HR Analytics

- Akshay Raje
Agenda
1. Core concepts, terminologies & buzzwords
Business Intelligence, Analytics
Big Data, Cloud, SaaS
2. Analytics
Types, Domains, Tools
3. HR Analytics
Why? What is measured?
How? Predictive possibilities
4. Case studies
5. HR Analytics org structure & delivery model
Core concepts and terminologies

Analytics = Business
Intelligence

Decision
Core concepts and terminologies

Business intelligence (BI) is a set of theories,

methodologies, processes, architectures, and
technologies that transform raw data into meaningful
and useful information for business purposes.

Business analytics (BA) refers to the skills,

technologies, applications and practices for continuous
iterative exploration and investigation of past business
performance to gain insight and drive business
planning.
1. Business Intelligence Success Factors: Tools for Aligning Your Business in the Global Economy. Hoboken, N.J: Wiley & Sons. ISBN 978-0-470-39240-9.
2. Beller, Michael J.; Alan Barnett (2009-06-18). "Next Generation Business Analytics". Lightship Partners LLC
 History of BI and Analytics
Decision support systems (DSS) began in the 1960s as computer-aided models created to assist
with decision making and planning.
From DSS, data warehouses, Executive Information Systems, OLAP
and finally Business Intelligence came into focus beginning in the late 80s.
Because of the rigidness of enterprise level BI tools, analytics started gaining traction in mid 00
Predictive Talent
Integrated ERP & Predictive Customer
Models HR
Financial Analytics Behavior
Analytics
Integrated Supply Web Behavior Business-driven
Chain Analytics Talent Analytics
Customer
1980s Financial & Integrated Talent
Segmentation and
Budget Analytics Workforce Planning
Shopping Basket
Customer Analytics, Recruiting, Learning,
Logistics & Supply
CRM & Data Performance
Chain Analytics
Warehousing Management
Source: Bersin & Associates

Industrial Economy Financial Economy Consumer & Web Economy Talent Economy

Steel, Oil, Railroads Conglomerates Segmentation & Globalization, Diversity, Skill &
Personalization Leadership shortages

Early 1900s 1950s-60s 1970s-80s Today

Buzzwords

#BigData #SaaS
#Cloud
Agenda
1. Core concepts, terminologies & buzzwords
Business Intelligence, Analytics
Big Data, Cloud, SaaS
2. Analytics
Stages, Types, Domains, Tools
3. HR Analytics
Why? What is measured?
How? Predictive possibilities
4. Case studies
5. HR Analytics org structure & delivery model
Stages of Analytics

Predictive Analytics
What can happen?
Business value

Analysis & Monitoring

Why did it happen? What is
happening now?

Reporting
What happened?

Complexity
Types of Analytical Models
PREDICTS
PREDICTIVE ANALYTICS
PREDICTS

Current
Future
Data
Predictive Analytics
PREDICTS

INFERENTIAL ANALYTICS

Drawing
Analysis & Monitoring Conclusions or
Past Data Inferences
REPORT

DESCRIPTIVE ANALYTICS
Representation of
Reporting Data and
Summarizing
Analytics Domains

Financial Services Risk & Credit

Retail Sales Analytics
Analytics Analytics

Consumer Behavior
Talent / HR Analytics Marketing Analytics
& Cohort Analytics

Collections Analytics Fraud Analytics Pricing Analytics

Supply Chain
Telecom Analytics Web Analytics
Analytics
Tools, Matrices, Software Reporting

Metric Types Description Typical tools /

software:
Rate Proportion of one or more parts to a whole of 100%
Ratio One number relative to another, often expressed as a Microsoft
reduced fraction Excel (max
Composition Breakdown of a whole into its parts, showing the number used)
or percentage allocated to each BI reporting
tools
Index Weighted combination of disparate data into one number ERP reporting
relative to a scale or anchor tools,
Volume Number of people or units with a characteristic, or dashboards
occurrences of an event
Cost Organizational expenses, revenues, profits, or value
Time Process cycle time, volume of time invested, or timeliness
of events
Quality Performance of people, processes, or systems
Satisfaction Participants subjective perceptions of a process,
program, or experience
Tools, Matrices, Software Analysis & Monitoring

DESCRIPTIVE ANALYTICS Typical tools / software:

Representation of Data: Microsoft Excel

Frequency Distributions: Relative and Percent Frequency (limited usage)
Graphs: Bar, Pie, Dot Plot, Histogram, Ogive BI reporting tools
Cumulative Distributions Statistical software
like SAS, R etc
Measures of central tendency:
Mathematical: Arithmetic / Geometric / Harmonic Mean
Positional: Median, Mode

Measures of dispersion: character of variability in data

Absolute: Range, Quartile / Mean / Standard Deviation
Relative: Coefficient of Range / QD / MD / variation

Correlation: degree or extent to which two or more variables

fluctuate with reference to one another
Pearson Correlation: Correlation for Continuous data
Spearman Correlation: Correlation for Ordinal Data
Tools, Matrices, Software Analysis & Monitoring

INFERENTIAL ANALYTICS Typical tools / software:

Sampling Types: Statistical software

Random like SAS, R etc
Systematic Sampling Survey tools
Stratified
Cluster Sampling

Statistical inference: Inference about a population from a

random sample drawn

Confidence Intervals: Using standard error (SE) for applying

confidence intervals to estimates

Hypothesis Testing: Assertion regarding the statistical

distribution of the population
Tools, Matrices, Software Predictive Analytics

Regression: Typical tools / software:

Linear Regression
Non Linear Regression Statistical software
like SAS, R etc
Factor Analysis

Cluster Analysis
Over to Dilbert
Agenda
1. Core concepts, terminologies & buzzwords
Business Intelligence, Analytics
Big Data, Cloud, SaaS
2. Analytics
Stages, Types, Domains, Tools
3. HR Analytics
Why? What is measured?
What can be measured? Predictive possibilities
4. Case studies
5. HR Analytics org structure & delivery model
Why HR Analytics?
What gets The business
measured, gets demands on HR are
managed; What increasingly going
gets managed, to be on analysis
gets executed Measure & Return on just because people
- Peter Drucker are so expensive
Manage Investment
- David Foster

To clearly Global organizations

demonstrate the with workforce
Linkage of
interaction of analytics and
business objectives Business
Performance workforce planning
and workforce Objectives outperform all other
Improvement
strategies to and People organizations by 30%
determine a full Strategies more sales per
picture of likely employee.
outcomes - CedarCrestone
HR Dashboards - SAP
Steps in HR Analytics

Hindsight Insight Foresight

Gather data by Make sense of data by Develop predictive

Reporting Analysis and models
Monitoring
What is generally measured/tracked today?

Employee Engagement 63%

Performance Ratings 52%
Retention / Turnover 48%
HIPOs & HIPO pipeline 45%
% employees with dev plans 37%
Readiness for job 31%
Internal hire %age 30%
Diversity of workforce 27%
Level of expertise / competance 27%

Source: Bersin & Associates 2012 US research

What should/could be measured?

Recruitment

Organization
Retention
effectiveness

HR
Matrices Performance &
Workforce Career
Management

Comp &
Training
Benefits
Recruitment
Recruitment Internal Movement Staffing Effectiveness
1. Employment Brand Strength 1. Career Path Ratio 1. Applicant Interview Rate
2. External Hire Rate 2. Cross-Function Mobility 2. Applicant Ratio
3. Net Hire Ratio 3. Internal Hire Rate 3. Average Interviews per Hire
4. New Position Recruitment Rate 4. Internal Placement Rate 4. Average Sign-On Bonus
5. New Position Recruitment Ratio 5. Lateral Mobility Expense
6. Recruitment Source Breakdown 6. Promotion Rate 5. Average Time to Fill
7. Recruitment Source Ratio 7. Promotion Speed Ratio 6. Average Time to Start
8. Rehire Rate 8. Transfer Rate 7. Interviewee Offer Rate
9. Upward Mobility 8. Interviewee Ratio
9. New Hire Failure Factor
10. New Hire Performance
Satisfaction
11. New Hire Satisfaction Offer
Acceptance Rate
12. On-Time Talent Delivery Factor
13. Recruitment Cost per Hire
14. Recruitment Expense
Breakdown
15. Referral Conversion Rate
16. Referral Rate
17. Sign-On Bonus Rate
Retention
Turnover Employee Engagement Cost of Turnover
1. Involuntary Termination Rate 1. Employee Commitment Index 1. Average Termination Value
2. New Hire Turnover 2. Employee Engagement Index 2. Average Voluntary Termination
Contribution 3. Employee Retention Index Value
3. Retention Rate 4. Market Opportunity Index 3. Termination Value per FTE
4. Termination Breakdown by 5. Offer Fit Index 4. Turnover Cost Rate< 1-Year
Performance Rating Tenure
5. Termination Reason Breakdown
6. Voluntary Termination Rate
Performance & Career Management
Performance Management Career Management
1. Average Performance Appraisal Rating 1. Cross-Function Mobility Managers
2. Employee Turnaround Rate 2. Employee Satisfaction with Leadership
3. Employee Upgrade Rate 3. LDP Prevalence Rate
4. High Performer Growth Rate 4. Manager Instability Rate
5. Peer Review Rate 5. Manager Quality Index
6. Performance Appraisal Participation Rate 6. Positions Without Ready Candidates Rate
7. Performance Rating Distribution 7. Successor Pool Coverage
8. Performance-Based Pay Differential 8. Successor Pool Growth Rate
9. Performance Contingent Pay Prevalence
10. Self Review Rate
11. Upward Review Rate
Training & Development
Training Education & Development
1. Average Training Class Size 1. Development Program Penetration Rate
2. E-Learning Abandonment Rate 2. Educational Attainment Breakdown
3. Employee Satisfaction with Training 3. Staffing RateGraduate Degree
4. Training Channel Delivery Mix 4. Staffing RateHigh Potential
5. Training Course Content Breakdown 5. Tuition Reimbursement Request Rate
6. Training Expense per Employee
7. Training Hours per FTE
8. Training Hours per Occurrence
9. Training Penetration Rate
10. Training Quality
11. Training Staff Ratio
12. Training Total Compensation
13. Expense Rate
Compensation & Benefits
Compensation Benefits Equity
1. Average Cost Rate of 1. Benefits Expense per FTE 1. Average Number of Options per
Contractors 2. Benefits Expense Type Employee
2. Average Hourly Rate Breakdown 2. Equity Incentive Value per
3. Bonus Actual to Potential Rate 3. Benefits Operating Expense Employee
4. Bonus Compensation Rate Rate 3. Net Proceeds of Options per
5. Bonus Eligibility Rate 4. Benefits Satisfaction Index Employee Exercising
6. Bonus Receipt Rate 5. Benefits Total Compensation 4. Number of Options Exercised
7. Compensation Satisfaction Rate per Employee
Index 5. Stock Incentive Eligibility Rate
8. Direct Comp Operating Expense
Rate
9. Direct Compensation
Breakdown
10. Direct Compensation Expense
11. per FTE
12. Market Compensation Ratio
13. Overtime Expense per FTE
14. Overtime Rate
15. Total Compensation Expense
per FTE
16. Upward Salary Change Rate
Workforce
Demographic Structural Tenure
1. Age Staffing Breakdown 1. Average Span of Control 1. Average Workforce Tenure
2. Average Workforce Age 2. Customer-Facing Time Rate 2. Organization Tenure Staffing
3. Ethnic Background Staffing 3. Employee Ownership Rate 3. Breakdown Staffing Rate< 1-
Breakdown 4. Employment Level Staffing Year Tenure
4. Gender Staffing Breakdown Breakdown
5. Staffing RateDisability 5. Function Staffing Breakdown
6. Staffing RateFemale 6. Staffing RateCorporate
7. Staffing RateMinority 7. Staffing RateCustomer Facing
8. Staffing RateMultilingual 8. Staffing RateManagerial
9. Staffing RatePart Time
10. Staffing RateRevenue
Generating
11. Staffing RateTemporary
12. Staffing RateUnion
Employees
Organizational Effectiveness
Productivity Structural Innovation
1. Human Investment Ratio 1. Corporate Expense Rate 1. New Products & Services
2. Operating Expense per FTE 2. Employee Stock Ownership 2. Revenue per FTE R&D Expense
3. Operating Profit per FTE Percentage Rate
4. Operating Revenue per FTE 3. Intangible Asset Value per FTE
5. Other Labor Rate 4. Market Capitalization per FTE
6. Return on Human Investment
Ratio
7. Work Units per FTE
Critical areas for HR Predictive analytics
1. Turnover modeling. Predicting future turnover in business units in specific
functions, geographies by looking at factors such as commute time, time since last
role change, and performance over time.

2. Targeted retention. Find out high risk of churn in the future and focus retention
activities on critical few people

3. Risk Management. Profiling of candidates with higher risk of leaving prematurely

or those performing below standard.

4. Talent Forecasting. To predict which new hires, based on their profile, are likely to
be high fliers and then moving them in to fast track programs
Advanced Analysis & Predictive examples
1
Problem statement:
An Indian MNC has a linear growth model. It wants to identify relationship between %
revenue growth and % headcount growth. They have revenue and headcount details for
past 10 years.

Solution approach:
Identify the correlation coefficient based on the type of data and plot a scatter plot.
Given that revenue growth is estimated at X% for the next year, we can predict
headcount growth

2
Problem statement:
An HR manager identify 20 variables such as educational qualification, college, age,
gender, nationality etc. that predicts the hiring effectiveness. He wants to identify mutually
exclusive variables which affect hiring effectiveness.

Solution approach:
Using factor analysis , mutually exclusive factors can be identified
Advanced Analysis & Predictive examples
3
Problem statement:
Campus hiring team is interested in how variables, such as entrance test score conducted
by company, GPA (grade point average) and prestige of the institution, effect selection .
The response variable, selected/not selected, is a binary variable

Solution approach:
Selection data is collected for past 5 years for the above parameters indicated.
Here dependent variable is selected/not selected( Selected =1, Not Selected= 0) and
independent variables are Test Score, GPA, Prestige of the institute.
Using logistic regression a equation can be developed

4
Problem statement:
A company conducted a employee engagement survey using a questionnaire developed by
internal HR team. The questionnaire had 15 questions and responses were collected from
50 employees. As a HR manager, we want to identify mutually exclusive factors

Solution approach:
Using factor analysis , mutually exclusive factors can be identified
Over to Dilbert
Agenda
1. Core concepts, terminologies & buzzwords
Business Intelligence, Analytics
Big Data, Cloud, SaaS
2. Analytics
Stages, Types, Domains, Tools
3. HR Analytics
Why? What is measured?
What can be measured? Predictive possibilities
4. Case studies
5. HR Analytics org structure & delivery model
Real world case studies

Starbucks, Limited Brands, and Best Buycan precisely identify the value of a 0.1%
increase in employee engagement among employees at a particular store. At
Best Buy, for example, that value is more than $100,000 in the stores annual operating
income.

Many companies favor job candidates with stellar academic records from prestigious
schoolsbut AT&T and Google have established through quantitative analysis that a
demonstrated ability to take initiative is a far better predictor of high performance on
the job.

Employee attrition can be less of a problem when managers see it coming. Sprint has
identified the factors that best foretell which employees will leave after a relatively
short time.

In 3 weeks Oracle was able to predict which top performers were predicted to leave
the organization and why - this information is now driving global policy changes in
retaining key performers and has provided the approved business case to expand the
scope to predicting high performer flight .
Real world case studies

Dow Chemical has evolved its workforce planning over the past decade, mining
historical data on its 40,000 employees to forecasts promotion rates, internal transfers,
and overall labor availability.

Dow uses a custom modeling tool to segment the workforce and calculates future head
count by segment and level for each business unit. These detailed predictions are
aggregated to yield a workforce projection for the entire company.

Dow can engage in what if scenario planning, altering assumptions on internal

variables such as staff promotions or external variables such as political and legal
considerations.
Agenda
1. Core concepts, terminologies & buzzwords
Business Intelligence, Analytics
Big Data, Cloud, SaaS
2. Analytics
Stages, Types, Domains, Tools
3. HR Analytics
Why? What is measured?
What can be measured? Predictive possibilities
4. Case studies
5. HR Analytics org structure & delivery model
Importance of HR Analytics as a function

Go out and Build a

measure & dashboard
analyze the 20% that
reasons for Analysis continuously
turnover of correlates
my sales 80% retention with
people engagement,
Analysis competency
scores and
other
80% Data Capture measures

20% Data Capture

Measurement as a Measurement as a
Project Process
How does Analytics fit in HR delivery model
Location 1 HR
Zonal HR Head
HR Business Location 2 HR

Partnering
BU 1 HR
Business Unit HR
BU 2 HR
Compensation & Benefits
Center of HR Head
Excellence Recruitment & Selection

Learning & Development

Shared Services HR Analytics

/ Process
administration Shared Services
Common mistakes to avoid

1. Keeping a metric live even when it has no clear business reason

for being
2. Relying on just a few metrics to evaluate employee performance,
so smart employees can game the system
3. Insisting on 100% accurate data before an analysis is accepted
which amounts to never making a decision
4. Assessing employees only on simple measures such as grades and
test scores, which often fail to accurately predict success
5. Using analytics to hire lower-level people but not when assessing
senior management
6. Analyzing HR efficiency metrics only, while failing to address the
impact of talent management on business performance
Key to success in HR Analytics

1. Transparency of business and workforce information

2. Analytics as a journey, not an end

3. Develop culture of data-driven decision-making

4. Empower line leaders, not just HR and L&D

Build an HR Data Warehouse

Deliver Actionable Business Information

 For one last time

Thanks! Q&A time

LinkedIn: in.linkedin.com/in/akshayraje/
Twitter: @akshayraje
Email: akshay.raje@gmail.com