TATA INSTITUTE OF SOCIAL SCIENCE

2012

Analytics in Human Resource

Management in India

Pravin Bang

2012HR031

S U B M I T T E D T O G . K . S A I N I

Introduction

Human resources analytics, also called talent analytics, is the application of sophisticated data

mining and business analytics (BA) techniques to human resources (HR) data.

It is a field of analytics that refers to use of analytics in the human resource department

processes of an organization in the hope of improving performance of the employees and

therefore getting a better return on investment. It aims to provide insight into each HR process of

an organization by gathering data and then analyzing that data to make relevant decisions about

how to improve these processes. The goal of human resources analytics is to provide an

organization with insights for effectively managing employees. The key aspect of HR analytics is

to conclusively show the impact the HR department has on the organization as a whole.

Establishing a cause-and-effect relationship between what HR does and business outcomes -

and then creating strategies based on that information - is what HR analytics is all about.

Efficiency of different core functions of HR can be drastically improved by use of analytics. These

are acquisition, optimization, training and determining compensation pay scales. HR analytics

can help to dig problems and issues surrounding these functions and using analytical techniques

guide the managers and decision makers to answer questions and gain insights from information

and data at hand, then make relevant decisions and take appropriate actions.

Today's organizations collect more HR and business data than ever, but still struggle to use it

effectively to predict workforce trends, minimize risks and maximize returns. Although most

organizations have enough data to make analytics useful, the data is often created and stored in

multiple places in multiple formats.

According to the study ‘State of HR Analytics’, (2010) conducted by Center for Advanced Human

resource studies, Cornell University in 30 leading commercial organizations. Corporate world is

slowly evolving their practice of HR analytics toward what Dr. Jac Fitz-enz calls a “model of

predictive management” for human resources because to be successful HR analytics must

extend beyond reporting what is (the present) or what was (the past) to predicting and analyzing

what will be (the future).

Most participants in the study say their organizations use dashboards to collect and share

information. Common metrics being measured include engagement, performance,

attrition/retention, headcount, diversity, and compensation. It was generally agreed that the next

steps for using dashboards should be to encourage HR staff to see them as tools for proactive

planning—versus merely reviewing before going into a meeting. For example, dashboards can

be used for predicting an impending problem or monitoring how changes in HR practices affect

the workforce and related outcomes1.

Current practice in HR analytics:

Several participants in Cornell University Study explained how they’re using available data in a

efficient way, rather than just compiling it into monthly reports that may or may not ever be read.

By means of these responses we can chalk out the current trends in the use of HR analytics in

the different organizations, which are as follows:

a.) Identifying and managing leaders to drive performance: One organization uses data to

assess which leaders are able to increase performance in a down market. Staff does this by,

first, identifying outcomes/metrics that assess this question beyond simple financial performance

outcomes, and then reviewing the data to make sure managers are driving performance in a

culturally compliant manner.

b.) Better risk management: A second organization uses employee survey data to assess

compliance and risk issues and create development plans.

c.) Peeling the onion on front-line supervisor traits linked to performance: A third

organization assesses the performance of front-line supervisors on the basis of factors that may

drive performance of the team or group they manage. Such factors include spans of control, time

in role, and individual characteristics. Through this approach, the organization hopes to identify

underlying personal or organizational factors likely to drive performance.

These examples demonstrate the value of HR analytics for understanding hard-to- quantify

concepts, such as relationships between HR drivers and key outcomes, as well as how

employee skills, capabilities and motivation impact business outcomes. Of course, analytics are

also used for measuring the business impact of HR interventions 1.

HR Analytics in India Though the field of business analytics has made considerable progress in India in the recent

years, HR processes have not yet caught up to the task of analyzing these complex dimensions

to make decisions on talent management, be it acquisition, development or retention. The typical

tasks that would fall under these heads would be assessing capabilities, identifying leadership

behaviours, predicting performance indicators or studying retention patterns. Leveraging on

analytics would mean an improvement in workforce planning, alignment of organizational

capabilities, improvement of business strategies, all of which lead to improved organizational

performance.

In India large organizations are gradually realizing the power of HR analytics as a tool for talent

management. Traditionally, the applications of HR analytics was much less prominent in Indian

organizations as compared to their counter parts in the developed world. But slowly the Idea of

HR analytics catching up with the Indian organizations and they are espousing HR analytics as a

mechanism to better manage their talent workforce.

Several leading Indian organizations are increasingly making use of HR Metrics to design and

implement talent acquisition and management strategy which are tightly linked to their overall

business objective. In developing recruitment strategy, organizations use HR metrics like the

turnover rate of new hires within the first year, the percentage of diversity hires in managerial and

senior positions and average performance appraisal score of new hires .To design and

implement talent management strategy organizations use HR metrics like Performance turnover

in key jobs (where performance turnover means that the top performer turnover is “weighted”

more heavily and bottom performer turnover more lightly than the average worker turnover), the

cost impact of employee turnover in key positions, Rupee spent on HR costs for every rupee of

revenue generated (compared to last year) and Preventable turnover in key jobs (where a

sample exit survey is used to identify the real reasons individuals left the organization and

whether the turnover could have been reasonably prevented).

Companies like TCS, Bharti Airtel, NTPC, and Phillips have developed a talent segmentation

strategy as a part of their overall talent management plan. As a part of this strategy talent matrix

or talent grids are maintained by the HR department which are used to track the performance as

well as potential for future growth of employees of the organization. This leads to the

identification of high performance high potential talent pool in the organization who can be

groomed for future leadership positions.

Human resource information systems plays a very crucial part in implementing the talent

management strategy. Analytics is used in various facets of talent management of many leading

Indian organizations like workforce analytics, competency profilers, demographic and diversity

ratios, retention and attrition analysis amongst others. The Information which is gathered after

application of analytics on raw data is collated and stored in the enterprise wide systems as well

as with HR dept and top management for quick decision making. Some of the organizations

which uses analytics in designing and implementing its talent management strategies are Larsen

and Tubro, TCS, NTPC and IOCL. However, in this process due care is to be taken to ensure

that the objectives of applying HR analytics is in sync with the overall business strategy.

Otherwise, it may lead to use of sophisticated HR analytics tool and generation of information

which does not have any direct relevance to the overall business strategy of the organization.

In recent years, Indian BPO industry is growing from strength to strength, now they are looking

for areas in which they can create future business opportunities. Offering higher value added

services like HR analytics to their clients is one such strategy which they are espousing to

diversify their service portfolio. Many major BPO firms believe that they can provide more cost

effective HR analytics services to the organization compared to their internal HR Department by

leveraging economies of scale.

Refrences:

1.) Study ‘State of HR Analytics’, (2010 ) conducted by Center for Advanced Human resource

studies, Cornell University.

2.) Succeeding with HR Analytics by Sreekanth Lapala, 2012; Website-www.Peoplematters.in

3.) Winning the People Strategy through Talent Analytics, 2012; Website-www.shrmindia.org

4.) Budhwa, P.S. & Bhatnagar, J (Eds.). (2009). The Changing face of people management in

India. New York: Routledge.