Analytics is the new kid on the block today. Every business function worth its salt is talking about using “Big Data” to strategize for its future. Can HR be far behind other functions? No.
Data and technology enablement has advanced rapidly in the last decade and will continue to do so. Given the huge amount of workforce data available in organisations today HR analytics has huge potential to deliver clear business benefits, but many HR leaders are at a loss as to where to begin.
A recent survey of CHROs (Chief Human Resource Officers) of companies found that the next big investment in the coming 6-18 months in HR will be in HR Analytics. Most companies feel that workforce analytics is their strategic priority.
Globally, 78 percent companies (employing 1000 and above employees) rated HR analytics as urgent, but only 19 percent companies felt they were equipped to handle this as compared to 81 percent in finance, 78 percent in operations and 58 percent in marketing and sales (Deloitte, 2014). Thus, HR is still playing catch up in the Analytics arena, though the scope is huge.
Many have talked about the “Power of Data”. Usually, decisions are made on perceptions. Data gives the objective and fair view enabling us to make precise decisions uncoloured by personal or professional biases. IBM believes that precision is better than guesswork. HR analytics helps in prioritising strategic decisions. They have in fact implemented many solutions in their HR domain to harness the power of data. They also use expense analytics to understand where the most expenses are being made in HR and how to make maximum utilization of these.
Currently, if we look at the statistics, 39% of the companies worldwide have data to understand the strengths and weaknesses of the employees which can be used for customising their development programmes, 38% use quantitative metrics for benchmarking but only 42% know how to extract meaningful insights from the data available to them.
In 3-5 years, 50-60% workforce in top companies would be temporary. Talent management would be one of the major challenges for the organizations. This includes the whole value chain from recruiting the right talent to nurturing and retaining it. Analytics allows organizations to maximize the investments they make in human capital.
But exactly what is HR-Analytics? As per a senior talent acquisition professional, it is just not about just numbers, but also logic and reasoning. Analytics uses Analysis and builds on it to understand the ‘why’ behind the numbers. The data is plentiful, but the process of using the results for meaningful interpretation that leads to action is what makes analytics powerful. The connecting the dots between seemingly uncorrelated data can identify useful patterns which help in making better decisions. As said by a senior HR professional, an assumptive point of view is a dangerous luxury when not backed by data and review.
Studies over the past decade have shown that a judicious use of Analytics in Human resources can help predict up to 80% the employee turnover, can help in making better recruitment decisions by predicting the probability of the potential candidate to remain with the organization for longer than a year. Most of the companies employing analytics in HR primarily use it for recruitment, compensation and Human resource planning.
Organizations like Shell have made it a mandate to digitalise all their HR practices and use analytics to drive the power of one, i.e. collaboration. They use it to better engage employees in teamwork and measure their performance on not just how the employee is performing, but also how much it has helped others perform better. It has improved their retention statistics drastically. IBM uses analytics to drive their change adoption process.
Starting the workforce analytics is a journey, not a destination. It requires setting proper direction. But once the course is set, the journey can be smooth indeed!