A Quick Overview of HR

Analytics: Why, What, How, and

When?
Wednesday, March 04, 2015 - by Laurie Bassi,
Dan McMurrer
Toolbar
Send to Kindle
0 Comments
Non-members see this Full Content Podcasts have a different
rendering

HR analytics is a hot topic these days. With new conferences, books,

and software emerging at a dizzying pace, its easy to lose sight of
whats really important in this realmthe reasons why analytics has
become so important in HR. In a nutshell, the increased attention on
analytics is the result of both necessity and opportunity.
Necessity arises from the growing centrality of human capital
management as an essential organizational core competence.
Whereas 35 years ago intangible assets accounted for only 9
percent of value creation, today intangibles account for 65
percent of value. Those intangibles? Theyre created by people.

Opportunity arises from the growing availability of readily

accessible data on virtually every aspect of the management and
development of people. This is data that, with some analytic
ingenuity and the assistance of increasingly powerful and
accessible software applications, can be transformed into
valuable, actionable insights and intelligence.
What Is HR Analytics?
HR analytics is the application of a methodology and integrated
process for improving the quality of people-related decisions in order
to improve individual and organizational performance. Although HR
analytics relies on statistical tools and analysis, its most successful
form involves much more than that. At a minimum, analytics require
high-quality data, well-chosen targets, talented analysts, leadership,
as well as broad-based agreement that analytics is a legitimate and
helpful way to improve performance.
HR analytics involves both descriptive components, such as
headcount, time to hire, workforce demographics, and turnover. It also
includes predictive componentsseeking to pinpoint those levers that
could be pulled to drive better business outcomes. Descriptive HR
data is typically put into context by using external benchmarking data.
Predictive HR analytics, on the other hand, identifies the unique
aspects of an organizations work, learning and leadership
environments that drive business outcomes. This creates insights that
cannot be obtained through traditional benchmarking.
The How To of HR Analytics
The statistical techniques deployed in HR analytics run the gamut
from the very simple (calculating the average value of a variable) to
the complex (multivariate regressions, factor analysis, simultaneous
equations, and neural networks). In truth, though, we have found that
the importance of the problem being analyzed is often inversely
related to the sophistication of the statistics available. The reality is
that the most advanced statistical methods need plenty of comparable
units for analysis. As a result, theyre much less likely to work on big
questions, such as How do we become more innovative?
Often answering the biggest questions may depend on more basic
statistical techniques. So dont shy away from comparison of means or
correlations just because other methods seem to look more
impressive.
Advertisement
When to Use HR Analytics
HR analytics is the go-to approach whenever leaders need accurate
statistics or fact-based predictions in order to make better business
decisions. In other words, theres a role for HR analytics in every
aspect of the HR function, including recruiting, onboarding, training,
development, succession planning, retention, engagement,
compensation, and benefits.
In a growing number of organizations, this analytic approach is
beginning to permeate every aspect of the HR function. To get your
juices flowing on this, take a look at 100 Questions You Can Answer
With HR Analytics.
Although many are tempted to use HR analytics to prove the value of
HR, our advice is not to go down this path since it immediately calls
into question the credibility of any findings or recommendations that
emerge. In short, if executives believe the HR function is embarking
on an analytics project to justify itself or its programs, any results will
be viewed with suspicioneven if the analysis is done well.
Jobs You May be Interested In
Director HR-Organizational and Talent Development
Port of Seattle (Seattle, WA)
Employee Services Manager
Navy Federal Credit Union (Winchester, VA)
Manager Technology Ed. and Training Specialist
The Maryland Judiciary (Annapolis, MD)
More Jobs
Of course, in the end, a well-designed and well-executed HR analytics
project can still underscore the value of HR. By establishing systems
and methodologies for understanding and linking measures on the
people side of the business to key performance indicators, the
potential for identifying how HR policies, procedures, systems, and
interventions drive organizational performance is greatly enhanced.
But at the same time, this process may reveal deficiencies in an
organizations current HR strategies and programs.
Bottom line: Pursuing HR analytics takes some courage. It brings a
new accountability to HR, which many leading-edge HR practitioners
welcome. Its a central part of earning HRs long-sought seat at the
table.