“Data is a precious thing and will last longer than the systems themselves”- Tim Berners Lee
Ever since the emergence of Big Data and data management systems, organisations have been sourcing, managing, analysing and leveraging data to improve marketing, finance, tech-support and production. Surprisingly though, human resource and its related functions, which is supposedly the most vital arm of a business, has been a late entrant into this world of analytics.
Data Analysis and HR
Overwhelming as it may be, data analysis has made things more precise for businesses. Data analysts have proven over time and again that numbers don’t lie and are collectively, an effective tool to design various organisational functions. The question still remains, that how does data analysis fit into the entire HR scenario?
HR Analytics or simply data analysis for Human Resource Management is nothing but application of data mining and business analysis techniques. Such data helps measure recruitment, training, retention, employee performance, engagement and similar HR functions.
Numbers across the borders
In a recent study by Ernst & Young, UK, 81% of respondents agreed that data should be at the heart of all decision-making. That also proves to be correct for the HR department.
In the same study, about 29% of the HR leaders surveyed, felt that data analysis can help in better management, governing company policies and so on.
As Heyns, further states, “Businesses are not yet realising the true potential of big data to measure, create and protect value across diverse operational areas.” One of such operational areas being HR.
It’s all about reading between the lines
In this case, it’s more like reading between the numbers.
As a management consultants of the data driven era, we at Yellow Spark, understand the changing scenarios in human resource management and constantly strive to delve deeper into the finer aspects of this numeric yet humane side of businesses. We discovered that some of the most pertinent questions can be answered by HR analytics. For example:
• Why is the attrition rate of the top talent higher than others?
• Which teams are more productive and why?
• Why are there skill-gaps within the organisation?
• How to assess team productivity?
• Who can be the right person for a specific role?
• How to predict and manage attrition?
• Why is the turnover higher at a certain point than others?
• What drives employee motivation?
• How diverse is the workforce?
• How can you attract employees across demographics (age, gender, location etc.)?
• Is the talent assessment system effective enough?
In short, data enables more efficient and effective assessment of employees, their behavior and performance. Of course, this can be done in the traditional ways, but abstract methods like a manager’s ‘gut-feeling’ or ‘observation’. However, this can be perceived as vague, unreliable, unpredictable or even worse – unfair. Wouldn’t you rather rely on technology that would give you accurate and more specific results? Sometimes more to ratify or create a strong case for that ‘gut-feel’…
Consider this- there is no dearth of data sources today. An organisation can gather employee data from an array of sources like website, open/third-party, mobile app, social media, invoices (against expenses towards employees), HRMS and so on. And the bigger you are as a company, the more widespread your data is. The data available across various sources, locations and data points (as mentioned above), can be leveraged and analysed to streamline processes, design or redesign policies and bring about a structured hierarchy. Just the way a Google Chrome browser displays relevant ads to you based on your browsing history or the way your Instagram post lures you to click on that ‘shop now’ button.
Why HR organisations should consider data analytics as a part of their organisation strategy
Few of the multiple reasons why data analytics can be of great advantage:
Assess employee behavior – It is important to note that HR metrics, are not as same as HR Analytics, since metrics can give you information prima-facie. Whereas, by analyzing as simple as attendance, feedback forms and employee insights, it’s easier to understand why the employees do what they do and take proactive steps to keep the organisation running smoothly.
Evaluate team and individual performance – Internal surveys can help understand the employee performance in a team environment and/or individually and benchmark workers accordingly. It also helps estimate attrition rate, and its reasons, thus giving you a platform to plan new, more effective talent-retention programs.
Hire the right talent – Integrating common HR tests on personal and cognitive ability, can not only help in streamlining the hiring process, but also yield you quality talent with better skill sets.
Assess skills – Every HR manager wants to know what is increasing or decreasing the employee productivity and how. To assess and understand their current skills, scope of developing skills, and what new skills they need to adopt, data can be gathered through evaluation.
Assess employee engagement – Employee motivation is paramount in driving the organisation output. Engagement techniques have grown and evolved manifold over the last decade or so. As much as one-on-one sessions and open forums help you understand prima-facie, what they want, analyzing hard data will tell you what drives them so you can facilitate those driving factors and plan your employee engagement strategy.
The backbone of HR Analytics
Just the way using a smart phone doesn’t make a person smart, the application of technology in HR is far more important than the technology itself. So, before you make the decision to bring in that high-tech HR product, you will need to transition the organization’s HR skill from being transactional to strategic. Let’s look at the very backbone of HR analytics- Datapoints and Analysis.
1. Data points: Data points that an organisation can captured include: employee name, gender, date of birth, family details, interests, qualifications, skills, past employment history, date of joining, salary details, and current career timeline, performance parameters and so on. Sometimes organisations, capture this data but are unable to comprehend how it can be used. Data points must always be captured keeping a certain objective in mind. For example, in order to come up with a strong employee engagement strategy, it is essential to know average age, social circle and average salary.
2. Analysis: The fun part about numbers is that they correlate in some or the other way. In one case, where the CEO was concerned about high attrition, we were able to pull out and group information on exited employees and basis their age, gender, tenure, department, reporting manager and hiring source; we learned that the attrition was highest in case of recruits hired from campus who had completed between 0 to 4 months. The average tenure in the company otherwise was 2 years. Hence it became clear that the issue was in the mismatch between what was communicated on campus vis-à-vis what the actual job role. Which when fixed brought the attrition rate in control. It is important to note that data points must be grouped and analysed in different permutation and combination to provide clarity to support problem solving and decision making.
3. Application: The decision to get into HR analytics to support an organisation strategy does sound like a plan. But let’s understand what it really means? It means that the analysis helps an organisation to start, stop or continue a certain practice or policy or initiative. In short it is essential that the data points and analysis or the numbers translate back into something for employees.
In one such case, during a half yearly review, the report showed a large variation in the performance of employees on a specific KRA which had a direct impact on company’s revenue targets. The analysis revealed that employees lacked the competence to meet that KRA. This emerged as a training need. A timely learning and development initiative helped the organisation take a corrective step and eventually keep all employees on track to meet their KRAs and for the company to meet its targets.
A look at the world’s best
Google Inc. is known to be an “employees” organisation. But what goes behind being one of the leading global organisations, is nothing but data driven decisions. From renaming their HR division to ‘People Operations Team’ and letting go of the traditional hierarchy, every strategy and policy has been put in place with the help of hard data. However, since metrics alone have no value without the humane aspect, Google mixes both qualitative and quantitative data to enable HR managers and leaders to get a deeper understanding the company’s cultural, employee engagement and process dynamics, through initiatives like…
Project Oxygen – a leadership project where their data analysis allowed them to identify the need of a mid-level manager and the qualities such a manger needs to possess.
Project Aristotle – a team building initiative where the performance metrics and perceptions in parallel, measured the effectiveness and productivity, respectively of team members.
To summarize, data driven decisions for human resources are more accurate and can largely affect your organisational outcomes by helping you how, why and when to make or remake your HR policies. However, relying solely on technology driven numbers might not always be effective, since we are in the business because of ‘human resource’ and without the ‘human’ element to it, this aspect of business will cease to exist. Enough care and sensitivity must be given to data privacy. Information must be secured and available only on a need to know basis.
To yield optimal results of data analysis, an organisation needs a team of data experts who can collate, manage and analyse valuable HR data and leverage this for a better future of the evolving workforce. After all, as they say- Data always speaks!
If you would like to develop customised formats to set up your own data mining system, write to us firstname.lastname@example.org
Author Profile: Aparna Joshi Khandwala is a passionate HR professional. She co-founded Yellow Spark to work with like-minded people who believe in the power of leadership, which is the only business differentiator in today’s time.