HR Analytics

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 Metric
to 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
probably occur in the future
future
HR’s
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
10 Analytics?
“What gets “The business
measured, gets demands on HR are
managed; increasingly
What gets going
gets executed”
managed, Measure & Return on to be on
- Peter Drucker analysis
Manage Investment just because
people
are so
expensive“
“ To clearly - David Foster
“Global organizations
demonstrate the
Linkage of with workforce
interaction of analytics and
business objectives Business
Performance workforce planning
and workforce Objectives outperform all other
strategies to and People organizations by 30%
determine a full Improvement
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
Retention
effectivenes
s

HR
Matrice Performance
s & Career
Workforce
Management

Comp &
Trainin
Benefit
s g
 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
14 analytics 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
• Tool: SAS/REPORT
analysis
• Techniques: frequencies , means, percentages etc.

• Derivation of some HR operational metrics which will help us

Level-2 in 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,
Level-3 compensation 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 ANALYT

Drawing
Analysis & Monitoring Conclusions or
Past Data Inferences
REPORT

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

MG
analysis and

R
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
contextual HR
data to
better
perform
HRB
P

€$¥
HR Business Partner
Consult with Business Units based Finance; Controlling; Budgeting
on workforce intelligence and HR HR HR Give input regarding financial
drives action plans as final figures and receives insights for
deliverable from the process HR Administration; HR Functions
midterm financial planning
Recruiting, Staffing, Talent Management
regarding the workforce
and other HR functions support
fulfillment of workforce action plans
 Real world case studies
22
Starbucks, Limited Brands, and Best Buy—can 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 store’s annual operating
income.

Many companies favor job candidates with stellar academic records from prestigious
schools—but 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!