Lecture 1: Introduction to HR Analytics
What is HR Analytics?
• One possible definition (Edwards & Edwards, 2019, p. 3): The systematic
application of predictive modeling using inferential statistics to existing HR
people-related data in order to inform judgments about possible causal factors
driving key HR-related performance indicators.
• The results of this modelling can be used (where appropriate) to make tangible
predictions about particular results or people outcomes
• “Analytics present a tremendous opportunity to help organizations understand
what they do not yet know… By identifying trends and patterns, HR professionals
and management teams can make better strategies decisions about the work
force challenges that they may soon face.” Huselid, 2014
• “HR will not be replaced by data analytics, but HR who do not use data analytics
will be replace by those who do.” Charlotte Allen, AstraZeneca
From reporting to analytics
Reporting is about highlighting the current workforce composition and past trends of
key HR metrics, through dashboard that may include KPIs for important workforce data.
Analytics aim to examine the root cause of a workforce issue, and provide knowledge to
mitigate and possible associated risks
Some of the problems of today’s HR “analytics”:
• Teams spend considerable amount of time and e ort producing descriptive
reports
• Such reports only show a “snapshot” of what is happening
• Tell us a little about why things are happening (e.g., we have a high turnover, but
why is that?)
• After the descriptive reports are written there is a lot of unused data
• Usually such reports fail to test or check if data is robust or valid (e.g., how
should we measure human capital?)
• Such reports lack any “predictive” paradigm
Measuring the return on people – it is about intangible value
• The 80/20 switch (tangibles/intangibles)
• Intangibles: human value (capital), organizational culture, wellbeing…
• How to measure it?
• Lacks credibility across the business, as organizations capture the value in terms
of costs.
1
,HR Analytics and predictive modeling
• Today HR somehow fails to “predict” various important things.
• So what can we actually understand with the predictive modeling that HR
analytics is supposed to deliver?
• We can understand predictive HR analytics in three ways:
1. Prediction is usually related to identifying “predictors” or potential “causal”
factors. WHY?
- Think about employee performance, how can we predict it?
2. Change the predictor. What will happen to the outcome?
3. Predict how employees may behave in the future (e.g., think about trends and
patterns).
HR Analytics – benefits
• With the right HR analytics we are able to:
o Determine the impact of people on the business
o Demonstrate that HR practices produce value for money in terms, for
example, of return on investment
o Provide guidance on future HR and business strategies
• Overall: Provide diagnostic and predictive data that will inform strategies and
practices designed to improve the e ectiveness of people management in the
organization
• Evidence: Organizations that have adapted advance people analytics capabilities
experience on average 25% increase in productivity, huge rise in recruitment
e icacy and reduction in attrition rates.
HR Analytics – challenges
• The other side of the story:
o Measures should be in line with needs from the HR perspective.
o HR professionals have paid too little attention to analytics for a long time
and it was no priority in HR departments.
o General management has not asked for this type of information in the
past.
2
, o Abundance of HR indicators.
o Information overload: general management needs specific, concise and
just-in-time info.
o Measurement often focuses on expenditures not on returns (no
e ectiveness).
o Time lag between action and result.
o The influence of HRM function on outcomes is often limited.
o No people analytics strategy at all!
The evolution of HR function
Khan & Millner (2019): shift of HR into a people function
o HR function split into two parts:
HR function (everyday supporting role)
Strategic HR function (people insights can improve organizational
performance)
Changing the function: has this not already happened?
• Proactive and responsive.
• Measuring value > become more financially-orientated and accountable.
• Adding value (ROI).
• E ective people practices.
• Being strategic.
• Leadership focus > line managers role!
• HR capability > in business, finance, technology, being a relationship manager is
not enough
3
, Strategic HR function
• Strategic HR function = people function
• Why call it people function?
o Talents
o Human capital > negative connotation
o HR and workforce > looking-in agenda, no cross functions
o People the new frontier > inside but also outside organization (customers)
o Is HR fit for the purpose > lack of knowledge?
o Emergence of a new leader (Chief People O icer) > being a business
partner, introduce people to analytics, workforce capability and future
jobs
Golden triangle CEO <> CPO <> CFO
What is the role of the strategic part of HR?
• Measurement, reporting and analyzing of the intangible value of business.
• Develop of a people / workforce strategy, in some cases termed Strategic
workforce planning.
• Alignment of the workforce strategy to business strategy, underpinned by a data
driven people-centric culture, all of which will drive employee experience that
retains talented employees in the organization
Selling the people function to top management
• How to increase the role of HR in the organizations?
• Credibly talk about and influence others about people issues with commercial
and business mindset, not just a people perspective;
• See issues from a wider business perspective;
• Work collaboratively and e ectively with di erent teams and work groups to
make change happen (avoid silo mentality!);
• Bring a focused business insights to people-based issues;
• Deliver what promised and on time;
• Be proactive
The people function as a profit center
4
What is HR Analytics?
• One possible definition (Edwards & Edwards, 2019, p. 3): The systematic
application of predictive modeling using inferential statistics to existing HR
people-related data in order to inform judgments about possible causal factors
driving key HR-related performance indicators.
• The results of this modelling can be used (where appropriate) to make tangible
predictions about particular results or people outcomes
• “Analytics present a tremendous opportunity to help organizations understand
what they do not yet know… By identifying trends and patterns, HR professionals
and management teams can make better strategies decisions about the work
force challenges that they may soon face.” Huselid, 2014
• “HR will not be replaced by data analytics, but HR who do not use data analytics
will be replace by those who do.” Charlotte Allen, AstraZeneca
From reporting to analytics
Reporting is about highlighting the current workforce composition and past trends of
key HR metrics, through dashboard that may include KPIs for important workforce data.
Analytics aim to examine the root cause of a workforce issue, and provide knowledge to
mitigate and possible associated risks
Some of the problems of today’s HR “analytics”:
• Teams spend considerable amount of time and e ort producing descriptive
reports
• Such reports only show a “snapshot” of what is happening
• Tell us a little about why things are happening (e.g., we have a high turnover, but
why is that?)
• After the descriptive reports are written there is a lot of unused data
• Usually such reports fail to test or check if data is robust or valid (e.g., how
should we measure human capital?)
• Such reports lack any “predictive” paradigm
Measuring the return on people – it is about intangible value
• The 80/20 switch (tangibles/intangibles)
• Intangibles: human value (capital), organizational culture, wellbeing…
• How to measure it?
• Lacks credibility across the business, as organizations capture the value in terms
of costs.
1
,HR Analytics and predictive modeling
• Today HR somehow fails to “predict” various important things.
• So what can we actually understand with the predictive modeling that HR
analytics is supposed to deliver?
• We can understand predictive HR analytics in three ways:
1. Prediction is usually related to identifying “predictors” or potential “causal”
factors. WHY?
- Think about employee performance, how can we predict it?
2. Change the predictor. What will happen to the outcome?
3. Predict how employees may behave in the future (e.g., think about trends and
patterns).
HR Analytics – benefits
• With the right HR analytics we are able to:
o Determine the impact of people on the business
o Demonstrate that HR practices produce value for money in terms, for
example, of return on investment
o Provide guidance on future HR and business strategies
• Overall: Provide diagnostic and predictive data that will inform strategies and
practices designed to improve the e ectiveness of people management in the
organization
• Evidence: Organizations that have adapted advance people analytics capabilities
experience on average 25% increase in productivity, huge rise in recruitment
e icacy and reduction in attrition rates.
HR Analytics – challenges
• The other side of the story:
o Measures should be in line with needs from the HR perspective.
o HR professionals have paid too little attention to analytics for a long time
and it was no priority in HR departments.
o General management has not asked for this type of information in the
past.
2
, o Abundance of HR indicators.
o Information overload: general management needs specific, concise and
just-in-time info.
o Measurement often focuses on expenditures not on returns (no
e ectiveness).
o Time lag between action and result.
o The influence of HRM function on outcomes is often limited.
o No people analytics strategy at all!
The evolution of HR function
Khan & Millner (2019): shift of HR into a people function
o HR function split into two parts:
HR function (everyday supporting role)
Strategic HR function (people insights can improve organizational
performance)
Changing the function: has this not already happened?
• Proactive and responsive.
• Measuring value > become more financially-orientated and accountable.
• Adding value (ROI).
• E ective people practices.
• Being strategic.
• Leadership focus > line managers role!
• HR capability > in business, finance, technology, being a relationship manager is
not enough
3
, Strategic HR function
• Strategic HR function = people function
• Why call it people function?
o Talents
o Human capital > negative connotation
o HR and workforce > looking-in agenda, no cross functions
o People the new frontier > inside but also outside organization (customers)
o Is HR fit for the purpose > lack of knowledge?
o Emergence of a new leader (Chief People O icer) > being a business
partner, introduce people to analytics, workforce capability and future
jobs
Golden triangle CEO <> CPO <> CFO
What is the role of the strategic part of HR?
• Measurement, reporting and analyzing of the intangible value of business.
• Develop of a people / workforce strategy, in some cases termed Strategic
workforce planning.
• Alignment of the workforce strategy to business strategy, underpinned by a data
driven people-centric culture, all of which will drive employee experience that
retains talented employees in the organization
Selling the people function to top management
• How to increase the role of HR in the organizations?
• Credibly talk about and influence others about people issues with commercial
and business mindset, not just a people perspective;
• See issues from a wider business perspective;
• Work collaboratively and e ectively with di erent teams and work groups to
make change happen (avoid silo mentality!);
• Bring a focused business insights to people-based issues;
• Deliver what promised and on time;
• Be proactive
The people function as a profit center
4
