses on HR Analytics for strategic Human
Resource Management. Employee Performance, and improvement impacted by HR
strategies. A sample is taken from Romania and the study is done by reviewing several
kinds of literature on the integration of HR into business performance measurement.
Strategic human resource management can be considered as a necessary approach for any
organization which intends to identify ways for assessing its impact on performance and
the process that needs to be undertaken for maximum productivity. The HCM: 21 model
represents a tool that allows you to rate the effectiveness of your department and
communicate with senior management in the quantitative business language they
understand. As this was based on theoretical review surveys can be done to reach a better
conclusion. [20] Thomas Rasmussen and Dave Ulrich (2015), It discusses how HR
analytics avoids being a management fad. Business Analytics (customer satisfaction,
operational performance, leadership quality, etc) aspects of HR analytics are studied.
Denmark, Maersk Drilling Company is chosen for the study. Data is collected from the
company’s website and interacts with the employees. Regression is applied. HR analytics
is very much realistic and can impact HR and also its influence in an improved way.
Further study can be done theoretically and statistically to study the impact of HR
Analytics on various functions of an HR. [10] Andrew B. Speer, Subhadra Dutta,
Menghan Chen, and Glenn Trussell’s (2019), research paper introduces and provides
guidance on Attrition modelling by prescribing the early considerations when identifying
turnover predictions within the organization settings. It offers suggestions for future
research to inform best practices. It highlights the analytical strategies to model turnover.
[17]
Janet H. Marler and John W. Boudreau (2016), the article addresses the concept of HR
Analytics, the way it works, the purpose of HR Analytics, and its production. It also
covers the requirements for HR Analytics to succeed in an organization. The evidence
used in the research is very minimal due to the low adoption of HR Analytics. [18]
Devesh Kumar Srivatsa and Pradeep Kumar Tiwari (2020), research article focuses on the
retention schemes which reduce employee attrition. All organizations, to reduce employee
retention they come up with different retention schemes through various methods that
include retention bonuses, better training, and promotions. [19] Setiawan and S
Suprihanto, 2019, study aims to analyze employee attrition using logistic regression. The
R language is used for data integration, exploratory data analysis, data preparation,
logistic regression, model evaluation, and visualization. The increase in employee attrition
can deteriorate the company’s competitive advantage. Hence, this study analyzes and
predicts the attrition rate so that the control measures can be initiated. Priksha Dalal
(2019), the research work involves the application of two types of analytics in Human
Resources management. The work emphasizes that many HR professionals leverage
analytics as part of their general HR role and an increasing number focus primarily on HR
analytics. The concept of Data Analytics has become the benchmark across functions like
Finance, Marketing and Operations. [21]
Chandrakant Varma’s (2019) study revolves around the idea that HR Analytics helps in
measuring the performances and gaining insights on employee’s efficiency. It has
emerged to be an important tool that helps to identify the factors that influence employee
behaviour and create a high-performance ecosystem. This concept helps in predicting the
employee turnover rate and the reasons behind it. The aim of the research paper is to
explore the importance of HR Analytics and its application in different HRM functions.
S. Zeidan and N. Itani (2020), the paper stresses the organizations’ integration of analytics
into daily operations might get exposed to more challenges that will change or even
disrupt the HR functions currently working. The secondary data from various published
journals on HR Analytics are considered for this study. It describes the obstacles involved
in the adoption of HR Analytics in the process of emerging trends. Shaji A. Khan, Jintong
Tang (2017), the article provides the managerial implications related to potential
employee concerns with HR analytics and their ramifications for organizations. This
sheds light on how employees ‘attributions of organizations’ use of HR analytics relate to
their commitment to the organization. The critical motivation to direct compelling HR
analytics is to indisputably show your business sway inside the association and genuine
reasons that impact relationship among what you do and business results and building a
system dependent on that data, will permit you to make those terms a reality, Mondore,
S., Douthitt, S., & Carson, M. (2011) [23] Mishra, S. N., Lama D. R. Lama, & Pal, Y.
(2016), HR analytics plays a role in every aspect of the HR function, including recruiting,
retention, succession planning, training and development, compensation, engagement, and
benefits. HR analytics involves ‘high-end’ predictive modelling where what-if scenarios
forecast the consequences of changing policies to produce better Return on Investment
(ROI). Dave Ulrich and James H. Dulebohn (2015), HR will need to adopt an
outside/inside approach where the stakeholders of the external environment influence
what HR does inside the company. HR analytics will enhance the value with respect to
goals for HR work and increase the scope for HR investment areas. [22]
Research Methodology
Hypothesis: There is a significant impact of Stock Option, Monthly Income, Satisfaction
Job, Job Involvement, Work Life Balance and Satisfaction Environment on the Employee
Attrition. The respondents of the research are the employees of the IT industry. Research
Problem: The prevalence of the HR Analytics concept in the field of HRM is very
minimal. To take effective decisions in Employee Retention, HR consultants adopt data-
driven approaches. Research Gap: Previous studies on the topics – Predicting employee
attrition are published incorporating various methods but here the most influential
parameter that impacts the employee attrition the most is determined. Research objective:
This study aims to expand the scope of HR analytics in the field of HRM aiming at
Employee Attrition so that HR consultants can make effective decisions using the data-
driven approach. Research Questions: The research is conducted to understand how HR
Analytics can be used to create an evolution in the field of HRM to arrive at
technologically advanced HR functions, focusing on the decision of attrition of an
employee.
Data Analysis and Interpretation
Feature Selection: We selected and deselected certain variables, which didn’t have a
significant contribution to our model by implementing exploratory data analysis and
descriptive statistical analysis. The deselection of variables is based on the following
given criteria 1. Based on the type of variable, 2. Invariability in the Data point,
3. Relationship between Target variable and Independent variable, 4. Multi-collinearity.
Source of data: Secondary data analysis is considered in this study. The model is built
from the IBM Attrition data set. Variable Type: The nominal variable isn't employed in
the analysis because it doesn't offer any input to the model building method, but it is still
kept so that the employees on whom the study is conducted can be identified. Invariability
in the Data point: There are few variables that do not have any variability in them. Such
variables are Employee Count: This is just the number of employees and it always takes
the value 1. Over18: This variable describes if an employee is eligible to be employed,
over 18 years of age and it always takes ‘YES’ as the value. Standard Hours: This
consists of standard hours an employee works in a particular week and 80 is the constant
value. Relationship between Target variable and Independent variable: It is vital to
ascertain the dependence between the target variable and independent variable quantity. If
there exists an insignificant relationship between the two, we must always not choose that
independent variable quantity for the model building method. Chi-Square Test is used to
conclude the dependence among the Independent variable and the target variable. Let’s
take the hypothesis as H0: There exists no association between the two variables. H1:
There is an association between the variables. We know that the null hypothesis is
rejected if the p-value is less than the Level of Significance. We have chosen the Level of
significance as 5%. The following variables were deselected based on Chi-Square Test. P
value for Education is 0.547, Performance rating is 0.980, Gender is 0.281, Distance from
Home is 0.097, and Relationship satisfaction is 0.159. Variables that are removed from
the model.
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