How is HR analytics changing people management?

It is developing an engaged, agile and flexible workforce by making use of data to obtain valuable insights on the employees.

In today’s VUCA (volatility, uncertainty, complexity, and ambiguity) landscape, small and big companies are continually facing uncertainty and volatility in their operations. The working environment is increasingly becoming very complex and ambiguous. This has put human resources into a challenging situation in terms of making definitive decisions in the workplace. HR has to look constantly at new tools for making risk-free decisions, and this is where the help of HR analytics comes in.

HR analytics is the use of statistical methods like factor analysis, correlation and regression and making use of different sources and variables to arrive at meaningful insights. It helps HR understand the dynamics in the workforce.

One cannot rely on a person’s experience or tacit knowledge to base one’s decisions on, but on real data and numbers to back one’s workplace decisions. This has proved to add value and improve workforce resource utilisation and deployment. HR analytics is not about merely collecting vast amounts of data, but analysing and processing it to provide meaningful insights. These insights are then used to provide the answers sought by the company, to the following questions, among others:

• Will the predictive attrition model help identify who is going to resign in the next, three, six or 12 months? What is the efficiency factor of this predictive model?
• Is the new tax-friendly employee compensation and benefits programme driving higher retention?
• Are the highly engaged employees at the workplace highly productive? Are they spreading positive employer brand in the workplace and social media?
• Will work from home/flexible working hours lead to better engagement, and to what extent?
• Which generation of employees (Gen X, Gen Y, Gen Z , Millennial) is contributing more towards profitability?
• What are the major reasons for attrition? Is the preventive HR intervention effective in controlling attrition?
• Is there any correlation in employees who are leaving within six months of joining?
• Is there any relation between employees who stay within 10 km radius and retention?
• Is the newly designed Employee Fraud Risk Management effective? Is there any correlation between frauds committed by habitual noncompliant employees/ disengaged employees?

Finance function decisions are based on data, such as graphs, charts, etc. However, in HR, it is based mostly on the relationship component and there is always the risk of being judgmental when it’s a person making decisions. Through HR analytics, this risk can be minimised.

HR can study the behavioural competencies of high-potential employees and share the data with the recruiting team to help them identify potential employees. This data can also be used in training. HR often comes up with various mechanisms intended to achieve employee satisfaction, leading to employee engagement. But today, the mechanism depends on what the employees value more and whether it is going to achieve the outcome.

Based on the HR analytics data, human resource policies are customised, for example, the recent decision by the Government of Delhi regarding the odd and even number cars taking turns to run on the roads. This has led some companies to offer Delhi metro cards to employees and encourage them to take local public transport instead of using their cars. Some companies are exploring the option of working from home.

People management is being accomplished with change thanks to evolving HR analytics. It gives a clear view of performances and drives the organisation towards its goals. This has led managers to understand their employees better and contribute towards planning for their training and development. In turn, the employees will be motivated to be more in tune with the culture of the organisation.

People analytics empowers HR with the ability to identify the gaps between employees and training, which is necessary to be bridged. This is especially important with new hires to help them understand expectations and workflow processes quicker. By digging into insights, HR managers can not only identify which hires will be low but also the high performers.

Predictive analytics contributes to analysis of the workforce beyond the mere basis of academics. While recruiting, many companies look for candidates with high academic records. But this is not full proof of a candidate’s ability to perform. Some bugging questions come to mind:

• Why does one programmer perform better than the other?
• Why do some average employees succeed while some perceived as good recruits fail?
• How much time does it take the new employee to be productive?

One way to employ the use of HR analytics is acceptance and deployment of HR management systems and cloud storage availability. These make it possible for organisations or companies to store all their data in a manner that can be integrated with other workplace operations.

Such cloud software today is readily available and affordable. It is time for employers to take advantage of this progress. By deploying HR analytics, companies collect data based on attrition, retention and other HR aspects. These metrics are then used further to look for trends based on ratios and accounts. The data is then vigorously analysed to give Google insight into employee trends. These insights could be effectively used to shape the organization’s policies and decisions. Businesses have noted that the ability to take initiative is a better indicator of actual performance.

Companies are deploying predictive analytics to drive their HR strategies. Employee data from all locations is analysed and processed to develop programmes based on age, demography and tenure. Information from predictive analytics/HR analytics is used to attract, retain and manage the right talent. To change the course of the manner in which they deal with employees, data-based information is used like predictive attrition models and exit analyses. This predictive modelling tactic is more handy than trying to figure out later why an employee left.

The new approach of HR/predictive analytics provides the ability to measure, quantify and qualify employee data. The new method digs into the ‘why’ rather than the ‘what’ to get the better perspective of things.

HR analytics helps to develop a workforce that is engaged, agile and flexible by using data to gain valuable insights on employees. In the diverse Indian context, the need for HR analytics is felt even more because every company has a broad array of people to manage. Proper management of this varied workforce is a prerequisite for greater synergy and productivity within an organisation. Companies must look towards HR analytics as the new tool to power an organisation’s success through smart people management.

(The author is a HR consultant.)