HR Analytics for decision-making

HR Analytics can be defined as evidence- based approach that contains the elements of business intelligence, tools and methods ranging from simple reporting of HR metrics to the predictive model.

The concept of HR Analytics as the use of data and related insights developed through statistical, contextual, quantitative, predictive, cognitive and other models to drive fact-based planning, decisions, execution, management, measurement and learning out of employee’s data. The purpose of HR Analytics is to enable the organisations to make better strategic decisions on the employee’s side of the business. HR Analytics is a combination of methodology and software that applies mathematical models to worker-related data, allowing leaders to optimise Human Resource Management in the organisation. Workforce is considered as the most crucial, volatile and potentially unpredictable resource which an organisation utilises therefore every decision relating to human resources needs to be taken seriously. Manpower planning seeks to make the links between strategy, structure and employees more explicit. The purpose of workforce planning is to get a better matching between manpower requirement and manpower availability its need for the organisational growth and the various processes involved in manpower planning. Human capital investment consists of placing right number of people, right kind of people at the right place, right time, doing the right things for which they are suited for the achievement of goals of the organization and individual goals.

It helps to take steps to improve human resources contributions in the form of increased productivity, sales, reduced turnover among others. It facilitates the control of all the functions, operations, contribution and cost of human resources. Workforce planning involves the analysing of the current manpower inventory, making future manpower forecasts, developing employment programmes and designing of training programmes.

The significance of workforce planning relates to key managerial functions, efficient utilisation of human resource, motivating employees by maintaining better human relation in order to achieve the higher productivity in the organisation. What is needed is the type of alchemy that transforms data and information into intelligence. Understanding these combinations is done to inform managers about the current or changing state of human capital in an organisation in a way that can impact manage­rial decision making.

‘To take advantage of HR Analytics, you need the integration of data, analyses and processes throughout the organisation. ’’ It follows then that the ability to effectively manage the organisation’s investment in human capital can spell the difference between success and failure. This knowledge and experience is often lacking to turn metrics into analytics and analytics into strategies.

Many HR executives lack the capabilities to analyse data to turn metrics into analytics and use these to create value as executable strategies. This knowledge is necessary to produce HR Analytics that is relevant to business decision making is not widely possessed or easily disseminated. Moreover, relevant analytics vary by industry and company, which can further complicate the issue, consequently, which HR Analytics hold value for business decision makers and how to unleash that value are challenging.

As a result, HR Analytics data are not yet being utilized and leveraged to their full potential. Leading management thinkers suggest that the challenge for Human Resource managers in the 21st century is to focus on strategic human resource development (HRD) which has been emphasised as a key contributor to ensure organisational effectiveness and the maximum return from its most important asset; that is employees in the organisation. It is said that effective management and innovative approaches to the development of employees will enable organisations to capture and embed knowledge and skills.

HRD is a process and not a set of mechanisms and techniques.

The writer is HR Analytics Consultant and Lecturer in School of Business and Economics, Co-operative University of Kenya.