HR Analytics

2 HR Analytics: Introduction

The core of HR Analytics is the preparing the metrics and analyzing that for the
insightful information
Metrics can be said as data that conveys meaning in a given context
Metric is to be distinguished from numbers
Example:
- Employee turnover is 13.5% p.a. Data
- There is a 4 percent point rise in attrition rate on a year to Metric
year basis
- Inappropriate Leadership styles of select managers Analytic
resulted in higher attrition of 3% on a comparable basis
3 Various Tools Used for HR Analytics

Various tools of HR Analytics: Checklist,

Checklist Dashboard, HRIS

Research Tools: SPSS, AMOS, R, SAS etc

Statistical Models: Regression,

Regression ANOVA, Trend Analysis, Markov Analysis
4 Evolution of HR Analytics

Evolved in 1984
(By Jac Fitzend, president of Saratoga Institute published How to
Measure Human Resources Management and outlined the
metrics that can be used to effectively measure employee
performance.)
Analytics is not so much about numbers, as it is to do with logic and reasoning
HR analytics works by gathering workforce data, from work history to
employee satisfaction scores, and feeding this information into
advanced computer models.
models
 What should/could be measured?
5

Recruitment

Organization
effectiveness Retention

HR
Matrices
Performance &
Workforce Career
Management

Compensation &
Benefits Training
 Why HR Analytics?
6
What gets The business
measured, gets demands on HR are
managed; What increasingly going
gets managed, to be on analysis
gets executed Measure & Return on just because people
- Peter Drucker are so expensive
Manage Investment
- David Foster

To clearly Global organizations

demonstrate the with workforce
interaction of
Linkage of
Business analytics and
business objectives Performance workforce planning
and workforce Objectives outperform all other
Improvement
strategies to and People organizations by 30%
determine a full Strategies more sales per
picture of likely employee.
outcomes - CedarCrestone
HR Dashboards - SAP
 Levels of HR analytics
7

Three levels of HR analytics and reporting

Reporting
Reporting of basic metrics, their frequencies & percentages by
Level-1 various cuts followed by key highlights. These can be monthly,
Descriptive quarterly, half yearly tracking reports
analysis Tool: SAS/REPORT
Techniques: frequencies , means, percentages etc.

Derivation
Derivation of some HR operational metrics which will help us in
Level-2 tracking the efficiency of HR functions
Operational Tool: SAS
metrics Techniques: variance, control limits, ratios, correlational
analysis etc.

Predictive
Predictive analysis based on historical HR data. Attrition
forecasting, performance management, compensation
Level-3 analysis, survey analytics, new hire strategies etc.,
Predictive analysis Tool: SAS BASE, SAS E-miner,
E Excel
Techniques: Regression analysis, Time series analysis, cluster
analysis etc.
8 Critical areas for HR Predictive
analytics

Turnover modeling. Predicting future turnover in business units in

specific functions, geographies by looking at factors such as
commute time, time since last role change, and performance over
time. One can accelerate hiring efforts accordingly, reducing lead
time and panic hiring, which can lead to lower cost, higher quality
hiring.
Recruitment advertising /HR Branding effectiveness: HR Branding
efforts based on Response modeling for advertising jobs.
9 HR Predictive analytics

Targeted retention. Find out high risk of churn in the future and focus
retention activities on critical few people
Risk Management: profiling of candidates with higher risk of leaving
prematurely or those performing below standard.
Talent Forecasting. To predict which new hires, based on their
profile, are likely to be high fliers and then moving them in to fast
track programs
 Examples
11
Starbucks, Limited Brands, and Best Buycan
Buy precisely identify the value of a 0.1%
increase in employee engagement among employees at a particular store. At
Best Buy, for example, that value is more than $100,000 in the stores annual operating
income.

Many companies favor job candidates with stellar academic records from prestigious
schoolsbut AT&T and Google have established through quantitative analysis that a
demonstrated ability to take initiative is a far better predictor of high performance on
the job.

Employee attrition can be less of a problem when managers see it coming. Sprint has
identified the factors that best foretell which employees will leave after a relatively
short time.

In 3 weeks Oracle was able to predict which top performers were predicted to leave
the organization and why - this information is now driving global policy changes in
retaining key performers and has provided the approved business case to expand the
scope to predicting high performer flight .
 Real world case studies
12
Dow Chemical has evolved its workforce planning over the past decade, mining
historical data on its 40,000 employees to forecasts promotion rates, internal transfers,
and overall labor availability.

Dow uses a custom modeling tool to segment the workforce and calculates future head
count by segment and level for each business unit. These detailed predictions are
aggregated to yield a workforce projection for the entire company.

Dow can engage in what if scenario planning, altering assumptions on internal

variables such as staff promotions or external variables such as political and legal
considerations.