DEPARTMENT OF MANAGEMENT STUDIES

MBA IV SEMESTER (HR ELECTIVE)

HR ANALYTICS
UNIT-I: INTRODUCTION TO PEOPLE ANALYTICS

By
Dr. S. Venkata Siva Kumar
MBA, M.Sc. (Statistics), PhD
Associate Professor
What is HR Analytics?

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. This method of data
analysis takes data that is routinely collected by HR and 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.
What is HR Analytics?
For example, if a software engineering firm has high employee
turnover, the company is not operating at a fully productive level.
It takes time and investment to bring employees up to a fully productive
level.
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.
As in the example above, 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?
Most organizations already have data that is routinely collected, so why the need for a
specialized form of analytics?
Can HR not simply look at the data they already have?
 Unfortunately, raw data on its own cannot actually provide any useful insight.
 It would be like looking at a large spreadsheet full of numbers and words.
 Without organization or direction, the data appears meaningless.
 Once organized, compared and analyzed, this raw data provides useful insight.
They can help answer questions like:
 What patterns can be revealed in employee turnover?
 How long does it take to hire employees?
Having data-backed evidence means that organizations can
 What amount of investment is needed to get employees up to a fully productive speed?
focus on making the necessary improvements and plan for
 Which of our employees are most likely to leave within the year?
future initiatives.
 Are learning and development initiatives having an impact on employee performance?

With the ability to answer important organizational questions

without any guesswork, it is not surprising that many businesses
using HR analytics are attributing performance improvement to
HR initiatives.
Why is HR Analytics Needed?
Utilizing data relevant to HR strategies enables HR leaders to identify successful practices
and pinpoint weak areas in need of improvement. HR analytics enables strategic decision-
making that can drive business solutions through improving:
1. Productivity
2. Engagement
3. Retention

Implementation of HR Analytics
Create a Plan
Involve Data Scientists
Prepare HR Personnel

Educate HR Professionals
Evolution of HR Analytics
HR Ascends
The concept of HR emerged during the Industrial Revolution to manage the growing demand for labor. Initially
focused on dominance and subordination, it later evolved into a recognized profession with the emergence of
modern industries and democratic ideals. Relation with Data HRM had its roots in data before being recognized in
organizations as HR analytics.

Early Events
1. 1978: An article proposed measuring HR activities' impact on the bottom line, marking the start of data capture in
HRM.
2. 1990: Despite advancements, HR analytics remained unfamiliar to many organizations, leading to the concept of
'Benchmarking'.
3. 2000: HR accounting and utility analysis emerged, with Billy Beane's 'Moneyball' concept showcasing metric-
based selection.
Source: https://edu4sure.com/hr-analytics-overview
Evolution of HR Analytics
Early Adopters
1. Google: 'Project Oxygen' identified effective managerial qualities, highlighting the benefits of analytics in

workforce management.

2. IBM: Acquired Kenexa to analyze HR big data, leading to talent management solutions.

Potential Realized - Organizations like Microsoft, Mindtree, ConAgra Foods, and Wipro leveraged HR analytics

for strategic decisions, including attrition prediction, risk assessment, and talent management.

Industry Scenario - While HR analytics is growing, acceptance levels remain low, with a small percentage of

companies utilizing advanced analytical solutions.

Despite challenges, HR practitioners are gradually incorporating analytics into their talent strategy and workforc

planning. Source: https://edu4sure.com/hr-analytics-overview

Examples in HR Analytics:
How can HR Analytics be used by organizations?
Let’s take a look at a few examples using common organizational issues:

HR Analytics can:
1. Turnover
 Collect and analyze past data on turnover to identify trends
 When employees quit, there is often no real
and patterns indicating why employees quit.
understanding of why.  Collect data on employee behavior, such as productivity and
 There may be collected reports or data on individual engagement, to better understand the status of current
employees.
situations, but no way of knowing whether there is an
 Correlate both types of data to understand the factors that
overarching reason or trend for the turnover.
lead to turnover.
 With turnover being costly in terms of lost time and
 Help create a predictive model to better track and flag
profit, organizations need this insight to prevent turnover employees who may fall into the identified pattern
from becoming an on-going problem. 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.
Examples in HR Analytics:
How can HR Analytics be used by organizations?
Let’s take a look at a few examples using common organizational issues:
Examples in HR Analytics:
How can HR Analytics be used by organizations?
Let’s take a look at a few examples using common organizational issues:

HR Analytics can:
2. Recruitment
 Enable fast, automated collection of candidate data from multiple
 Organizations are seeking candidates that not only have
sources.
the right skills, but also the right attributes that match  Gain deep insight into candidates by considering extensive
with the organization’s work culture and performance variables, like developmental opportunities and cultural fit.
 Identify candidates with attributes that are comparable to the top-
needs.
performing employees in the organization.
 Sifting through hundreds or thousands of resumes and
 Avoid habitual bias and ensure equal opportunity for all
basing a recruitment decision on basic information is candidates; with a data-driven approach to recruiting, the
viewpoint and opinion of one person can no longer impact the
limiting, more so when potential candidates can be
consideration of applicants.
overlooked. For example, one company may discover that  Provide metrics on how long it takes to hire for specific roles
creativity is a better indicator of success than related work within the organization, enabling departments to be more
prepared and informed when the need to hire arises.
experience.
 Provide historical data pertaining to periods of over-hiring and
under-hiring, enabling organizations to develop better long-term
hiring plans.
Examples in HR Analytics:
How can HR Analytics be used by organizations?
Let’s take a look at a few examples using common organizational issues:
Need for HR Reporting
HR reporting is the process of collecting, analyzing, and presenting data related to various aspects of human
resources management within an organization. This data typically includes metrics such as employee turnover rates,
recruitment statistics, training expenses, performance evaluations, and diversity metrics. HR reporting serves as a
tool for HR professionals and organizational leaders to gain insights into their workforce and make informed
decisions to improve HR processes and outcomes.
HR reporting is crucial for organizations for several reasons:
Informed Decision Making: It helps organizations make smart decisions based on data rather than guesswork.
Tracking Progress: HR reporting allows organizations to monitor their HR performance over time and see what's working and what needs
improvement.
Compliance and Risk Management: It ensures that organizations follow legal requirements and helps identify and address potential risks.
Resource Optimization: By analyzing HR data, organizations can use their resources more effectively, saving time and money.
Transparency and Communication: HR reporting promotes openness within organizations by sharing important HR information with
stakeholders.
Learning from Others: It enables organizations to compare their HR practices with industry standards and learn from others' successes and
failures.
HR reporting is essential for making better decisions, tracking progress, staying compliant, using resources wisely, fostering transparency,
and learning from others.
HR Metrics
HR metrics are specific measurements used to track and evaluate
various aspects of the human resources function. HR metrics are
typically used to assess the performance, efficiency, and
effectiveness of HR processes and practices and to provide
insights into workforce trends and patterns.

HR metrics include employee turnover rates, time-to-hire,

training and development costs, absenteeism, skills gap and
employee engagement levels.

By tracking and analyzing HR metrics, organizations can

identify areas for improvement, make data-driven decisions, and
ensure that HR initiatives, practices and drives are aligned with
the business’s overall goals.
Why Do We Need HR Metrics?
HR metrics are important for organizations to assess, measure and monitor specific aspects of their human
resources function. By measuring and tracking HR metrics, organizations can identify areas for improvement,
make data-driven decisions, and ensure that their HR initiatives are aligned with their overall business goals.

Some key reasons why we need HR metrics are:

HR metrics assess HR Tracking metrics helps find weak HR metrics ensure adherence to
processes like recruitment or spots and improve HR efforts. laws and regulations.
training.

Evaluate HR initiatives: Metrics evaluate the success Metrics compare performance with
of HR programs and guide decisions on them. industry norms for insights.
What are the major HR Metrics?
HR analytics involve several different metrics concerning HR data that you can analyze to help improve an organization. Following are
the 8 crucial key metrics that human resources analytics deals with:
5. Time to Recruit New Employees
1. Revenue Generation Per Employee Time to recruit is one of the most crucial factors for a firm’s progress. This
Revenue generation per employee is one of the most critical metrics. This metric metric calculates how much time an organization requires to find a new staff
calculates how much revenue an organization can generate through each member if it loses its current employees. It includes the time taken by the
employee. It helps determine how much an organization is investing in each staff company from the advertisement of vacancies to hiring a new individual. It
member and how much profit it is getting in return. helps determine the efficiency and effectiveness of an organization’s recruiting
process.
2. Training Cost Per Employee
Training cost per employee involves the cost that an organization spends on 6. Job Acceptance Rate
training its employees. It is measured by dividing the total training costs of a The job acceptance rate is a metric that measures the number of individuals
training program by the number of employees receiving the training. who accept a job offer by an organization. It helps determine how many
people are attracted to a particular organization and its offerings. It is
3. Employee Voluntary Turnover Rates calculated by dividing the accepted number of job offers by the total number
Employee voluntary turnover rates measure the number of employees who have of jobs offered by a company.
voluntarily left an organization within a particular period. It provides information
on how many qualified employees are leaving at any point in time. It is measured 7. Employee-Related Risks
by dividing the number of employees who have left a company by the total Employee-related risks are metrics that measure the lack of specific skills in a
number of employees. company’s workforce. It helps determine whether an organization has enough
employees with the proper skill set. It also deals with how much an
4. Employee Involuntary Turnover Rates organization is exposed to risks regarding its workforce.
Employee involuntary turnover rate measures the number of employees fired or
terminated by an organization within a specific period. It is calculated by dividing 8. Absenteeism Rate
the number of employees that a company has fired by the total number of The absenteeism rate is one of the essential HR analytics metrics. This metric
employees. Assessment of this metric is used to determine whether the company deals with the number of staff members who miss working for a day or more in
has too many employees or is maintained at an optimum level. a month. It excludes those on leave, sick, or other types of time off. It helps
determine the unavailability of an organization’s employees and its impact on
the organization.
HR Analytical Models:
HR analytics enables organizations to analyze data,
predict outcomes, and demonstrate how HR
initiatives are making an impact. These insights
show what initiatives are effective and where
improvements are needed. With data readily
available, HR leaders can answer questions and
propose solutions with concrete evidence.

Descriptive analytics:
Analyzes historical data to understand what has
happened in the workforce over a specific period.

Diagnostic analytics:
Examines data to understand the causes of past
events and behaviors within the HR domain.

Predictive analytics:
Uses statistical models and forecasts to predict
future HR events and employee behaviors based on
current and historical data.

Prescriptive analytics:
Provides recommendations on how to handle future
situations and challenges in HR by analyzing
potential outcomes and scenarios.
Benefits of HR Analytics:
Practicing evidence-based HR: Making decisions based on data and research
rather than intuition.
Improved recruitment and talent acquisition: Enhancing hiring processes and
improving the quality of hires through recruitment process data analysis.
Better employee performance and productivity management: Identifying top
performers and areas for improvement.
Effective workforce planning: Forecasting future workforce needs and planning
accordingly.
Skills gap analysis: Identifying and addressing gaps in employee skills.
Employee turnover prevention: Understanding and addressing the reasons
behind high turnover and reducing flight risk.
Identifying inefficiencies: Spotting and rectifying inefficiencies within the
organization.
Cost savings: Reducing unnecessary expenses through informed decision-
making.
Improving workplace safety: Enhancing safety measures based on data analysis.
Uncovering trends: Gaining insights into workforce trends to inform HR
strategy.
Stages of HR Analytics:
People Analytics follows a systematic process that progresses through several stages:

Data Collection and Preparation: The first stage involves gathering relevant data from various
STAGE- sources, including HRIS (Human Resources Information Systems), performance management
1 systems, and employee surveys. Data cleaning and preprocessing are performed to ensure data
quality and consistency.

Descriptive Analytics: In this stage, descriptive statistics and visualizations are used to summarize
STAGE- and explore the data. HR metrics such as headcount, turnover rates, and employee demographics
2 are analyzed to gain insights into workforce trends and patterns.

Diagnostic Analytics: Diagnostic analytics focuses on understanding the underlying causes of

STAGE- workforce issues or trends identified in the descriptive analysis. Statistical techniques such as
correlation analysis and regression analysis are used to uncover relationships and dependencies
3 within the data.

Predictive Analytics: Predictive analytics involves building statistical models and machine
STAGE- learning algorithms to forecast future outcomes based on historical data. These models help HR
professionals anticipate workforce trends, such as turnover, performance, and talent demand, and
4 develop strategies to address them proactively.

Prescriptive Analytics: The final stage of analytics, prescriptive analytics, provides actionable
STAGE- insights and recommendations for decision-making. It involves developing data-driven strategies
and interventions to optimize workforce management processes and improve organizational
5 performance.
TOOLS & SOFTWARES USED:
Several tools and software platforms are used in People Analytics to facilitate data analysis and
decision-making:
Human Capital Management (HCM) Systems: HCM systems integrate HR functions such as payroll,
recruitment, performance management, and employee development into a single platform. Examples
include Workday, SAP SuccessFactors, and Oracle HCM Cloud.

Business Intelligence (BI) Tools: BI tools enable organizations to visualize and analyze HR data to gain
insights into workforce trends and patterns. Examples include Tableau, Microsoft Power BI, and
QlikView.

Predictive Analytics Software: Predictive analytics software allows HR professionals to build and
deploy predictive models to forecast future outcomes based on historical data. Examples include IBM
SPSS Modeler, SAS Predictive Analytics, and RapidMiner.

Social Media Monitoring Tools: Social media monitoring tools help HR professionals track and analyze
employee sentiment, brand perception, and recruitment opportunities on social media platforms.
Examples include Brandwatch, Hootsuite, and Sprout Social.
SOCIAL MEDIA IMPACT:
Social media has a significant impact on People Analytics in several ways:

Recruitment and Talent Acquisition: Social media platforms such as LinkedIn, Facebook, and
Twitter are valuable sources of talent for recruitment purposes. People Analytics leverages social
media data to identify and engage with potential candidates, analyze their profiles, and assess their
suitability for job roles.

Employee Engagement and Brand Perception: Social media provides insights into employee
sentiment and brand perception through online conversations and interactions. People Analytics
analyzes social media data to gauge employee engagement levels, identify issues or concerns, and
measure the effectiveness of employer branding efforts.

Employee Monitoring and Compliance: Social media monitoring tools enable organizations to
track employee activity on social media platforms for compliance purposes. People Analytics uses
social media data to monitor employee behavior, identify potential risks or violations, and ensure
adherence to company policies and regulations.
PEOPLE ANALYTICS FACTSHEET:
People Analytics Factsheet is a concise document that highlights key insights and statistics about
the impact of People Analytics in organizations.
People Analytics Factsheet Highlights:
1. Data-Driven Decision Making: People analytics facilitates evidence-based decision making by
leveraging data insights related to workforce dynamics, including recruitment, engagement,
performance, and retention.
2. Strategic HR Planning: By analyzing trends in employee demographics, skills gaps, and
succession planning, organizations can develop proactive strategies for talent management and
organizational development.
3. Talent Acquisition Optimization: Data analytics enables recruiters to optimize recruitment
processes by analyzing candidate sourcing channels, hiring costs, time-to-fill metrics, and
candidate quality, leading to more effective talent acquisition outcomes.
4. Employee Engagement and Retention: People analytics provides insights into factors
influencing employee engagement and retention, allowing organizations to identify drivers of
attrition and implement targeted interventions to improve employee morale and loyalty.
PEOPLE ANALYTICS FACTSHEET:
People Analytics Factsheet is a concise document that highlights key insights and statistics about the impact
of People Analytics in organizations. the People Analytics Factsheet highlights the transformative potential of
leveraging data insights to optimize workforce management practices and drive organizational success.
People Analytics Factsheet Highlights:
5. Performance Management Enhancement: Data analysis helps managers assess employee
performance objectively and identify areas for improvement, leading to more effective coaching and
development opportunities and ultimately enhancing employee productivity.
6. Diversity and Inclusion Support: People analytics supports diversity and inclusion initiatives by
tracking metrics related to workforce diversity, representation, and inclusion efforts, enabling
organizations to identify areas for improvement and foster a more inclusive workplace culture.
7. Challenges Addressed: The factsheet acknowledges challenges such as data privacy and security, data
quality and integrity, skills and capabilities development, and change management, emphasizing the
importance of addressing these challenges to realize the full potential of people analytics.
8. Actionable Recommendations: The factsheet provides actionable recommendations for organizations
to leverage people analytics effectively, including investing in data validation processes, building data
literacy and analytical skills, and fostering organizational buy-in and cultural change.