Studies in Indian Place Names

(UGC CARE Journal) ISSN: 2394-3114

Vol-40-Issue-95-March-2020

HR Analytics Need and Importance – A Theoretical

Perspective
Chandrakant Varma
Faculty, Thakur Institute of Management Studies and Research,
PhD Researcher Jamnalal Bajaj Institute of Management Studies, University of Mumbai
Dr Chandrahauns R Chavan
Professor, Jamnalal Bajaj Institute of Management Studies, University of Mumbai
Abstract
The industry settings have changed the entire deliberate structure and operation of the organization.
The current advancement in the global business environment in order to be effective has been causal to
the functioning of the Human Resource roles and responsibilities. There is a enormous strain on today's
organizations due to global business set-up, technical change, rivalry, as well as development and
changes in employees priority, capability, and other requirements. Anticipating to the changes HR has
to develop by evolving to the technological advancements and planning its moves accordingly. HR
Analytics is one such advancement which organization and its HR needs to understand and implement
so as to be competitive.HR Analytics helps in determine performance of diverse functions and expand
insights of employee effectiveness and efficiency. This help in better decision making and creating
competitive advantage for the organization. HR Analytics has come forward as an vital tool which
helps recognize factors which has profound intercession and helps construct understanding of employee
actions and create a continued and high performance environment. Understanding the significance of
Human Resource Management in adding value to organizational capability by means of HR Analytics,
it is imperative to understand to what extent HR Analytics is to be implemented and how it can
contribute to the organizational accomplishment. The study tries to observe how HR Analytics assist the
enhancement of staff performance in an organization thus affecting the organizational performance.
This paper also investigates the importance of HR analytics practices and applicability in the
organization. The aim of the research paper is to explore and understand the importance of HR
Analytics and its application in different functions of HRM.
Keywords: HR Analytics, Organizational Performance, Human Resource Management, Information
Technology, HR Analytics Maturity Model.
Introduction
Historical perspective of HR advancement witnesses changes from transactional approach from mere
record keeping traditional approach to Cost effectiveness, employee development. The technological
development has led to shift HR from conventional to transformational approaches. The character of
HR has evolved from the administrative function towards more strategic partnership. A major driving
force behind this evolution has been the technological development.
Fig. 1 Evolution of HR Capital Metrics

Source: Jac, F. E. (2010). The New HR Analytics

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Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-95-March-2020

The collecting, storing and processing of data has been in central role in the gradual evolution of HRM.
Still throughout past decades academics and practitioners have questioned the success of HR´s
development to more strategic role. One challenge has been the ability to produce accurate information
of people related issues and make fact-based strategic HRM decisions. In recent years a growing belief
have risen that HR analytics could be the answer to these challenges and improve the data-driven HRM
in a way that could help HR achieve its strategic position. HR analytic helps the human resources in
tracking projects, absenteeism, monitoring and managing schedule assignment, and tracking
performance of each employee (Bartels S, Richey J, 2008). Still relatively limited amount of research
related to HR analytics can be found and therefore its real potential remains to be a question mark.
Hence the purpose of this thesis is to deepen the understanding of HR analytics and its implementation.
Also the possible connections between HR analytics and broader concept of data-driven HRM are
examined. There is a need to determine the strategic fit between technology and HR. Human resource
management is core department in any organization. HR analytics practitioners must also commit
themselves to the habit of measuring and reporting on success. This will help HR and business leaders
understand that progress is happening even when stages may take weeks or months to complete. It also
provides a clearer understanding, in both directions, of changing priorities and emerging findings from
the work Gardner, N., McGranahan, D., & Wolf, W. (2011).
Organizations that are competent of leveraging in data motivated decision making for the staff not only
do better than their competition, but also for other stakeholders. This is evident from people
management practices adopted by Google, they have reached an extraordinary success in the
marketplace by focusing on strategic focus on people management (Sullivan J, 2013) In the article
“how Google is using people analytics to completely re – invent HR” explains how Google has reinvent
their focus to people management which has in turn help them to become No. 1 spot in the list of top
ten successful companies. It also explains how by re aligning their HR strategy Google has changed its
face of productivity. Google uses employee performance data to determine the most appropriate
intervention to help both high- and low-performing employees succeed. Davenport, T. H., Harris, J., &
Shapiro, J. (2010).
Organization which wants to be technically updated and implement new technology will have to
develop leaders who can manage organization information system and overcome the resistance among
the employees (Lorenzi and Riley. 2000). Snell, Stueber, and Lepak (2002) observe that HR can meet
the challenge of simultaneously becoming more strategic, flexible, cost-efficient, and customer-oriented
by leveraging information technology. They point out that IT has the potential to lower administrative
costs, increase productivity, speed response times, improve decision-making, and enhance customer
service all at the same time.
Objective set for the study
 To understand and explore how HR Analytics assist the enhancement of employee performance in
an organization.
 To explore importance of HR analytics practices and applicability for organization.
 To explore and understand the importance of HR Analytics and its application for HRM.
Literature Review
Organization HR needs to be directed towards organizational goals and objective, the objective should
be to add value to the strategies and help achieve them with the stake holders involved (Ulrich, D., &
Dulebohn, J. H. 2015). Greer (1995) in their study stated that the organizations have realized the
importance of human resource as a source of competitive advantage by creating distinct culture. This
can be done by allowing organization to measure performance of human resource accurately. While
human resource performance is not only in the form of output but also about understanding the
experiences gathered and knowledge created which contributes towards organizational value (Baron, A.
2011).
Ulrich, D. (1997) stated that HR can contribute significantly by facilitating the organization to
overcome the competition of globalization by growing knowledge capital in terms of adopting
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Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-95-March-2020

technological development. The biggest benefit to organizations of using IT in HRM is the freeing of
HR staff from intermediary roles so that they can concentrate on strategic planning in human resource
organization and development (Pinsonneault & Kraemer, 1993). HR is facing difficulty in measuring
employee performances and to establish the value added to the business Gardner, N., McGranahan, D.,
& Wolf, W. (2011). Human Resource Management (HRM) could support technological innovation to
achieve high performance while technology innovation could serve as an approach to enable HR
function to focus more on value-added activities in order to realize the full potential of technology and
organizational strategy (Shrivastava et al., 2003).
HR will have to provide with accurate data which is most important for fact based decision making, like
wise at Google employee related decisions are guided by analytics Sullivan, J. (2013). HR lacks tools
and capability which can help integrate the functions and approaches real-time and enable critical
measurements and decision making by presenting evidences. This can be done with the help of HR
analytics. HR analytics plays a role in every aspect of the HR function, including recruiting, training and
development, succession planning, retention, engagement, compensation, and benefits. HR analytics
perform workforce optimization and it became important for HR to develop IT and finance analytical
skills and capabilities to produce better Return on Investment (ROI) Mishra, S. N., Lama, D. R., & Pal,
Y. (2016)
HR Analytics is the ultimate tool for making a strategic workforce planning. HR Analytics today is
targeting critical workforce metric that link workforce strategy to business results that finally provides
HR a seat at the table and the integrity to make business and workforce strategy decisions by identifying
cost savings opportunities, improving the retention of key talent and increasing workforce productivity
and efficiency (Higgins J., Cooperstein G and Peterson M, (2011). The purpose of HR analytics is to
improve individual and organizational performance. They are often focused on using analytics as a
method of proving their worth Bassi, L. (2011). The key drive to carry out effective HR analytics is to
convincingly show your business impact within the organization and actual cause-effect association
among what you do and business outcomes and building a strategy based on that information, will allow
you to make those terms a reality Mondore, S., Douthitt, S., & Carson, M. (2011). Analytics modify HR
data and procedures into precise and applicable insights. The more abundant HR data becomes, the
more critical is analytical capability. Analytics ensures that insights from HR data provide legitimate
and reliable foundations for human capital decisions. Thus, analytics is an essential addition to deep and
rigorous logic for an effective measurement system. As it turns out, many analytical principles and
competencies already exist Boudreau, J. W. (2006).
HR Analytics defined and explained
“Workforce analytics uses statistical models and other techniques to analyze worker-related data,
allowing leaders to improve the effectiveness of people-related decision-making and human resources
strategy” SHRM. HR analytics is defined as an approach to utilize human resource data maintained by
the organization to measure the direct or indirect impact of HR campaigns on important business
outcomes. Unlike before, HRs cannot rely on gut feelings or experience. One has to base decisions on
real data and numbers. This has proved to add value and improve workforce resource utilization and
deployment.
Various dictionaries define analytics as the science of analysis, from the Greek analutika, including the
principles of mathematical analysis. That is, it is the process of dismantling or separating into
constituents to study Jac, F. E. (2010).

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Electronic copy available at: https://ssrn.com/abstract=3775951

Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-95-March-2020

Fig. 2 The Nature of HR Analytics

Source: Jac, F. E. (2010). The New HR Analytics

Bersin et al. (2013) describes HR Analytics maturity model in four stages as given in the figure 3. The
model shows the stages where the organization are functioning what level of HR Analytics is adopted
and implemented. Also states that the organization matures as it progresses in the model.
Fig. 3 HR analytics maturity model and implementation progress

Source: Bersin et al. (2013)

Advantages of using HR Analytics
HR analytics aid attraction of prospect, maintenance of employees and Talent retention in the
organization. Considering this organizations have been investing huge amounts in IT tools which
support ranges of HR functions starting Human Resource planning, Recruitment & Selection,
Performance management system, legal Compliances, employee engagement activities and training and
development. Analytics has been described as a ‘must have’ capability for HR profession, a tool for
creating value and a path to augmentation of the tactical ability of the HRM function (CIPD, 2013).
This is why CHRO thoughtful of the business environment have been investing heavily in HR analytics
so as not to fall behind the competition Deloitte (2016).
 HR analytics is most beneficial Man power planning by assisting forecasting about employee need in
numbers and competencies required for achieving organizational goals and objectives.
 HR Analytics helps organization to recruit right fit by differentiating high performers from the misfit
and low performers.
 HR Analytics keep track of the past employee performance records so as to determine available
requirement of the organization and presenting right candidates within with the requisite experiences
and skill set.
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Vol-40-Issue-95-March-2020

 HR analytics in the course of its analytical nature help in thoughtfulness reveals the incomplete
policies which are key cause for employee turnover, which helps in retaining and maintaining high
worth employees.
 It helps in getting better performance in organization through timely and quality decisions in talent
acquisition, maintaining and retention.
 It helps in concise defining of vital performance fraction and bits which may have high impact on the
organizational performance.
 HR Analytics also helps understand the potential attrition which can hit organization if not tracked. It
also enables organization to take preventive measures to curb attrition in future.
 HR analytics facilitate in administration and classification by and large all HR activities and integrate
workforce and financial data to align talent investments with company results. .
Challenges faced in implementing HR Analytics
The test for any organization implementing analytics is to get the best from facts and analytics begins
with being able to comprehend the trade adequately that you can conceptualize and articulate the
questions that need to be answered. It is also necessary that the results are delivered back to the
organization in a understandable, actionable way Fairhurst, P. (2014). “HR will become a further
analytically alert occupation because it has to become that way,” says Jim Link of Randstad. With the
involvement of substantiation with evidence, the associations between HR measurements and
commercial and financial performance will become clearer, particularly as the technology develops and
intriguing discoveries trigger specific, deeper investigation KPMG. (2015).
 HR Analytics is about decoding big data to suit the organizational requirement, for which following
are the challenges faced by HR:
 There is lack of skill set and understanding of big data among HR practioners, due to which HR is
unable to leverage the available data and create meaningful information for critical decision making
which is then based on intuitions and experiences rather than on facts.
 Analytics requires modern Information technology infrastructure which may not be affordable for
the smaller organizations.
 Maintaining privacy and confidentiality of the data is one important criteria of Analytics success as a
lot of private data is collected in the process which in wrong hands can pose trouble.
 HR Analytics is seen as technology which takes out human out of the human resource causing
resistance and not applying in decision making.
Suggestions
 Organizations will have to give ample time and training to develop competency while implementing
HR Analytics so as to best articulate the goals and objectives of use of the technology.
 Integration of analytics with different functions is essential to get the best of analytics.
 Organizational leaders and managers will have to create a ecosystem where decision making is more
on the basis of facts and data collected rather than on the basis of their gut feeling.
 Analytics is all about getting the data together and derive the meaningful result, isolated bits and
pieces of data may prove to be pointless.
 Analytics is a objectively creating a set up for employees to come together and contribute towards
organization, hence organization communication is key to its success. Every member need to be
know the goals and understand its important rather than being surprises.
Conclusion
Finally, although there is evidence of significant complementarities among information technology, HR
analytics and performance pay, still other unobserved organizational practices that are correlated with
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Studies in Indian Place Names
(UGC CARE Journal) ISSN: 2394-3114
Vol-40-Issue-95-March-2020

HR analytics and performance pay are not looked upon. If HR wants to play a strategic role in
organizations it needs to develop its ability to measure how human capital decisions affect the business
and how business decisions affect human capital. The growing use of information technology is a clear
positive with respect to the ability to change and develop capability for achieving organizational goals
Lawler, E. E., Levenson, A., & Boudreau, J. (2004).
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