Making sense of the big picture
Big data is changing the way organisations answer their most urgent business questions. It is not only creating a new way for businesses to target their audiences and analyse their outreach, it can also help HR professionals to improve their manpower capabilities with value-focused insights.
According to a report by Harvard Business Review, The Big Data Opportunity for HR and Finance, “big data” is used to describe the new volume, variety, and velocity of data that companies are now faced with. This information can also be difficult to store, search, and analyse.
By using qualitative and quantitative data, HR analytics present predictive insight to help HR managers with the decision-making needed in talent management. It therefore removes the need to trust gut feelings when it comes to important decisions. Additionally, the data can be presented in graphic and statistical reports, to make it easy for them to understand and draw conclusions from.
Progressive businesses are discovering big data could prove to be a game changer in HR, as it will allow companies to look deeper than standard metrics and benchmarks to tap into future-looking modelling.
A report by KPMG, titled People are the Real Numbers: HR Analytics has Come of Age, finds HR is currently using analytics akin to a rear view mirror; to focus on the present and the past in areas such as staff turnover, promotion rates, employee engagement, and diversity statistics.
The report says that talent management software can also work as headlights for the future, by helping HR recognise upcoming behaviour in the areas of hiring, workforce performance, development, and retention. “Applied properly, HR analytics can show connections, correlations and even causality between HR metrics and other business measures – all of which can be used to inform HR strategy and actions,” the report states.
According to an Economist Intelligence Unit (EIU) research commissioned by KPMG International, 85% of business leaders believe their HR teams do not excel at providing insightful and predictive analytics. Although raw data may not make much sense, it is all about getting insights by amalgamating a range of measurements and using analysis to test questions or theories which could be useful to the company.
Wealth of data
The biggest advantage HR can get from HR analytics is to understand data, Eric Teong, Frontier e-HR’s Director and Software Architect says. “While being a HR practitioner is all about managing staff data, approving staff leave and so on, with HR analytics, these can be enhanced to a higher level of productivity for the benefit of the company,” he explains.
Firstly, analysing patterns can improve the quality of the company’s performance. “Once you understand patterns, you will be able to diagnose current problems and even predict future ones,” Teong adds.
For example, leveraging on big data allows employers to have a more analytical and strategic approach to hiring, by sorting information to identify suitable talent, focusing on the right talent pool, and avoiding bad hires. Besides using analysis to identify each talent’s qualifications, it is also possible to predict whether a candidate will get along with the potential employer by looking into their interpersonal connections.
Besides hiring from a talent pool outside, companies can also look at existing data to identify internal staff who might be a good fit for a vacancy, thus helping to reduce recruitment and workforce costs.
“We all know that it is very important to find the right person to fill in the right position. Internally, tapping on talent data enables you to identify a potential base of expertise, whether an employee is good in the job or has expertise in certain areas. In this case, you may arrange for a department transfer instead of hiring a new person,” Teong says.
Reports show that big data can also help to eliminate discrimination in the hiring process and avoid workplace homogeneity, as the tools are not able to tell a candidate’s ethnicity, age, gender or physical disability.
What’s the big deal?
HR can also turn to big data to analyse employee performance and help identify top performers. The same goes for employees who may be struggling with their jobs. This will make it easier for HR professionals to evaluate the performance level of each worker. Some technology also provides the option to identify teams which are likely to succeed in the office by studying various elements such as personalities, interests, and work style.
Using data can also enable companies to focus on the core values and behavioural traits of candidates by compiling, processing and comparing their fundamental values and behavioural compatibility, and diversity.
Teong says talent management is another area of HR operations that big data is useful for. “Staff are the company’s most valuable asset. It’s important to understand their strengths and weaknesses to improve their performance quality. This can be done by understanding HR big data,” he says.
Analytics can also give concrete examples of how employees are making the most out of the professional development opportunities available. Employers can obtain data to measure the participation rates and outcomes of training programmes, and gauge whether employees are applying what they have learned to their daily tasks.
With tools such as employee satisfaction surveys, team assessments, and exit interviews, HR can study ways to improve retention rates and prevent employee attrition. In fact, workforce analytics can also help to identify employees who are on the verge of resigning.
Needless to say, companies who have adopted big data analytics are making human capital decisions based on statistical insights. For example, an electronics manufacturing company built a model that predicts the impacts of attrition and wage increases on profits. This helps each of its factories to use site-specific data to give the best pay rates and better manage thin margins.
In another instance, some retailers determine which employees are most successful and why through their performance, sales, and employee survey data. Pre-hire screening surveys are then developed to predict which applicants are most likely to succeed and produce higher sales.
HR analytics can also lead to a better office environment. To better understand employee behaviour patterns, several companies use embedded sensors in office furniture which in turn lead to optimised office designs.
Some HR organisations are also discovering how to analyse unstructured data from career-oriented social networking sites. This is not only for recruiting purposes, but also to better understand career progressions so they can create more effective learning and development activities.
According to Mercer’s Don’t Get Lost in the Fog of Big Data: Lessons for Success in Workforce Analytics report, the key to a successful HR analytics programme is to start by focusing on the impact of the data collected and the analysis that will be done. “These elements can be identified by determining the critical workforce questions that you hope to solve, without being constrained by the data that is currently available,” the report notes.
Low investment priority
The big data journey is still in its infancy for many organisations. A study of more than 1,200 businesses by SAS in 2013, showed 6,400 organisations (which have 100 employees or more) planned to implement big data analytics by 2018. However, a worldwide survey of executives at more than 1,200 companies by Tata Consulting Services showed that HR was also one of the lowest priorities for big data investment.
According to Tata’s The Emerging Big Returns on Big Data report, also from 2013, HR departments only spent five percent on total big data investments, the lowest percentage out of ten departments.
Marketing and sales, customer service, and product development received most of the attention and investment for big data. Granted, these business segments use big data for results which are tangible and easily recognisable. However, HR can also play a part in solving business problems, achieving a company’s business goals and identifying revenue streams by helping to spot specific areas that can be improved upon, such as recruitment and performance. “Staff with proper training who are equipped with decent knowledge have an important role to boost the company’s revenue,” Teong adds.
In summary, Teong affirms that talent is a company’s most valuable asset, and tapping on the company’s data will help to find the right members of a workforce. “Analyse your staff’s strength and weaknesses and then develop their values, in accordance to your business goals, by sending them for courses or training,” he advises.
“Last but not least, HR analytics also enables you to identify staff who have performed well. In that case, appreciate and retain them. In short, HR data analytics will play a big part in company growth if one can use it wisely,” he adds.
Also known as...
HR analytics, which applies data mining and business analytics techniques to HR data, is also sometimes referred to as:
Working in tandem
The Big Data Opportunity for HR and Finance report highlights some scenarios in which HR can partner with the finance department to utilise big data.
More than a buzzword
A KPMG report, titled People are the Real Numbers: HR Analytics has Come of Age, describes HR analytics as:
“...the synthesis of qualitative and quantitative data and information to bring predictive insight and decision making support to the management of people in organisations.
HR analytics can be seen as the application of statistical techniques (for example, factor analysis, regression and correlation) and the synthesis of multiple sources to create meaningful insights – for example, employee retention in office X is driven by factors Y and Z.”
The four ‘V’s for HR
The Talent Analytics and Big Data: The Challenge for HR report by Oracle breaks down the four ‘V’s for HR: