HR ANALYTICS - EXTENT OF ITS UTILITY IN MAKING STRATEGIC BUSINESS

DECISIONS IN IT SECTOR.
L Ravikiran*
Kambam Vedantan**
ABSTRACT
Purpose The study aims to find out to what extent HR analytics is being used for Strategic
Business Decision Making in IT Industry and establish its importance. The Decision Making
in HR department is often said to be qualitative based on verbal reasoning, perceptions and
feelings rather than based on data, metrics and analysis. This study indicates the extent of
utility and importance of HR analytics in making business decisions which add strategic value
to the organizations.
Design/methodology/approach The research opted for an exploratory study using the
structured questionnaire designed by experts consisting of several HR processes where
decision making is involved and data is collected from practitioners who utilize and have
necessary expertise in the analytics department of 20 IT companies in South India. This is
followed by extensive analysis by the guided scoring given as per the questionnaire.
Findings The study provides empirical insights about how change is brought in the decision
making process to business by HR department by extensive usage of analytics. Even though
many companies have initiated the process of HR analytics in their organizations they still lag
in this approach by 10 years compared to US organizations. There are many young HR
executives who have extensive knowledge of HR analyticsbut Middle level managers are
found wanting in this aspect..
Research limitations/implications The research sample is restricted to large and midsize
organizations,therefore generalization of the research results may not be possible. Therefore,
researchers are encouraged to test the proposed propositions further.
Practical implications The research includes implications for the development of a
quantitative method of supporting decision making in organizations by HR department with
the aid of HR analytics. The study also throws light on the criticality of data and its
analysisto support decision making as part of HR processes.
Originality/value This research fulfills the growing need to develop expertise in HR
analytics and its utility to support Strategic Business Decision Making in IT organizations
which will make HR a strategic business partner.
Keywords: HR Analytics, Metrics, Strategic Decision Making
*Post Graduate Research Scholar, Email: rs.ravi0909@gmail.com
**Professor, OB and HRM, Institute of Management, Christ University, Email:
kambam.vedantan@christuniversity.in

INTRODUCTION
BACKGROUND OF THE STUDY
The proposed study is about various HR analytics used in process of decision making. The
various HR Practices use different metrics and analysis and the level of usage of these for
making decisions in organizations is observed in this article. Both these variables involved,
required in depth literature reviewing and study to carry forward this research. Hence a good
starting point would be to define these. Human Resource metrics and analytics are emerging
rapidly but we have only limited information of how its created, executed and whether its
effective (E.Lawler, 2005).
HUMAN RESOURCE METRICS
It is a measurement of a specific area relevant to a companys performance & collected with a
particular target or benchmark to compare against. A measure such attrition rate becomes a
metric only when there is a context of either attrition rates of previous years or attrition rates
of other similar companies in the same industry. A metric is a measure with a history of a
comparison. A measure is a scalar & a metric is a vector ( in other words , a direction.)
HUMAN RESOURCE ANALYTICS
Human Resource analytics is defined as methodology to relate and interpret human resource
practices and employee performances in terms of organizational effectiveness (Boudreau &
Ramstad, 2006). It is used to understand and evaluate the casual relationship between these
variables. HR analytics doesnt deal with just gathering data it also interpreting and use it for
relevant decision making proves.
STRATEGIC BUSINESS DECISION
These are decisions that contribute for the organization performance and effectiveness. These
are evaluated pre and post implementation on a regular basis and decisions are made on
whether to continue or improve or discontinue the process or practices. These decision are
taken with due care as they involve cost, productivity , brand image of the organization etc.

RATIONALE OF THE STUDY

The study was done to explore how much of the HR analytics or metrics are being used for
considering several strategic business decision making process. The study is basically
considered in IT industry as they grow relatively advanced in these technologies compared to
primary sector. To study and administer this tool to a niche sample of IT employees would
mean taking baby steps in this direction. This study will throw some light on what the chosen
sample of respondents would give a rough idea on the usage of several metrics among
different organizations.
REVIEW OF LITERATURE
Review - 1
Title: The Survey on HR analytics and HR transformation
Author(s):Alec Levenson, John Boudreau, E.Lawler, 2005
Summary:This study aims at identifying the analytical competencies those exist within HR
department of a organization and how they are applied. What are the systems used to build,
develop and deploy analytics in HR department. The issues faced by these analytics
department and the level of complication involved in this department. The relation between
HR analytics and Organization effectiveness.
Research Methodology: The research was done on 47 different survey respondents across 40
different companies. The survey was conducted between 2 group of professionals who were
HR professionals who work closely in analytics and Other HR professionals. The survey
involved questionnaire method as well as direct interview among professionals. Standardized
questionnaire for data collection and standardized questions were asked among the
professionals.
Findings of the Study:The study provides new empirical evidence that there seem to be a
gap in the analytical competencies among HR professionals working on analytics and other
HR professionals. HR analytics is used to a considerate extent only among various industries.
The organization leaders perceive there seems to be a relationship between the extent of usage
of HR analytics towards organization effectiveness.

Review 2
Title: Human Resource Analytics in Practice
Author(s) : Joerik van Dooren , 2012
Summary of the Study: The study investigates the contingency factors affecting the
applicability of HR analytics and the extent to which they are affecting in Dutch
Organizations. The study also aims at explaining that financials of a organization also related
to the HR analytics. The Hypothesis are as below
Research Methodology: The research involved 2 aspects qualitative and quantitative. The
qualitative aspects is observed through interview to professionals in 20 different organizations
and quantitative aspects through a structured questionnaire among professions from Dutch
organizations. The total number of questionnaire filled are 69.
Results:Results of the empirical study showed that only few signs show there is increase of
financial perspective by HR analytics. The old organizations, organically structured
organizations, large organizations etc have less scope of improvement in HR analytics.
Review 3
Title : Human Resource Metrics: Can Measures Be Strategic?
Author(s): John Boudreau, Peter M Ramstad, 1998
Summary of the Study: The main objective of this paper is to suggest a general frame work
for integrating SHRM and measurements through strategic HR metrics. The fundamental
SHRM theoretical dilemmas identified in this article are How theoretical and Operational
issues faced by SHRM can be addressed with the help of measurements.
Research Methodology: The research was qualitative research made by reviewing several
literatures related to SHRM and also HR metrics and based on the literature suggestions the
paper has built models to explain the linkages between both.
Results: The research proposes few propositions as in the organizational strategy requires set
of employees responses, HR policies produces those unique set of employee responses. The

paper gives an overview of challenges faced in SHRM as in the nature and quality of metrics
to be used. The usage of metrics and selection of right metrics should be based on the
strategic focus.
Review 4
Title: Metrics HRMs Holy Grail: A New Zealand Case Study
Author(s): Beth Tootell, Meredith Blackler and Paul Toulson, Philip Dewe, 2009
Summary of the study:The purpose of this study is to analyze the human resource
measurement issues confronting in given sample of organizations by the HR managers. This
article identifies the current HR measurements and the measurement needs. The research
suggest the importance of HR measurements and developing relevant models.
Research Methodology:The research undertaken is a qualitative research based on several
case studies of different industries and different organizations. Comparative case study
analysis gives a insight over the measurements used in the industries and compared with their
equivalent in the organizations.
Results: The research paper suggest that Organizations using HR measurements system only
to be appreciated.

There seem to variations between industries and also between

organizations thereby a global same model for measurement cant be used and its tailor made
for different industries and organizations. The article also suggest that the HR professionals
should interpret the results in both words and numerical.
Review- 5
Title: Maximizing the Impact and Effectiveness of HR Analytics in Driving Business
Outcomes
Author(s): Scott Mondore, Shane Douthitt and Marisa Carson, 2011
Summary of the study:This paper describes the process of using analytics to develop several
case studies by HR professionals and interpret them using analytics. The paper focus mainly
on process analytics and integrated analytics for business cases

Research Methodology:An exhaustive research of several case studies are done as process of
research methodologies and suggestions are given as in what analytics to be used in those
places. By form of examples of these cases they have given the usage of several process
analytics and their methodologies and their pros and cons.
Results: The article suggest HR professionals to concentrate on Business process and
providing strategy for improving the organization strategy rather than concentrating only on
improvement of employee engagement activities. To become a strategic business partner the
article suggests analytics as only way.
Review 6
Title: What Makes HR a Strategic Partner?
Author(s): E.Lawler, J. Boudreau, 2009,
Summary of the Study: The study is about the research gap that there has been a talk on
movement of HR to a strategic business partner but in actual organizations it doesnt happens.
The analysis shows what are the actions required and steps to be taken to address the research
gap. The research also shows the strategic activities that a HR needs to be involved in and the
extent of the involvement.
Research Methodology: A set of questionnaire was developed and analyzed among several
professionals both HR and non HR. several aspects those were analyzed are HR roles
involvement in strategic activities, the activities done by them, Metrics and analytics for
strategy of organizations, Decision making and strategy, skills competence and strategy etc.
Result: Even if the needs to become strategic partner is been identified and pointed out the
implementation part plays a major role. There is a stubborn traditionalism in HR
professionals. This article mainly imposes upon the need to change from traditional aspects of
HR and understand interpret results in terms of HR analytics and measurements and
communicating it to other professionals in other department and top management in same
terms.

Review -7
Title: HR Metrics and Analytics: Uses and Impacts
Author(s): Alec Levenson, J.Boudreau, E.Lawler, 2004
Summary of the study: The purpose of this study is to analyze usage of HR metrics and
analytics in organizations and the impact in organization strategy. But the organizations use
metrics efficiently and not effectively thereby they dont contribute as a strategic partner
Research Methodology: Survey was conducted with 38 small and large organization who
were in Fortune 500 list US firms. The survey was filled by HR professionals who have
corporate wide visibility of HR functions. The survey was basically on what all measurements
used and their scope in organization strategy
Findings of the study: Results of this study show that there is a significant impact of
choosing the right HR analysis for the proper metrics. Survey suggest that HR professionals
lag skill set required for analysis in most cases and even if skill sets are available they are
used only for particular factors and not in every analysis.
Review-8
Title: Challenging Relationship: HR Metrics and Organization Financial Performance
Author(s): Nita Chhinzer and Gurudeep Ghattehorde, 2009
Summary of the study: Even though several studies show that there is always a positive
relationship between organizational financial performance and HR metrics there seem to be a
gap on translating them into actions and strategy. The article tries to bring that hidden
relationship and also brings awareness about the issues and obstacles faced in this
relationship.
Research Methodology : The study is pure academic study based on earlier evidences and
earlier literatures. The study is purely based on few case studies of organizations based in US
and also on individual literatures focusing on this topic.
Findings of the study: The study suggest that there should be universal HR metrics for
analyzing the organization financial performance. The organization should use those metrics
based on the organization strategy its practices and priorities. The lag between the HR effort

and revenue recognition should be based on the industry, organization and the project
specification. The interpretation of the numbers should be industry specific and competitors.
Review-9
Title: Status of HR Measurements in India
Author(s): M. Srimannarayana,2010
Findings of the study: This study is concerned about HR measurements in India. The study
identifies some positive factors that will help the HR measurement system to be in line. The
study also indicated that ITES sector is more efficiently using HR measurement compared to
manufacturing or IT sector. The study also says private sector makes more investment in HR
measurements compared to private sector thereby they advance them.
Research Methodology: Data has been collected from 114 HR employees all over India.
22% were from manufacturing organization. The study was based on questionnaire developed
by Philips.
Findings of the Study :The research shows that , Organizations with population between
5000 to 10000 have more impact on HR measurements and they progress more on this. The
research suggest that organizations in which CEOs recognize the HR managers investment
on HR measurements performs better. There is no measure on Cost benefit analysis so the HR
professionals need to concentrate on that. The public sectors also need to make investment on
HR measurements.
Review-10
Title: Reasons For Using HR Metrics
Author(s): HR Focus, IIM, July 2010
Summary of the Study: The study dealt on the analyzing the types of HR metrics used
across various industries and various HR processes. The survey also identified most frequent
reasons for using HR metrics across industries.
Research Methodology: The study was done in 6 different sectors and across 5 different
regions. The questionnaire responses were observed among the HR professionals across
various organizations in the Industry.

Findings of the study: The study provided empirical evidence North Central region
organizations use HR analytics on major scale and financial institutions are the top in
employing HR measurements. Turnover is the metric which is used on a major scale across
industries. The major reason of using the metrics is to compare with the competitor
organizations.
RESEARCH METHODOLOGY
PROBLEM STATEMENT:
HR analytics - extent of its utility in making strategic Business decision in IT sector.
Considering the importance of the growing trend in several industries and changing HR role
from a support function to strategic function, this will find the use of metrics and analytics in
strategic business decision.
VARIABLES OF THE STUDY:

Dependent Variables: Decision making

Independent Variables: HR analytics used in IT organizations

Table 3.1 Dimensions of the Dependent and Independent Variables
Variable

Dimensions
HR analytics methods

HR
Analytics

HR Metrics
Data

Processing

and

Interpretations
Decision on HR processes
Strategic

Outsourcing Processes

Business
Decision

HR programs Decisions
Overall Business Strategy

OPERATIONAL DEFINITIONS:
Below are the operational definitions for the purpose of the study.

IT Companies Information Technology product and Services companies.

South India- South India implies all major IT hubs in Tamil Nadu and Karnataka.

HR Analytics: Includes metrics, analytical tools etc used by HR department.

Strategic Business Decision: Decisions pertaining to HR department , HR programs

and practices and its contribution to overall organization.

HYPOTHESIS:
H1; HR analytics is not utilized in strategic business decision
H2: HR analytics is also considered for strategic business decision
3.8 SAMPLING TECHNIQUE & SIZE:
The sample size is 20 organizations and snowball sampling is used for the study.The Research
Methodology of the study will be to collect information through a questionnaire. Sample size
of a 21 employees would be taken up for the study from 20 IT Companies operating all over
South India with a relevant work experience. This is done so that employees with relevant
work experience can have better clarity and knowledge on the various HR analytics tools and
metrics implemented in the organization.
DATA COLLECTION TOOLS USED
A standardized tool measuring usage of HR Analytics for Decision Making Questionnaire
developed by Levenson Boudreau and E. Lawler, Centre for Effective Organization,2005. The
tool was adopted to study the same in the Indian context for Employees in IT Organizations in
South of India.
The Cronbachs reliability test on the instrument for this sample revealed that the
reliability was =.84.

FINDINGS:

The study shows that there is considerable knowledge and growth in terms of analytics
and metrics in HR department.

Also, there is huge growth in terms of implementation of them across different

functions and practices in HR.

The routine process execution seems to dominate the analysis. Almost every
organization use metrics for these processes.

On the other hand, in pinpoint the HR programs for discontinuity there is lack of usage
of analytics or metrics. Most cases people not at all use metrics or they use to a little
extent. Thereby analysis in these areas are need to invented and utilized

Even though the number of usage of analytics has improved from not at all and some
extent the overall usage still remains considerable extent. This has not changed for
past 10 years.

The Demographic factor shows that experienced professionals are employed in this
field. Majority of them are between the age of 26 to 30. There are the generations of
Gen Y who are Technology natives where as 30+ are Gen X mostly who are
technology immigrants so most of them wont be comfortable with usage of
technology and analytics.

SUGGESTIONS:
Organizations should look at motivating employees for usage of datas for supporting their
decision rather than just verbal arguments. The data is available in abundance in the
organizations which are never considered most of the times. These data can be used to
interpret each and every process of organization as everything in measurable in current trend
with the help of available technology.
Developing a culture for supporting every decision making process with the help of data
would help to have a strong points for discussion over a decision and analysis of the
effectiveness of the implemented decisions. Analysis of data would also give way for several
different perspectives and new suggestions for new decisions or alternatives.

It would be highly recommended if organizations focused more on usage of tools and metrics
and assure that the employees are aware of the processes taking place in the organization in
terms of several programs which are implemented and discontinued and also the processes.
Also, the practices followed in the organizations should be transparent and the channels of
communication should be open. A flat organizational structure comes a long way in enabling
this. The employees who are unaware of the process of evaluation may not be able to
contribute much to the decision making process.
There need to be change in overall usage of the analytics. The employees need to increase the
usage for other purposes also and not restrain themselves with the known facts and metrics
alone.
Hence Organizations could,

Respect the views and opinions of employees, welcome and encourage new ideas in
using several tools for decision making as IT industry is extremely knowledge
sensitive and centric

Discourage qualitative suggestions and try to associate a logic and quantitative value
for every suggestions and discussions made.

Move away from the opinion that every aspects of Human Resources cant be
quantified and try to identify the metrics in each and every possible functions.

Provide dashboards and supportive values and graphs for each and every decisions
made.

CONCLUSION
It can be concluded that, in the context of the study, Organizations are slowly moving to the
digital age in accepting quantitative analysis for every process which were not employed
earlier. The HRs are being considered more as strategic functions rather than a support
functions. There seem to be few traditional organizations which are slowly growing as
learning organizations in this trend. Even though there seem to be a positive growth of
analytics in the sector the margin between positive and negative is too less by fractions in
major case. The change in slightly observed here but need to grow on a faster phase to
compete with global organizations as this is almost similar to the earlier survey conducted in

US. There seem to be a huge gap in between earlier and this survey and also the
demographics but the result seem to coincide mostly. Thereby it shows that US is going 10
years ahead to us in the usage of technology and data. To compete with the global market we
need to improve in terms of analytics and its usage to fight in this competitive global
environment. The organizations should invest in identifying various metrics and their
advantages and try to deploy that in the evaluation.
REFERENCES

Alec Levenson, B. J. (2005). The Survey on HR analytics and HR transformation. California:

Marshal School Of Business .
Alec Levenson, J. E. (2004). HR Metrics and Analytics: Uses and Impacts. Center for
Effectiveness.
Beth Tootell, M. B. (2009). Metrics HRMs Holy Grail: A New Zealand Case Study. Human
Resource Management Journal , 375-392.
Dooren, J. v. (August 2012). HR Analytics in Practice. Dutch.
E.Lawler, J. B. (2009). What Makes HR a Strategic Partner? California: Marshal School of
Business.
Ghattehorde, N. C. (2009). Challenging Relationship: HR Metrics and Organization Financial
Performance. The Journal of Business Inquiry , 37-48.
IIM. (2010). Reasons For Using HR Metrics. HR Focus .
John Boudreau, P. M. (1998). Human Resource Metrics: Can Measures Be Strategic.
California: Center of Effectiveness.
Scott Mondore, S. D. (2011). Maximizing the Impact and Effectiveness of HR Analytics in
Driving Business Outcomes.
Srimannarayana, M. (2010). Status of HR Measurements in India. The Journal of Business
Perspective .

APPENDIX
Chart 5.2 Age wise profile of the Respondents

9%
24%

<=25
26-30
31+

67%

Source: Primary Data

Table 5.3, Summation of Responses

Positive Negative
Measure The Business Impact of HR programs and processes

61.9%

4.8%

Measure the cost of providing HR services

38.1%

23.8%

Conduct Cost Benefit Analysis of HR programs

61.9%

19.0%

57.1%

23.8%

55.0%

25.0%

52.6%

21.1%

66.7%

14.3%

60.0%

20.0%

Measure the effects of workforce in terms of competence, motivation,

attitude, behaviour, etc,

Evaluate and Track the performance of outsourced HR activities

Connect Human Capital practices to Organization effectiveness

Making decisions and recommendations that reflect companys
competitive situation

Identify where talent has the greatest potential for strategic impact

Assess the HR programs before they are implemented

47.6%

28.6%

Pinpoint HR programs that should be discontinued

27.8%

44.4%

Assess the feasibility of new strategies

47.4%

21.1%

Evaluate the effectiveness of HR programs and practices

61.9%

14.3%

Measure routine HR process Execution

85.7%

0.0%

Support Organizational Change Effort

47.4%

15.8%

Assess and Improve the HR department

66.7%

14.3%

Assess and Improve Human Capital strategy of the company

52.6%

15.8%

Contribute to decision about Business strategy and Human capital

57.1%

4.8%

Source: Primary Data

Chart 5.3 Overall Usage

Source: Primary Data