HR Analytics

Shubham Singhal
80303120053
PGDM
NMIMS, Hyderabad
2 Primer

The core of HR Analytics is the "metric

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 Primer Contd.

Checklist, Dashboard, HRIS

- All of these are tools to collate and display information

Hypothesis: u0 & u1

Variables: Dependent and Independent

Statistical Models

- E.g. Regression, ANOVA

4 HR Analytics

Analytics is not so much about numbers, as it is to do with logic and reasoning

Analytics is different from Analysis, which is the equivalent of number crunching.
Analytics uses analysis but then builds on it to understand the 'why' behind the
figures and/or to predict decisions. Analytics is the methodology of logical
analysis
Analytics requires the use of carefully constructed metrics
HR Analytics is data based; it uses past data to predict the future
It is not about the quantity of data churned; it is about the logic used to link
metrics to results
5 Core concepts and terminologies

Analytics
= Business
Intelligence

Decision
6 Core concepts and terminologies
Business intelligence (BI) is a set of theories,
methodologies, processes, architectures, and
technologies that transform raw data into meaningful
and useful information for business purposes.

Business analytics (BA) refers to the skills,

technologies, applications and practices for continuous
iterative exploration and investigation of past business
performance to gain insight and drive business
planning.
7
Past to future

Tera bytes of data of

Analytics is shifting
information being generated
emphasis from trend
every single day which is
analysis based purely on
being used to answer, fairly
internal data to presenting
accurately, what will
scenarios of the future
probably occur in the future
HRs Evolution
9 Background
Need of HR analytics & reporting
Many organizations have high quality HR data (residing with a multitude of systems, such as the HRMS,
performance management, learning, compensation, survey, etc.) but still struggle to use it effectively to
predict workforce trends, minimize risks and maximize returns.

The costs of attrition, poor hiring, sub-optimal compensation, keeping below par employees, bad training
& learning strategies are just too high

Data-driven insights to make decisions are always better than judgmental (subjective) HR practices in
terms of
how to recruit
whom to hire
how to onboard and train employees
how they keep employees informed and engaged through their tenure with the organization
Hence regular tracking and prediction of crucial HR metrics is indispensable
 Why HR Analytics?
10
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
11 Objectives

Predict attrition especially amongst high performers.

Forecast the right fitment for aspiring employee
Predict how compensation values will pan out.
Establish linkages between Employee engagement score and C-Sat
scores(Work in progress)
 What should/could be measured?
12

Recruitment

Organization
effectiveness Retention

HR
Matrices
Performance &
Workforce Career
Management

Comp &
Training
Benefits
 Critical areas for HR Predictive analytics
13
1. 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.

2. Targeted retention. Find out high risk of churn in the future and focus retention
activities on critical few people

3. Risk Management. Profiling of candidates with higher risk of leaving prematurely

or those performing below standard.

4. 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
 Trendwise Analytics HR analytics
14 capabilities
Three levels of HR analytics and 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 of some HR operational metrics which will help us in

Level-2 tracking the efficiency of HR functions
Operational Tool: SAS
metrics Techniques: means, variance, control limits, ratios,
percentages etc.

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, Excel
Techniques: Regression analysis, Time series analysis, cluster
analysis etc.
 Stages of Analytics
15

Predictive Analytics
What can happen?

Analysis & Monitoring

Why did it happen? What is
happening now?

Reporting
What happened?

Complexity
 Types of Analytical Models
16
PREDICTS
PREDICTIVE ANALYTICS
PREDICTS

Current
Future
Data
Predictive Analytics
PREDICTS

INFERENTIAL ANALYTICS

Drawing
Analysis & Monitoring Conclusions or
Past Data Inferences
REPORT

DESCRIPTIVE ANALYTICS

Representation of
Reporting Data and
Summarizing
17 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 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.
18 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
19 Tools & Software Used
Typical tools / software:

Microsoft Excel (max used)

BI reporting tools

ERP reporting tools, dashboards

Statistical software like SAS, SPSS etc.

20 Social media impact

Day to
Predictive day
ANALYTIC existence
is is now
Predicting
touching being
the future
every exploited
sounds
human on by social
mystical
Earth who media
accesses and then
internet the
analytics
 HCM Analytics consumers by role
Stakeholders across the organization
HR Analyst
Needs ad-hoc
capabilities to do
sophisticated

MGR
analysis and
Executives; Corporate Strategy planning Middle Managers; Line Managers
Craft and guide long term Execute on strategic plans and
workforce plan based manage organizational performance
on given information Employee to assure strategic objectives are
Needs reached timely and efficiently
x
contextual HR
data to better
perform
HRBP

HR Business Partner
Consult with Business Units based
on workforce intelligence and
drives action plans as final
deliverable from the process
HR HR HR
HR Administration; HR Functions
Recruiting, Staffing, Talent Management
and other HR functions support
fulfillment of workforce action plans
$
Finance; Controlling; Budgeting
Give input regarding financial
figures and receives insights for
midterm financial planning
regarding the workforce
 Real world case studies
22
Starbucks, Limited Brands, and Best Buycan 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
23
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.
Thanks!