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Defining human resource analytics

People analytics or human resource (HR) analytics refers to the use of analytical techniques such as data mining, predictive analytics and contextual analytics to enable managers to take better decisions related to their workforce. People analytics helps organizations in the following ways:

  • aids in understanding and interpretation of large volumes of data related to employees;

  • identifies underlying trends and patterns in data sets such as enhanced performance in teams with higher number of female employees;

  • helps to predict needs of organization and its employees;

  • helps to prioritize HR activities based on their impact, utility and return on investment to the organization; and

  • does away with subjectivity in decision-making and makes it more transparent.

As organizations often incur high costs in recruitment, development and engagement of employees, especially in the complex work environment that they operate in, they need to take sound, logical and judicious people-related decisions. As opposed to other management functions such as finance, operations, and sales and marketing, the qualititative nature of the HR function has led managers to take such decisions on the basis of intuition, anecdotes, feelings and instincts. However, new-age organizations today have realized the potential of analytics in the domain of HR to make decision-making more data-driven, quantified and objective. Some other reasons for an increase in the adoption of analytics in the domain of HR are:

  • increased focus of organizations’ top management and board of directors to measure and quantify people-related decisions;

  • growing perception that the HR function ought to become more quantitative in nature and that HR professionals should have business acumen; and

  • a connection between analytics-based decisions and employee performance.

Analytical techniques

People analytics helps to seek answers to critical questions such as improvement of productivity; suitability of an employee for a job; staffing requirements of organizations; performance of individuals, teams and departments; and identification of skill gaps. Such insights can be gained from a variety of analytical techniques, such as:

  • Data mining and machine learning: Data mining refers to identifying trends in large amounts of raw data, which are then converted into relevant information. Machine learning is the use of computers in...

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