Role of Analytics in HR

HR Analytics blog summarizes the need for analytics in HR. “With data becoming widely available and more easily accessible, industries are quick to realize the value of insights that analytics can uncover. Analytics has helped police departments reduce crime, credit card companies detect fraud, companies reduce customer churn rates, and baseball teams win World Series. In Human Resources, with the automation of many HR transactions, from recruitment to retirement along with the need to perform strategically, analytics of the workforce is more important than ever. HR analytics is a lot more than head-counting-it’s about the total amount and the quality of talent, knowledge, and expertise to move your organization forward and stay ahead of competition. It’s about measuring the return on human capital investment and measuring the impact and how HR is driving performance, productivity, and profitability. In many different studies, HR seems to be lagging in this era of analytics and big data. But analytics of the workforce, a company’s most important asset, should be an opportunity for businesses, particularly for HR, to transform itself and align with the business strategy.”  

While some of the analytics may be common across all enterprises, in general, the analytics that are easy to develop and provide value will depend on 1) the maturity of the organization; 2) the size of the organization; and 3) the organization domain (the markets they serve).  There are other factors of course, but the aforesaid three categories provide the basis for a taxonomy of analytics for HR.

As an illustration, let us see why the maturity of the organization impacts the type of analytics that are relevant.  For entrepreneurial organizations that have a high velocity of growth the analytics will be quite different than a mature organization.  Entrepreneurial organizations may prefer the speed of hiring and rapid assimilation of the hired resource as key metrics, whereas a mature organization may be looking at employee growth and attrition rates as key metrics.  The size of the organization also impacts the type of analytics that are relevant.  Larger organizations may prefer multiple set of metrics and rely on statistical evaluation of historical data to provide trends, whereas smaller organizations may prefer simpler metrics and look at historical data as anecdotes to guide the human resources.  The organizational domain is also a significant factor in deciding which analytics are relevant.  In markets where resources required are scarce, then the HR analytics may need to include recruitment channels as part of their analytics, where as in very stable markets where resources are in plenty, then HR analytics may place a higher emphasis on fit to the enterprise culture.  Clearly, the metrics identified above apply to organizations of all sizes, in all domains, and in all stages of the enterprise evolution, however, the  relative importance of the metrics will be different.