HR Metrics & HR Analytics

“That which is measured improves. That which is

measured and reported improves exponentially.”
Karl Perason
 Index
❑ What is HR Metrics?
❑ What is HR Analytics?
❑ How HR Metrics & Analytics relate
❑ Common Metrics measured by HR Analytics
❑ Data Required By HR Analytics Tools
❑ Implications of HR Analytics for HR Professional
❑ Types of HR Analytics
❑ Advantages of HR Analytics
❑ Disadvantages of HR Analytics
❑ Case study
❑ CONCLUSION
What is HR Metrics?
• HR metrics are measurements used to determine the
effectiveness and efficiency of HR policies.
• Metrics don´t say anything about a cause, they just measure the
difference between numbers.
• HR Metrics are indicators that enable HR to track and measure
performance on different aspects and predict the future.
• Human Resource Metrics are measurements that helps you to
track key areas in HR data.
Eg: Absence Rate

Absenteeism is also a strong indicator of dissatisfaction and a

predictor of turnover. Absenteeism Rate can give information to
prevent this kind of leave, as long-term absence can be very costly.
Again, differences between individual managers and departments
are very interesting indicators of (potential) problems and
bottlenecks.
What is HR Analytics?
• Systematic identification and quantification on how people strategies can lead to
business outcomes.

• It drives Data Driven Decision Making and Evidence Based HR Practices.

• HR analytics, also called people analytics, is the quantification of people drivers

on business outcomes.

• Analytics measures why something is happening and what the impact is of what’s
happening.
• Eg: Recruitment
Organisations are seeking candidates that not only have the right skills, but also the
right attributes that match with the organisation’s performance needs.Sifting
through hundreds or thousands of resumes is tough.HR Analytics can 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.
This is show how
HR Metrics &
Analytics relate
 HOW HR METRICS AND HR ANALYTICS RELATE:
• This example starts with an opinion: “I feel like a lot of people are ill this month!” This opinion, however, is a gut feeling, it’s not a fact. The person
could be mistaken.
• Data helps to factualize the opinion. When we look at the data, we see that absence levels are at 12% this month. With this data we still can’t make a
value judgment. We don’t know if 12% is high or low.
• To understand this, we need a norm (a.k.a. compare with a second data point). For example, when we know that the company average is 8.5%, and the
national average is 4%, we know that this month is a really bad month – and that there’s a potential problem in the company! This is where the metrics
come in.Another metric could be ‘cost of lost productivity due to absence’. For this, we need the following numbers:

• Assuming that the organization has 60,000 employees with an average annual labor cost of $45,000, the formula for this month alone is:

• Analytics helps identify causes and how it impacts the business. For example, the number of people who report flu-like symptoms has significantly
increased, or the number of flu symptoms reported in the company increased at similar rates as in the country. This information helps to identify a
cause.
• The final step is insight. What will we do with these numbers? First of all, cost of absence is far above the market average. It is so high that it threatens
the competitive position of the company. Second, we should try to reduce the absence of employees in a flexible manner in case a new flu epidemic
sweeps the land. This can be done by fighting the cause or by fighting the symptoms: sponsoring flu vaccinations or enabling flexible deployment of
on-call workers.

This example shows how HR metrics and analytics relate.

Common Metrics measured by HR Analytics
❑ Revenue per employee: Obtained by dividing a company’s revenue by the total
number of employees in the company. This indicates the average revenue each
employee generates.
Formula Revenue per employee =
For example, company ABC has 80000 employees and revenue 25000
On the other hand, company XYZ has 90000 employees and revenue 46000
So, the revenue per employee ratio of company ABC is 0.312500 and company XYZ is 0.511111

❑ Time-to-productivity: The period of time from hire to full productivity.

❑ Employee Satisfaction: It shows whether employees would recommend their

organization as a good place to work. Higher the rate, the happier is the workforce.
Common Metrics measured by HR Analytics
❑ Employee turnover rate: This rate calculates the number of
employees who leave the company divided by the total number of
employees, within in a given time. It is indicated as percentage.
For example, in a company the average numbers of employees are 50 and
5 employees left the company.

❑ Offer acceptance rate: It shows how many candidates have

accepted the offer in comparison to the total number of offer
letters extended by the organization. 

For example, in a company total number of applicants are 1000

and numbers of applicant accepted is 35
So, the offer acceptance rate is 3.5%
 Common Metrics measured by HR Analytics
❑ Cost-per-hire: Cost per hire is a recruiting metric that measures
the costs associated with the process of hiring new employees.
These include expenses such as sourcing and recruitment
advertising costs, onboarding, referral bonus program costs, etc.

Formula, Cost per hire=

Example: Cost per hire

❑ Training Expenses per Employee: At every organization, employees
require training and support. Here is a metric that measures the total
cost of the organization’s training programs, divided by the total
number of participating employees.

Formula, Training expense per employee=

❑ Time to Hire: The total days it took to hire a job applicant after listing the
job out on platforms and the company website.
 Common Metrics measured by HR Analytics

❑ Absenteeism: Absenteeism is a metric, which is measured by dividing the number of days missed by
the total number of scheduled workdays. Absenteeism can offer insights into overall employee health
and can also serve as an indicator of employee happiness.

Formula, Absenteeism Rate =

For example, In a company, average number of employees in workforce is 100 and number of available
work days during period is 20. Total number of lost days due to absence is 93
So, total number of available workdays = 20 = 2000
Then Absenteeism rate= (93 100)/2000 = 4.65%

❑ Retention Rate: A key metric. It shows the number of employees who stayed in the organization over
a period divided by the total number of employees. It is considered a key indicator of organizational
culture.
Implications of HR • HR analytics will make the HR function
more strategic.
Analytics for HR
• Analytics requires a data-driven mindset
Professional for HR professionals.

• The data going into the systems will

become more important.

• Analytics changes HR by busting long-

held beliefs.
 Types of HR Analytics
• Descriptive analytics
which is made up of observations and reports, are important as they consist
of observing the workplace to gain initial insight into what is going on.
Example: A headcount report of all employees within the organization is a
form of descriptive analytics.

• Diagnostic analytics
 takes the observations to the next level to understand why and what is the
cause. It may be clear that employees are unhappy, but it is important to find
out why.
Example: Employee absenteeism is a good example of this. If employee’s
absenteeism rate is climbing, we can use diagnostic analytics to find out why
employees are missing work more often
 Types of HR Analytics
• Predictive analytics
is used less than the others, but is where organizations can predict ways of
improving the situation and attempt them.
Example: If we know, which sales people are preparing to leave our company in
the next 90 days, we can advise their managers to approach them now, before it’s
too late. This is the example of Predictive Analytics.

• Prescriptive analytics
is the final step where it considers the cause of the issue and uses the data to
prescribe what needs to be done to fix it. Prescriptive analytics relies on the other
three forms of analytics to get the best outcome.
Example: Netflix uses AI-powered algorithms to make predictions based on the
user's watch history, search history, demographics, ratings, and preferences.
These predictions shows with 80% accuracy what the user might be interested in
seeing next. This is a good example of Prescriptive Analytics.
Advantages of HR Analytics
▪ HR Analytics Improves Talent Acquisition
The right HR analytics software will look at all the information & skills of the candidates provide in
their application & throughout the hiring process, compare that with our company listing, and draw
up an unbiased shortlist of the best potential candidates using its specific algorithms.
▪ It Increases Staff Retention
Find patterns in the gathered information to understand what is causing attrition & put remedial
measures in place to avoid that in the future.
▪ HR Analytics Improves Employee Experience
Using HR analytics to create unified employee support will improve company culture, create a better
working environment.
▪ It Uncovers Skills Gaps
With the type and amount of data that HR analytics software has access to, it can use its algorithm to
easily determine what kind of skills organisation is lacking & identify any knowledge gaps.
▪ HR Analytics Increases Productivity
By utilizing the available tools, employees are better able to manage their time & work. HR analytics
platforms even give insight to significant interactions among employees & the collaboration between
various divisions.
 1)Access to quality data can be a problem for companies that do
not have up-to-date systems.
2)Smaller HR teams may not always have the statistical and
Disadvantages analytical skill set for working with large datasets.
of HR Analytics 3)It is possible to miss opportunities or derive untrue insights if the
HR team uses a complex tool and is not skilled in data analysis.
4)If HR analytics tools having access to sensitive information do
not fulfill the right security standards, it could lead to potential
security issues.
 A CASE OF HR ANALYTICS
• The organization under the study is privately owned medium size firm with employee strength of 310.
• The organization claims to be the one of the top organization in this business in the region. The organization
faces challenge of high turnover in middle level.
• The organization sincerely interested in knowing the reasons for employee turnover. HR of the organization
is asked to understand the problem and provide solutions.

• The following are the objectives set for the study:

• To understand how HR data could be integrated to draw meaningful conclusion on turnover.
• To explore how accuracy of HR data can help in making right decision.
• To explore how HR data can help in improving employee performance

• What would you have done if you were an HR in this scenario?

 The Solution
• Had I been the HR of the Organization, I would have tried to understand the key drivers of attrition.
• The HR in its measures to understand the given problem has tried following:

1. Feedback from employees leaving the organization

2. Feedback from existing employees
3. Reviewing of process and trying to make them more employee friendly

After all this effort, if the problem still would not have been solved, I would have decided to do some analysis
in order to collect HR data through various HR functions.
The HR data acquired contains the following details:

• EDUCATION
• DESIGNATION
• DEPARTMENT
• NATURE OF EMPLOYEMENT

To draw analytics on the given data and to achieve the set objectives statistical test was conducted. As per the
data available a conceptual outline was developed establish the relationship between the employee turnover
and the details available so as to draw meaningful analytics.
 Data Analysis & Interpretation
Table 1 – Department wise Attrition Department wise & Nature of
attrition Employment

The above chart and table shows the attrition among different departments. It could be seen that there is high rate of attrition
among employees in marketing department followed by finance department. This could be outcome of low cohesion within the
team. The above chart and table shows the attrition with reference to different Nature of employment (Temporary, Probation, and
Permanent). It could be seen that there is high rate of attrition among employees who are hired on temporary basis and similar
level of attrition is seen amongst permanent employees. It could be seen that there is attrition in Marketing department, followed
by finance department. This could be outcome of having less consistent HRM policies and practices.
 Suggestions & Recommendation
As per data collected and the analysis drawn, I would have provided the following suggestions :
The organization is facing a grave challenge of high attrition amongst the middle management level
employee is of soaring concern.
❑ Organizations tend to lose the employees to the competitors hence it is recommended to survey
competitors' practices in terms of compensation so as not to lose employees due to less compensation.
❑ High attrition is seen amongst employees hired on temporary basis and similar amongst permanent
basis, in this case further analysis is required in terms of their compensation, performance etc.
❑ Employees in permanent category may leave the organization because of insecurity in their career
which has spill over effect on the temporary employees, hence organization can develop career path
for their employees.
❑ High attrition is also due to lack of effective Organizational communication with the employees; hence
the organization must improve on employee communication and develop process with higher
employee participation.
❑ Organization can adopt HR Analytics in different functions so as to create meaningful data and draw
predictions.
 Benefits derived of HR ANALYTICS
• HR analytics through its predictive nature help in understanding and exposing the
deficient practices that grow to be the key cause for attrition, which helps in
retaining and maintaining high worth employees.
• It makes possible the HR to exhibit its yield and accountability to accomplish
corporate goals
• HR analytics help in most advantageous Human resource planning
• It helps precise forecasting about employee needs and skill-set for achieving
organizational objectives
• It helps in sourcing the best possible potential suiting organizational talent
requirement for specific positions without bias.
• It helps in concise defining of vital performance part and bits which may have high
impact on the organizational performance
• HR analytics facilitate in administration and classification by and large all HR
activities.
CONCLUSI o So basically we learn first of all from this about HR Metrics and
Analytics. Then discuss how they can contribute to organisational
ON efficiency and effectiveness.
o As we know metrics are data elements that contributes in analyses
What gets measured which provides information to decision makers in effective decision
making.
gets improved ....
o These both activities ( HR Metrics & Analytics) provides no benefit to
organisation unless the managers utilizes the information obtained
from reports or metrics in effective way.
o Managers need to know that what metrics are important to them and
what are least important in preference and should align the HR
activities and employee practices with company objectives and goals.
o HR team must fully understand the directions of business.
 Bibliography

o HR Analytics: Understanding Theories and Applications by By

Dipak Kumar Bhattacharyya ( Book)
o People Analytics Case Studies with Business Impact by AIHR
Academy
o How HR Analytics Improve Performance by Tracy Smith,
Numerical Insight LLC.
o Effectiveness of HR Metrics and HR Analytics in the Evolution
of HR as a Strategic Business Partner by K. Sripathi and C.
Madhavaiah (Research paper)
 Group Members Contribution
▪ Aratrika Biswas (Roll 28): Basic idea about the topic and
research it on YouTube and on internet

▪ Swikriti Chanda (Roll 32): Power point presentation making,

design and finding matters for HR Metrics and it's types with
example

▪ Sandip Kumar Jana (Roll 31): Helping in ppt design with sharing
his points for HR Analytics topic with example

▪ Labani Dawn (Roll 29): Case Study finding and summarised it

▪ Ahtasham Noor (Roll 30): Case Study finding and finalize a

conclusion