The Power of HR Analytics

HR Analytics
Prof. VijayLakshmi Singh
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PeopleProcesses
Future / Strategic Focus
Day to Day Operational Focus
Strategic Partner
• Strategic HR Planning
• HR as Business Partner
• Culture and Image
Change Agent
• Staffing
• Organizational design
• Survey action planning
• Performance measurement
• Training and development
Employee Relations
Expert
• Employee relations
• Labor relations
• Safety & workers’ compensation
• Diversity and EEO
Administrative
Expert
• Compensation
• Benefits
• HR information systems
• Compliance

Add Value
&
Maximize
Upside
Limit
Liability
&
Protect
Downside
Impact/ContributiontotheBusiness
Strategic
HR Planning
Organizational
Design
HR as
Business
Partner
Compensation
Benefits
Safety &
Workers’
Compensation
Compliance
Labor/Union
Relations
Staffing
Training &
Development
Culture
& Image
EEO/AA
Employee
Relations Performance
Management
Survey Action
Planning
HR Information
Systems (HRIS)
A Century of Evolution in the Function
Labor Employee Personnel Human Organizational
Relations Relations Resources Effectiveness
HR Continues to Evolve
& the model defines our aspirations
continue
to grow
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HR Metrics
WHAT ARE METRICS?
Metrics are measurable factors that can be used to demonstrate
the contributions of HR strategies to an organization.
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Headcoun
t
Time to
fill
Cost
per hire
Turnov
er rate
Absenc
e rate
Health
cost per
employe
eRevenu
e per
FTE
The items that can be measures within an organization seemingly are limitless.
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Measure or…Consider
This!
• To admit to clients and senior
managers that the impact of
human resources cannot be
measured is to admit
1. that HR programs do not add
value
2. or that the HR department should
not be held accountable for its
impact--positive or negative--on
the organization's bottom line.
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Why is this a #HR HOT
TOPIC?
• Implementation of integrated HRIS has increased the capacity accessing and
examining data
• Real time analysis & distribution of information - Growing interest in evidence
based mgmt.
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Why Should You Invest in HR
Metrics
• Benefits seen regardless of company size
• Not a guarantee return on investment.
o Must determine what data is appropriate to collect.
o Learn how to use this information to increase
managerial decision-making efficiency.
• Remember the Hawthorne Theory?
• The Hawthorne effect (also referred to as the observer effect)
refers to a phenomenon whereby workers improve or modify an
aspect of their behavior in response to the fact of change in their
environment, rather than in response to the nature of the change
itself.
• The "Hawthorne effect" study suggested that the novelty of
having research conducted and the increased attention from
such could lead to temporary increases in productivity.
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So..What are HR Metrics?
• Way to quantify the cost and the impact of employee
programs
o Can quantify the cost of HR processes and
measure the success of HR initiatives.
o Measures time of the money spent
o Allows you to track yearly trends
EXAMPLE: Cost Per Hire
(CPH) = the sum of external costs (recruiting) and internal costs
(training new employees) divided by the total number of starts
in a time period.
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Getting the Data
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Primary and Secondary Research
Primary
(data gathered firsthand)
Secondary
(data gathered by others)
• Experiments
• Pilot projects
• Surveys/questionnaires
• Interviews
• Focus groups
• Direct observation
• Testing
• Historical data
• Benchmarking and
best-practices reports
• Purchased data
• Professional
publications
• Secondhand reports
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Quantitative v. Qualitative Research
Quantitative Qualitative
• Collects attitudes, opinions,
and feelings.
• Uses: Identify strengths and
weaknesses, generate ideas,
determine preferences.
• Examples: Focus groups, in-
depth interviews,
questionnaires.
• Collects and analyzes
numerical data in a descriptive
or inferential manner.
• Uses: Describe groups,
compare results, identify
trends or commonalities.
• Examples: Charts and graphs,
statistical measures,
regression analysis.
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Qualitative Analysis: Interviews
Benefits
• Yield insightful information.
• Provide opinions and reactions to
events.
• Allow for personal connection to
interviewee.
• Are flexible.
Cautions
• Interviewer’s nonverbal actions can influence
responses.
• Interviewers should be careful not to ask leading
questions.
• Interviewees may answer with what they think is
“right.”
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Qualitative Analysis:
Surveys and Questionnaires
Benefits
• Ensure interviewee anonymity.
• Are efficient; can gather data
from many respondents.
• Standardize data collection.
Cautions
• Less flexible than interviews.
• Can produce low response rate, which
yields little data and impairs analysis.
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Reliability
• Ability of an instrument to
measure consistently.
• Parallel form method
compares results of
similar tests administered
to same group at two
times.
• Here Test A shows less
variability and is therefore
considered more reliable.
Candid
ate
Test A Test B
First
test
Rete
st
First
test
Retes
t
1 90 92 87 95
2 89 90 79 86
3 92 94 81 93
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Validity
• Ability of an instrument to measure what it is
intended to measure.
• Answers the questions:
o What does the instrument measure?
o How well does the instrument measure it?
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A reliable instrument
is not always valid. A valid instrument
is always reliable.
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Choosing Proper Metrics
to Measure
Must have the 3 A’s.
*Metrics should include a people component and directly
influence the business.
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Accessible
Auditable
Actionable
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MetricsTool Examples
Surveys Smile Sheets, 30 Day Behavior
Change, Annual Corporate
Employee Satisfaction Survey
Comparison
s
•Performance
Mgmt System
•Competency/Be
havior Change
• Performance of
Direct Reports
•Promotion Rates
• 360
Assessments
•LDP vs.
Everyone else
Mentoring
Relationshi
p
Mentoring Surveys +
involvement across the business
View from Mentee / Mentor
Business
Metrics
• Individual and Group
contribution to Business Goals
• Business Case Results
• Performance and Annual Reviews
• Delivery on Change Management
• Increase Coaching and Business
Contribution
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Connect HR Metrics to
Business Metrics
HR metrics should always be connected to strategic
objectives!
oStart with understanding the
organizational strategy
oCreate a strategy map
oReady to create HR metrics
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Know Where Your Org Is
HR Focus:
Staffing Staffing and
training
Compensation, HR planning,
training
Change management,
outplacement, cross-
training
Introduction Growth Maturity Decline
Challenge:
Leadership
Challenge:
Delegation
Challenge:
Bureaucracy
Challenge:
Change resistance
Need:
Creativity
Need:
Clear direction
Need:
Formal systems Need:
• Streamlined
decision making
• Flexibility
• Small-company thinking
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Building the Metrics Model
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Balanced Scorecard
1. Aligns business
function measures
with organizational
strategies.
2. Measures the
effectiveness of a
department or the
entire company.
3. Considers
perspective of all
stakeholders.
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Finance Customers
Learning and
growth
Internal
business
processes
Mission
Vision
Values
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Effectiveness
Efficiency
Impact
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Efficiency
• What range of
resources (financial and
non-financial) should be
considered?
• What is the appropriate
level of investments?
• How should investable
resources be allocated
to maximize results?
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Effectiveness
Efficiency
Impact
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Effectiveness
• What unique combination
of policies and practices
would best build the
necessary human capital?
• What factors link policies
and practices to human
capital enhancement?
• What attributes distinguish
effective from ineffective
policies and practices?
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Effectiveness
Efficiency
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Impact
• What is the link between
sustainable strategic
success and human
resource management?
• Which talent pools are
most critical for
competitive advantage?
• How could improving
human capital increase
value?
Impact
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Efficiency
• Time to Hire
• Cost per Hire
• Headcount Ratio
Effectiveness
• Customer Survey
• “At the Table”
• Practice/Process
Impact
Efficiency
• Direct Labor Costs
• Indirect Labor Costs
• Positions Unfilled
Effectiveness
• Employee Satisfaction
• Leadership Capability
• Talent Retention
• % Black Belt Leaders
• Employer Brand
Efficiency
• Cost per Unit
• Shrinkage
• Defects/Scrap
Effectiveness
• Customer Satisfaction
• Revenue Growth
• Market Share
OrganizationHR People
Metrics Model
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Accountability & Measurement
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• Turnover
• Headcount
• Employment costs per
student
grant
revenue
• Employment costs
relative to budget
• Workforce health and
wellness
• Workforce competency as
per performance
management process
• Workforce total rewards
position to market
• Etc.
HR Strategy Metrics
Metrics tied to the
workforce’s efficiency and
ability to meet university’s
strategic objective(s)
HR Program Metrics
Metrics tied to effectiveness of HR
Programs
• Performance review
completion rates
• Comp actions taken (in and out
of guideline
• Open jobs to position
management plan
• Target jobs to market
• High value employee tracking
• ER complaints
• Benefit participation
• Health/Wellness participation
• Etc.
HR Operating Metrics
Metrics tied to the efficiency of the HR
Operating Model
• Service Center questions
answered
• Internal SLAs met
• Vendor SLAs met
• HR operating costs
• Time to fill
• Costs/hire
• Staffing efficiency
• Etc
Not only should metrics be developed to measure
performance/engagement, but also to hold distributed
personnel accountable.

Common Activities Used in HR Metrics
and Analytics
– Reporting
– Dashboards
– Benchmarking
– Data Mining
– Predictive Analyses
– Operational
Experiments
– Workforce
Modeling
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Scope of HR Measurement
Approaches
Ad hoc HR
Measures
Benchmarks
Data Systems
and Portals
Scorecards
and
Drill Downs
Strategic Impact
Organizational Effectiveness
Validity and Rigor
Causation
Leading Indicators
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What is Analytics?
• Statistics: Incorrect
• Dismantling or separating information:
Correct
• Taking something apart to understand it
better: Correct.
o Statistics can be used to help answer these
questions.
o Why? Overcome reliance on past data, obsolete
experience and replace it with insights regarding
the future.
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Analytic Value Chain
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Moving from Metrics to Analytics
UNDERSTANDING THE DIFFERENCE
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Many HR organizations track metrics but fail to provide analytics.
The disconnect between metrics and analytics has resulted in organizations not using data
to their advantage.
Metrics
Analytics
Metrics
Data that reflect some
descriptive detail about given
processes or outcomes
Reporting
Metrics provide information
Analytics
Strategies for combining data
elements into metrics and for
examining relationships or
changes in metrics
Reporting
Analytics informs decisions
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UNDERSTANDING THE DIFFERENCE
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The era of big data has enabled organizations to store, access, and
analyze more data than ever before, thereby complicating
organizational decision making.
Due to the lack of understanding for
how to effectively use data, the belief
has developed that gathering more
data will address business challenges.
Quotes from Executives*
 “We track metrics such as
employee engagement, but we
don’t really know what to do
with them.
 “We collect data on everything,
and spend more time analyzing
them than doing anything
about them.”
 “Employee data can be related
to business outcomes?”
The rate at
which the
volume of
data will
continue to
grow per
year
60% The
proportion
of business
professional
s who rate
HR staff as
competent
to analyze
data
27%
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Making Big Data Small,
Manageable, & Actionable
• Focus on a small number of specific HR measures
that are clearly linked to business strategy.
o Don’t attempt to track all HR benchmark
measures listed as “best practices”.
o Identify the goal of collecting data.
o Determine who will collect the data and how
often.
o Locate relevant and trusted sources of data.
o Make basic calculations.
o Compare results to external and internal
benchmarks.
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What big data is and what it
isn’t
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Analytics
• Five ways to measure anything in business
o 1. Cost
o 2. Time
o 3. Quantity
o 4. Quality
o 5. Human Reaction
• Five Steps of Analytics
o 1. Recording our work (i.e., hiring, paying, training, supporting, and retaining)
o 2. Relative to our organization’s goals (i.e., quality, innovation, productivity, service
[QIPS])
o 3. Comparing our results to others (i.e., benchmarking)
o 4. Understanding past behavior and outcomes (i.e., descriptive analytics)
o 5. Predicting future likelihoods (i.e., prescriptive analytics)
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Adopt a strategy aimed at gathering specific data needed to address
specific business objectives.
StepOne
Collect
the ‘right’
data
StepTwo
Transform
data into
usable
informati
on
StepThree
Develop
action-
oriented
reports
THREE STEP SOLUTION
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CHALLENGES AND SOLUTIONS
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Three Challenges to Improving HR’s Role in Linking Metrics to Analytics
 “Criticality” – only 17% of business leaders agree that HR focuses on the right
questions
 “Capability” – 80% of HR leaders agree that HR lacks the capability to improve HR
analytics
 “Credibility” – only 18% of business leaders agree that HR can be trusted when it
comes to human capital analytics
Solutions
 Work with stakeholders to identify key HR priorities
 What types of data do they need to make informed business decisions?
 Consider developing a “workforce analytics” team within HR
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Key Tool: Metrics/Analytics
SHRM Workforce Analytics Model
1) Assess and Plan
2) Link and Align
3) Identify and Build
4) Implement and Execute
Metrics gather information in reports – often
from an accounting perspective.
Analytics use that information to ask
relevant questions and feed strategic
decisions.
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1) Assess and Plan
In the initial phase, HR must acquire
knowledge of the organizational strategy,
goals, and plans
Then, HR should identify a metrics team,
similar to a steering committee, of 3 or more
individuals
To build credibility, individuals from different
departments should be on the metrics team
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2) Link and Align
Begin by answering the question, “What
impact does the business strategy have on
the workforce?”
When this question is answered, identify
workforce drivers that support the business
strategy
Example: The business strategy of a retail
store is to open 20 stores in a year. The
potential drivers include the need to hire
additional staff, provide training for store
managers, and develop onboarding
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3) Identify and Build
Next, determine which metrics and analytics
support the workforce drivers for each HR
function
Previous example: Analytics to support hiring
additional retail staff would include the time
required to fill positions, the number of
recruiters required, and the recruiting
investment needed
All of these metrics support the organizational
business strategy
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4) Implement and Execute
In this phase, HR needs to specify how
often the analytics will be delivered and to
whom
HR practitioners should use a feedback
loop to receive comments from internal
constituents to improve the quality of data
that is being distributed
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Where Companies Can
Start
• Build the right team and show the return on investment
• Start with the tools you have
• Partner with IT
• Use analytics on the HR organization to show analytics potential
• Focus on immediate business needs
• Leverage embedded analytics by upgrading technology platforms
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Promote, communicate and share metrics widely
• Be sure to promote metrics that demonstrate a
positive impact of people on the bottom line
• Should be presented in the proper context to
show the strategic impact of what is being
measured.
• Promotion Rate = Promotions / Headcount.
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Metric “Don’ts”
• Always be willing to learn!
• Bigger is not better
• Don’t neglect the organizational strategy –THIS
IS THE MOST COMMON MISTAKE
o The organizational strategy is key to determining what
measure matters most.
o Essential in determining which people metrics will
measure human capital impact.
• Remember to include information that interests
top executives and not just HR
• Not every HR function that can be measured
should be.
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THANK YOU!
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The Power of HR Analytics

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