HUMAN RESOURCE

ANALYTICS
A DATA-DRIVEN APPROACH TOWARD HUMAN RESOURCES MANAGEMENT.
HR ANALYTICS

• HR analytics is a novel tool.

• Also referred as People analytics, workforce analytics, or talent analytics
• Involves gathering together, analyzing, and reporting HR data.

• It enables your organization to measure the impact of a range of HR metrics on

overall business performance and make decisions based on data.
HOW HR ANALYTICS IS USEFUL?

• HOW HIGH IS YOUR EMPLOYEE TURNOVER RATE?

• WHICH EMPLOYEES WILL LEAVE YOUR ORGANIZATION IN AN YEAR?
WHAT IS HR ANALYTICS?

• The process by which

………………….Statistical tools, methods and technologies are used
…………..For analysing historical/ HR data
……..In order to gain new insights and improve strategic decision making.
DEFINITION

• HR analytics is the process of collecting and analyzing Human Resource

(HR) data in order to improve an organization’s workforce performance.

• The process can also be referred to as talent analytics, people analytics, or

even workforce analytics.
TYPE OF DATA COLLECTED

• Routine data collected by HR Department.

…………….correlates it to HR and organizational objectives.
• Doing so provides measured evidence of how HR initiatives are
contributing to the organization’s goals and strategies.
RESULT

HR analytics provides data-backed insight on what is working

well and what is not so that organizations can make
improvements and plan more effectively for the future.
EXAMPLE

• A software engineering firm has high employee turnover, the company is not operating at
a fully productive level.
• Knowing the cause of the firm’s high turnover can provide valuable insight into how it
might be reduced.
• By reducing the turnover, the company can increase its revenue and productivity.
WHY IS HR ANALYTICS NEEDED?
THEY CAN HELP ANSWER QUESTIONS LIKE:

• What patterns can be revealed in employee turnover?

• How long does it take to hire employees?
• What amount of investment is needed to get employees up to a fully
productive speed?
• Which of our employees are most likely to leave within the year?
• Are learning and development initiatives having an impact on employee
performance?
WHY IS HR ANALYTICS?

• HR analytics is a methodology for creating insights on how investments in human capital

assets contribute to the success of four principal outcomes:
(a) generating revenue (b) minimizing expenses,
(c) mitigating risks, and (d) executing strategic plans.
• Make better decisions using data
• Create a business case for HR interventions
• Test the effectiveness of these interventions
• Move from an operational partner to a tactical, or even strategic partner
 EXAMPLES WHERE HR ANALYTICS CAN BE USED

1. Turnover
• Collect and analyze past data on turnover to identify trends and patterns indicating why employees quit.
• Collect data on employee behavior, such as productivity and engagement, to better understand the status of
current employees.
• Correlate both types of data to understand the factors that lead to turnover.
• Help create a predictive model to better track and flag employees who may fall into the identified pattern
associated with employees that have quit.
• Develop strategies and make decisions that will improve the work environment and engagement levels.
• Identify patterns of employee engagement, employee satisfaction and performance.
 CONTINUED…

2. Recruitment
• Enable fast, automated collection of candidate data from multiple sources.

• Gain deep insight into candidates by considering extensive variables, like developmental opportunities and cultural fit.
• Identify candidates with attributes that are comparable to the top-performing employees in the organization.
• Avoid habitual bias and ensure equal opportunity for all candidates; with a data-driven approach to recruiting, the
viewpoint and opinion of one person can no longer impact the consideration of applicants.

• Provide metrics on how long it takes to hire for specific roles within the organization, enabling departments to be more
prepared and informed when the need to hire arises.
• Provide historical data pertaining to periods of over-hiring and under-hiring, enabling organizations to develop better
long-term hiring plans.
EVOLUTION

• 1978
“The Measurement Imperative” proposed the idea of measuring the HR activities with
collected data like staff retention, staffing, compensation etc.
The idea marks the beginning of the data capturing activity in HR and its application in
organization.
• 1990
Predictive and assessment models became a subject of study.
It lead to the concept of Benchmarking.
EVOLUTION

• 2000
Concept of HR Accounting and utility analysis.
New dimensions and measurement data to quantify hr.
Metric model adopted by Billy Beane, GM of USA baseball team to select team members in
2003.
Metric based selection model development called as ‘Moneyball’ concept.
By 2006 organizations at large scale started adopting it.
NEED OF HR ANALYTICS

• FOCUS IS ON EVIDENCE BASED MANAGEMENT PRACTICES.

• SCIENTIFIC DATA MANIPULATION FOR BETTER BUSINESS DECISION…..BUSINESS
ANALYTICS.
• APPLICATION OF MATHEMATICAL AND STATISTICAL TECHNIQUES
• FOR PREDICTIVE DECISION MAKING TO IMPROVE DECISIONAL OUTCOMES.
• DATA DRIVEN HR DECISIONS ARE MORE OPERATIONAL.
Eg Walmart’s manpower planning model helps it assess how with every additional
headcount its sales revenue changes.
HR ANALYTICS, PEOPLE ANALYTICS, AND WORKFORCE
ANALYTICS: WHAT IS THE DIFFERENCE?
THE DIFFERENCE BETWEEN HR ANALYTICS, PEOPLE
ANALYTICS, AND WORKFORCE ANALYTICS
• HR analytics: HR analytics specifically deals with the metrics of the HR function, such
as time to hire, training expense per employee, and time until promotion. All these
metrics are managed exclusively by HR for HR.
• People analytics: People analytics, though comfortably used as a synonym for HR
analytics, is technically applicable to “people” in general. It can encompass any group of
individuals even outside the organization. For instance, the term “people analytics” may
be applied to analytics about the customers of an organization and not necessarily only
employees.
CONTINUED

• Workforce analytics: Workforce analytics is an all-encompassing term referring

specifically to employees of an organization. It includes on-site employees, remote
employees, gig workers, freelancers, consultants, and any other individuals working in
various capacities in an organization.
 A HUMAN RESOURCES INFORMATION SYSTEM
(HRIS) THE MOST USED SOFTWARE IN HR

• The HRIS is a system that is used to collect and store data on an organization’s
employees.
• It is a system for recruitment, performance management, learning & development, and
more.
• The HRIS can either run on the company’s own technical infrastructure, or, more
common nowadays, be cloud-based. This means that the HR software is running outside
of the company’s premises, making it much easier to update.
CONTINUED…

• Other commonly used names are HRIS system and HRMS, or Human Resources
Management system.
• Human Capital Management systems, or HCM.
• HRIS becomes interesting when you have between 30 to 50 employees.
• There are different kinds of HRIS systems and software.
 BENEFITS OF AN HRIS
TOOL TO SUPPORT THEIR PEOPLE OPERATIONS.

• Record-keeping
An HRIS is a record-keeping system that keeps track of changes to anything related to
employees.
• Compliance.
This includes material for the identification of employees in case of theft, fraud, or other
misbehaviors, first contact information in case of accidents, citizens identification
information for the tax office, and expiration dates for mandatory certification. All this
information can be stored in the HRIS.
BENEFITS

• Efficiency
Having all this information stored in one place not only benefits accuracy but also saves
time.
• HR strategy
The HRIS permits the tracking of data required to advance the HR and business strategy.
Depending on the priorities of the organization, different data will be essential to track.
• Self-Service HR
FUNCTIONS OF HRIS

• Applicant Tracking System (ATS)

This software handles all the company’s recruiting needs. It tracks candidate information
and resumes, enables recruiters to match job openings to suitable candidates from the
company’s application pool, and helps in guiding the hiring process.
• Payroll
Payroll automates the pay process of employees. Contractual data and information on new
hires is often entered into this system – sometimes combined with time & attendance data
– and at the end of the month, payments orders are created.
• Benefits administration
Another functionality of the HRIS is benefits management. Employee benefits are an important aspect
of compensation and are also managed in this system.
• Time & Attendance
This module gathers time and attendance data from employees. These are especially relevant for shift
workers where employees clock in and out.
• Training
Learning and development is a key element when it comes to employee management. This module
allows HR to track qualification, certification, and skills of the employees, as well as an outline of
available courses for company employees. This module is often referred to as an LMS, or Learning
Management System, when it’s a stand-alone. An LMS usually includes available e-learning and other
courses to be followed by employees.
•Performance management

Performance ratings are generated once or multiple times a year by the direct manager or peers of the employee.

•Succession planning

Creating a talent pipeline and having replacements available for key roles in the organization is another key component of
an HRIS.

•Employee self-service

Organizations are focusing increasingly on having employees and their direct supervisors manage their own data. Requests
like holidays can be asked for by the employee him/herself. After approval, these are then immediately saved into the
system (and registered to track for payroll and benefits purposes).

•Reporting & Analytics

A much rarer module in HRIS systems is reporting and analytics. Modern systems enable the creation of automated HR
reports on various topics like employee turnover, absence, performance, and more.
HR DATA SOURCES FOR ANALYTICS

• HR data sources can be categorized into three groups.

• HRIS data. Data from the company’s Human Resources Information System, or HRIS,
includes most of the company’s data about its employees. Common examples of HRIS systems
include Workday, Oracle, and SAP.
• Other HR data. Some HR data is essential for data-driven decision making but is not
included in the HRIS. This data is often acquired through surveys or other measurement
techniques.
• Business data. Although it is impossible to cover business data exhaustively, it plays an
increasingly important role in people analytics. We will touch on the most essential business
data used for people analytics.
HRIS DATA SOURCES

• Recruiting.

Recruiting data gathered from the Applicant Tracking System (ATS) is the first common data source in the HRIS. This
includes the number of candidates who applied, their CVs and other characteristics, as well as data about the
recruitment funnel, recruitment sources, selection, and so on. This system is the most common input for recruiting
metrics.

• Demographic data.

Another key data source is HRIS employee records. This includes the employee ID, name, gender, date of birth,
residence, position, department, cost center specifications, termination date, and so on. These demographic data are
often included in an analysis as control variables. Also, when data is combined manually, this is often the database that is
enriched with data from other systems by matching the employee’s ID as a unique identifier.
• Performance management.

The performance management system (PMS) is part of the HRIS and contains information about performance
management. This includes employee reviews and performance ratings.

• Learning management.

The learning management system (LMS) is another source of HR information. The LMS contains a course offering and
registers employee’s progress through different programs. Not all learning data is stored in the LMS. Often finance holds
the information of expenditure on external courses while learning impact and effectiveness is often measured using
surveys.
Job architecture.

Job architecture, also referred to as global grading or job leveling, is a framework that serves as a foundation for
remuneration. Different roles are put into salary scales that have bands and grades with maximum reward levels. Different
roles apply to different salary scale levels. The example below shows the salary scales as displayed in the collective labor
agreement for a universities. Function scale H2 and H1 are reserved for full university professors meaning that their
salaries range from Rs5582 – Rs9812. Commercial companies often have these salary scales and job architecture as part of
their HRIS.
Compensation & benefits.

To keep employees engaged, they are compensated. Compensation and benefits data are also stored in the
HRIS. These include remuneration details but also secondary benefits. For more information, check our full
guide on compensation and benefits.

Succession planning.

Succession planning schemes are also part of the HRIS. The amount of data depends on the maturity of the
organization’s succession planning practices. Example data includes leadership development data, managerial
bench strength, and data about which people are next in line for positions.

Talent development.

Talent development data is a bit of a weird one out. Talent programs often consist of courses and workshops
that are often included in the learning management system. However, the broader approach to developing
talent is another key piece of information that can be retrieved from the HRIS.
WHAT ARE HR METRICS?

• HR metrics are indicators used to measure the effectiveness of HR responsibilities and

initiatives such as hiring, employee retention, training and labor costs.
• Human resources professionals track HR metrics to improve their efficiency, and then,
report their findings to upper management.
• The metrics play an important role in helping companies make informed decisions by
illustrating what's working well, where there is room for improvement and what trends
they can expect to see in the future.
BENEFITS OF USING HR METRICS

• Improving labor resources allocation regarding scheduling, bidding, hiring and

compensation
• Predicting results of proposed changes in actions such as personal time-off policies,
benefits changes, team makeup and additional shifts or locations
• Decreasing compliance risks regarding overtime, minimum wage, exempt vs. non-exempt
classification, payroll-based journal, Family Medical Leave Act.
• Improving the return of investment regarding HR programs such as engagement, wellness,
financial planning and performance
TYPES OF HR METRICS

1. Absenteeism
HR professionals can measure absenteeism to help them understand how satisfied
employees are with their jobs and prevent turnover. It can also help identify differences in
job satisfaction based on management styles and departments within a company. An
absence rate can be determined with this formula:

Absence rate = workdays missed / total workdays scheduled x 100

2. Acceptance rate

The acceptance rate measures the number of candidates who receive job offers and accept. To calculate a
company's acceptance rate, use this formula:

Acceptance rate = (acceptances / offers) x 100

3.Average performance rating

Tracking the average performance rating of a department or group of employees can help HR professionals
identify if employees need additional training. It can also help determine whether a company's workforce is
improving.To calculate average performance rating, use this formula:

Average performance rating = (sum of all performance ratings / number of employees) x 100
4. Benefit participation rate
This metric identifies the percentage of employees enrolled in a specific benefit plan through their company. HR
professionals can use this data to determine if there are any benefits the company offers that are being
underutilized.To calculate the benefit participation rate, use this formula:

Benefit participation rate = (number of employees enrolled / number of employees eligible) x 100

5. Cost per hire

This HR metric shows how much it costs a company to hire a new employee. It may also illustrate the efficiency
of the recruitment process. To determine cost per hire, use this formula:

Cost per hire = total cost of recruiting and HR staffing / number of new hires
6. Cost of HR per employee
Companies can use this metric to determine the cost efficiency of HR. To calculate the cost of HR per employee,
use this formula:
Cost of HR per employee = total HR compensation / number of employees

7. Diversity and inclusion

Accurately measuring diversity in the workplace can promote a more inclusive work environment. HR professionals
can use anonymous surveys to help them track a company's diversity. They can also use the following formula:

Diversity rate = (total number of employees / number of employees from a diverse background) x 100
8. Employee referral program success

If a company offers an employee referral program, they may want to track how successful it is. HR professionals
can provide this data by using this formula:

Employee referral program success = number of referrals hired / number of open jobs resulting in referrals

9. Pay equity
HR professionals can use pay equity metrics to ensure employees are being properly compensated based on the
work they do. To determine pay equity, HR professionals use the following formula to identify potential pay gaps
between different segments of the workforce:

Unadjusted pay gap = (average high pay - average low pay) / average pay x 100
10. Retention rate
Another important HR metric is the employee retention rate for a company. It is the number of people who
remain at an organization within a given period. The formula below does not include new hires during the specified
period:

Retention rate = number employees staying across time period / number of employees at start of time period
x 100
The retention rate per manager may also be used to view how many employees stay vs. leave for each team and
manager.
11. Training completion rate
HR professionals may want to track how many employees have completed a specific training program. The training
completion rate can be calculated with this formula:

Training completion rate = number of employees who completed training / total number of employees x 100

12. Training cost per employee

Assessing how must it costs to train each employee can help HR professionals determine how much the company must
invest in workforce development. Training costs can include travel expenses, course fees and the cost of a company's
learning management system (LMS). To calculate the cost of training an employee, use this formula:

Training cost per employee = total training costs / number of employees

13.Training participation rate
This metric shows the percentage of employees participating in development opportunities. You can calculate the
training participation rate using the formula below:
Training participation rate = (number of participants / number of eligible employees) x 100
This can be a useful tool to determine if companies are offering the right type of training opportunities to
employees.

14.Training return on investment

HR professionals may also be interested in identifying the training return on investment (ROI) to assess whether
the training programs offered to employees are effective. Use the formula below to calculate training return on
investment:
Training ROI = (value of increased performance - cost of employee training) / cost of employee
training x 100
WHAT METRICS DOES HR ANALYTICS MEASURE?
 WHAT DATA DOES AN HR ANALYTICS TOOL NEED?

• Internal data
Internal data specifically refers to data obtained from the HR department of an organization. The core HR system contains
several data points that can be used for an HR analytics tool. Some of the metrics that an HRIS system contains includes:
1. Employee tenure
2. Employee compensation
3. Employee training records
4. Performance appraisal data
5. Reporting structure
6. Details on high-value, high-potential employees
7. Details on any disciplinary action taken against an employee
II. External data

External data is obtained by establishing working relationships with other departments of the organization. Data from
outside the organization is also essential, as it offers a global perspective that working with data from within the
organization cannot.

1. Financial data: Organization-wide financial data is key in any HR analysis to calculate, for instance, the revenue per
employee or the cost of hire.

2. Organization-specific data: Depending on the type of organization and its core offering (product or service), the
type of data that HR needs to supplement analytics will vary.

3. Passive data from employees: Employees continually provide data that is stored in the HRIS from the moment they
are approached for a job. Additionally, data from their social media posts and shares and from feedback surveys can be
used to guide HR data analysis.

4. Historical data: Several global economic, political, or environmental events determine patterns in employee behavior.
Such data can offer insights that limited internal data cannot.
HOW TO GET STARTED WITH HR ANALYTICS
THE COMPLETE HR ANALYTICS CYCLE

1. Create a collective mindset

HR leaders must prepare their teams and organizations for a workflow-driven by analytics.
2. Bring in data scientists
3. Start small
4. Get clearance from the legal team
The sort of data collection that HR analytics uses is governed heavily by compliance laws.
5. Choose an HR analytics solution
 SOME LEGAL CONSIDERATIONS TO KEEP IN MIND WHEN
IMPLEMENTING AN HR ANALYTICS SOLUTION ARE:

• Employee privacy and anonymity

• Consent from employees about the amount and type of data being collected
• Establishing the goal of data collection and informing employees accordingly
• IT security when using third-party software to run HR analytics
• Location of the HR analytics vendor – with whom the data will be stored – and their
compliance with local laws
BENEFITS OF TRACKING HR METRICS

• Improves talent acquisition. ...

• Increases staff retention. ...
• Prevents workplace misconduct. ...
• Increases productivity. ...
• Uncovers skill gaps. ...
• Improves employee experience. ...
• Highly engaged workforce. ...
• Reduces attrition rate.
INTUITION VERSUS ANALYTICAL THINKING
HRIS MODELS