HR departments have always had access to people data in large organisations, tabulation and analysis of data have been carried out for the purpose of understanding the patterns and the trends of employee behaviour. Moving away from providing operational support to business, HR function is now being viewed as a strategic function. What is different in the current day context is the use of digital technology in HR and the ability it provides to the HR function to bring together large amounts of data, build models for insightful analysis and use this for real time decision making. Hence HR function is slowly turning out to be a data driven function specially in large businesses which have begun to actively utilise analytical tools for enhancing their effectiveness and support to the business teams.
Every aspect of HR function offers scope for application of HR analytics and it depends upon the organisation’s critical needs to choose areas where analytics could play an important role. Employee turnover is a major area of concern for most. In order to enhance employee retention, analysis of factors that may trigger exits, growth opportunities, promotion prospects, compensation and organisation culture and building suitable data models that would help in extracting insights could be helpful.
Personalisation of learning pathways and improving job content based on the match of competencies required for the job with the defined skills could be supported by HR analytics. Such practices would reduce external hiring for certain skill sets and the resultant high costs and increase the longevity of employees with the organisation. Predictive analytics could also help in determining success factors for teams and identifying teams that are likely to succeed the most, given their methods of working, collaboration and communication styles.
HR metrics contribute to business value; however they need to be aligned with the business need. Therefore HR analytics process should start with the stated business goal followed by identifying the metrics that would define the business goals. Next, collection and analysis of the data leading to gaining insights. And finally, communication on the impact of these insights on the organisation. Very often, while HR function wants to use predictive HR analytics, there is limited consumption and resultant action and HR competency gets constrained.
In order to introduce HR analytics, the pre-requisites need to be in place. These include data selection, cleansing, ensuring data quality, constructing suitable models that can answer the queries of senior leadership and the willingness to experiment as well as invest in analytics tools. The shift from being reactive to proactive ways of functioning would be possible with the help of robust analytics. It should be possible to build a strong case for investment in HR analytics through measures such as enhancement in productivity, reduction in costs, enhanced employee engagement, lower voluntary exits, enabling learning culture, faster turnaround or reduced employee turnover. To be able to demonstrate financial value and ROI from the investment, it is important to combine HR data with other applications such as blending employee engagement with financial parameters or retention of employees with higher customer satisfaction scores that would make for a strong case. In order to make organisations future-ready, leaders should be able to embrace technology and analytics.
The writer is chairperson, Global Talent Track, a corporate training solutions company