Business Analytics for HR Professionals


Stemming from a combination of core business and developing technologies, the term “business analytics” refers to precisely what the words suggest in plain English – “analyzing a business”; rather, analyzing the past performance of a business, using the latest technologies and methods. Business analytics, thus, involves an investigative examination why and how the business performance in question was achieved and how it can be developed for future decision-making.

Human resources (HR), on the other hand, are what the common man would refer to as labor. Enveloping the entire workforce, HR focuses on the ‘people’ side of business, keeping track of the existing employees’ information (personal and professional), salary, expenditures, new recruits, retirement data, and much more. In effect, the HR departments probably handle more data than ever, which means that efficient data analysis will most certainly help bring a vital change to the workforce. Experts, however, suggest that lesser than one-fourth of this data is effectively utilized; which brings us back to the original conundrum – the importance of business analytics for HR professionals.

Let’s take a simple example –

Example 1: Every year, numerous candidates are head-hunted by a company, say ABC. At the same time, a considerable number are likely to leave their jobs at ABC for better jobs in other companies, and a few may plan for retirement. If the company’s progress is fairly good, then why do some of the employees consider leaving the company at all? Setting aside the possibility of a few employees wanting to carve out a niche some other place, or a few of them wanting study further, HR statistics still fail to explain why potential candidates would leave a firm that promises growth.

The possible reason for this could be lack of data analysis by HR professionals.

Business analytics (BA), at its very base, works around:

  • Fact-based data
  • Statistics
  • Quantitative Analysis
  • Business modeling
  • Data Investigation

BA, thus, strives to find a reason behind the success or failure of a business, by concentrating on data analysis. It helps derive optimum solutions for future business planning and gives an insight into effective decision-making.
HR managers with a good sense of business analytics will need to use business models and various data interpretation techniques to understand the changing culture of the present-day workforce. At a fundamental level, an organization’s HR oversees the following functions:

The number of departments in the company and their individual functions
The workforce required at the departmental level, for effective performance
The requirement for training modules and related procedures
The total investment – in terms of time and capital, that goes to enhance the workforce and their skill sets.

Example 2: You are considering recruiting a candidate. What is the probability that the recently joined candidate will remain retained for a period of next two years?

With the help of predictive analytics, it is possible to gauge whether a new entrant is probable to stay in the company for some definite period or not. These predictions will help them understand if any amendments in the existing policies are required to be made, or what provision is required to be made for recurring expenditure of hiring new candidates.

Example 3: You wish to see the list of candidates who received promotions from the period of 2005-2010.

With business analytics, there will be stricter maintenance of data and analytics. The HR manager can easily access data, study the promotions and contemplate candidates who’re viable for the next promotions. Accurate prediction is a very important factor related to HR analytics. For example, a lot of employees today resort to early/late retirement, courtesy – part-time jobs, entrepreneurship, and the like.
Example 4: You want to see which employee is likely to have the best performance.

HR can analyze the performance of the employees and gauge which employee(s) should be awarded for their outstanding performances, with the help of various metrics. BA can help them predict on the basis of historical information, which employees are probable to perform better. The above points are suggestive of the statement that an effective HR strategy adds value to the organization; that is to say, it is up to the HR professionals to analyze what kind of workforce will contribute their expertise to the organization and what percentage of the workforce is likely to prohibit the firm’s growth. And undoubtedly, this can be achieved through a combination of business acumen and HR knowledge.
Thus, an HR professional can make use of the principles and methodologies of business analytics to list down, analyze, verify, investigate, and interpret the data he has in hand. Further investigation is likely to reveal repetitive trends, and a good HR manager must spot it immediately. Once a pattern has been identified, it is easier to spot the underlying problem and then come up with a suitable, optimized solution.

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