TATA INSTITUTE OF SOCIAL SCIENCE

Analytics in Human Resource Management in India

Pravin Bang
2012HR031

2012

SUBMITTED

TO

G.K. SAINI

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 planningversus 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 theyre 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.