HR Analytics

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
Decision
Analytics
=
Business
Intelligence
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
Logistics & Supply
Chain Analytics
1980s Financial &
Budget Analytics
Integrated Supply
Chain
Integrated ERP &
Financial Analytics
Customer Analytics,
CRM & Data
Warehousing
Customer
Segmentation and
Shopping Basket
Web Behavior
Analytics
Predictive Customer
Behavior
Recruiting, Learning,
Performance
Management
Integrated Talent
Workforce Planning
Business-driven
Talent Analytics
Predictive Talent
Models HR
Analytics
Early 1900s 1950s-60s 1970s-80s Today
Industrial Economy Financial Economy Consumer & Web Economy Talent Economy
Steel, Oil, Railroads Conglomerates Segmentation &
Personalization
Globalization, Diversity, Skill &
Leadership shortages
S
o
u
r
c
e
:

B
e
r
s
i
n

&

A
s
s
o
c
i
a
t
e
s

Buzzwords
#BigData
#Cloud
#SaaS
Agenda
2. Analytics
Stages, Types, Domains, Tools
3. HR Analytics
How? Predictive possibilities
4. Case studies
Stages of Analytics
Reporting
What happened?
Analysis & Monitoring
Why did it happen? What is
happening now?
Predictive Analytics
What can happen?
Complexity
B
u
s
i
n
e
s
s

v
a
l
u
e

Types of Analytical Models
Reporting
Past Data
Current
Data
Future
PREDICTS
PREDICTS
PREDICTS
Drawing
Conclusions or
Inferences
Representation of
Data and
Summarizing
INFERENTIAL ANALYTICS
DESCRIPTIVE ANALYTICS
REPORT
PREDICTIVE ANALYTICS
Analytics Domains
Retail Sales Analytics
Financial Services
Analytics
Risk & Credit
Analytics
Talent / HR Analytics Marketing Analytics
Consumer Behavior
& Cohort Analytics
Collections Analytics Fraud Analytics Pricing Analytics
Telecom Analytics
Supply Chain
Analytics
Web Analytics
Tools, Matrices, Software
Reporting
Metric Types Description
Rate Proportion of one or more parts to a whole of 100%
Ratio One number relative to another, often expressed as a
reduced fraction
Composition Breakdown of a whole into its parts, showing the number
or percentage allocated to each
Index Weighted combination of disparate data into one number
relative to a scale or anchor
Volume Number of people or units with a characteristic, or
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
Typical tools /
software:

Microsoft
Excel (max
used)
BI reporting
tools
ERP reporting
tools,
dashboards
Typical tools / software:

Microsoft Excel
(limited usage)
BI reporting tools
Statistical software
like SAS, R etc
Representation of Data:
Frequency Distributions: Relative and Percent Frequency
Graphs: Bar, Pie, Dot Plot, Histogram, Ogive
Cumulative Distributions

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
DESCRIPTIVE ANALYTICS

like SAS, R etc
Survey tools
Sampling Types:
Random
Systematic Sampling
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
INFERENTIAL ANALYTICS

like SAS, R etc
Regression:
Linear Regression
Non Linear Regression

Factor Analysis

Cluster Analysis
Over to Dilbert
Agenda
2. Analytics
3. HR Analytics
What can be measured? Predictive possibilities
4. Case studies
Why HR Analytics?
Measure &
Manage
Return on
Investment
Linkage of
Business
Objectives
and People
Strategies
Performance
Improvement
What gets
measured, gets
managed; What
gets managed,
gets executed
- Peter Drucker
The business
demands on HR are
increasingly going
to be on analysis
just because people
are so expensive
- David Foster
To clearly
demonstrate the
interaction of
business objectives
and workforce
strategies to
determine a full
picture of likely
outcomes
HR Dashboards - SAP
Global organizations
with workforce
analytics and
workforce planning
outperform all other
organizations by 30%
more sales per
employee.
- CedarCrestone
Steps in HR Analytics
Hindsight Insight Foresight
Gather data by
Reporting
Make sense of data by
Analysis and
Monitoring
Develop predictive
models
What is generally measured/tracked today?
63%
52%
48%
45%
37%
31%
30%
27%
27%
Employee Engagement
Performance Ratings
Retention / Turnover
HIPOs & HIPO pipeline
% employees with dev plans
Readiness for job
Internal hire %age
Diversity of workforce
Level of expertise / competance
Source: Bersin & Associates 2012 US research
What should/could be measured?
HR
Matrices
Recruitment
Retention
Performance &
Career
Management
Training
Comp &
Benefits
Workforce
Organization
effectiveness
Recruitment
Recruitment Internal Movement Staffing Effectiveness
1. Employment Brand Strength
2. External Hire Rate
3. Net Hire Ratio
4. New Position Recruitment Rate
5. New Position Recruitment Ratio
6. Recruitment Source Breakdown
7. Recruitment Source Ratio
8. Rehire Rate
1. Career Path Ratio
2. Cross-Function Mobility
3. Internal Hire Rate
4. Internal Placement Rate
5. Lateral Mobility
6. Promotion Rate
7. Promotion Speed Ratio
8. Transfer Rate
9. Upward Mobility
1. Applicant Interview Rate
2. Applicant Ratio
3. Average Interviews per Hire
4. Average Sign-On Bonus
Expense
5. Average Time to Fill
6. Average Time to Start
7. Interviewee Offer Rate
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
2. New Hire Turnover
Contribution
3. Retention Rate
4. Termination Breakdown by
Performance Rating
5. Termination Reason Breakdown
6. Voluntary Termination Rate
1. Employee Commitment Index
2. Employee Engagement Index
3. Employee Retention Index
4. Market Opportunity Index
5. Offer Fit Index
1. Average Termination Value
2. Average Voluntary Termination
Value
3. Termination Value per FTE
4. Turnover Cost Rate< 1-Year
Tenure
Performance & Career Management
Performance Management Career Management
1. Average Performance Appraisal Rating
2. Employee Turnaround Rate
3. Employee Upgrade Rate
4. High Performer Growth Rate
5. Peer Review Rate
6. Performance Appraisal Participation Rate
7. Performance Rating Distribution
8. Performance-Based Pay Differential
9. Performance Contingent Pay Prevalence
10. Self Review Rate
11. Upward Review Rate
1. Cross-Function Mobility Managers
2. Employee Satisfaction with Leadership
3. LDP Prevalence Rate
4. Manager Instability Rate
5. Manager Quality Index
6. Positions Without Ready Candidates Rate
7. Successor Pool Coverage
8. Successor Pool Growth Rate
Training & Development
Training Education & Development
1. Average Training Class Size
2. E-Learning Abandonment Rate
3. Employee Satisfaction with Training
4. Training Channel Delivery Mix
5. Training Course Content Breakdown
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
1. Development Program Penetration Rate
2. Educational Attainment Breakdown
3. Staffing RateGraduate Degree
4. Staffing RateHigh Potential
5. Tuition Reimbursement Request Rate
Compensation & Benefits
Compensation Benefits Equity
1. Average Cost Rate of
Contractors
2. Average Hourly Rate
3. Bonus Actual to Potential Rate
4. Bonus Compensation Rate
5. Bonus Eligibility Rate
6. Bonus Receipt Rate
7. Compensation Satisfaction
Index
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
1. Benefits Expense per FTE
2. Benefits Expense Type
Breakdown
3. Benefits Operating Expense
Rate
4. Benefits Satisfaction Index
5. Benefits Total Compensation
Rate
1. Average Number of Options per
Employee
2. Equity Incentive Value per
Employee
3. Net Proceeds of Options per
Employee Exercising
4. Number of Options Exercised
per Employee
5. Stock Incentive Eligibility Rate
Workforce
Demographic Structural Tenure
1. Age Staffing Breakdown
2. Average Workforce Age
3. Ethnic Background Staffing
Breakdown
4. Gender Staffing Breakdown
5. Staffing RateDisability
6. Staffing RateFemale
7. Staffing RateMinority
8. Staffing RateMultilingual
1. Average Span of Control
2. Customer-Facing Time Rate
3. Employee Ownership Rate
4. Employment Level Staffing
Breakdown
5. Function Staffing Breakdown
6. Staffing RateCorporate
7. Staffing RateCustomer Facing
8. Staffing RateManagerial
9. Staffing RatePart Time
10. Staffing RateRevenue
Generating
11. Staffing RateTemporary
12. Staffing RateUnion
Employees
1. Average Workforce Tenure
2. Organization Tenure Staffing
3. Breakdown Staffing Rate< 1-
Year Tenure
Organizational Effectiveness
Productivity Structural Innovation
1. Human Investment Ratio
2. Operating Expense per FTE
3. Operating Profit per FTE
4. Operating Revenue per FTE
5. Other Labor Rate
6. Return on Human Investment
Ratio
7. Work Units per FTE
1. Corporate Expense Rate
2. Employee Stock Ownership
Percentage
3. Intangible Asset Value per FTE
4. Market Capitalization per FTE
1. New Products & Services
2. Revenue per FTE R&D Expense
Rate
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

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
1

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
2
Advanced Analysis & Predictive examples

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
3

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
4
Over to Dilbert
Agenda
2. Analytics
3. HR Analytics
4. Case studies
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
2. Analytics
3. HR Analytics
4. Case studies
Importance of HR Analytics as a function
20%
Analysis
80% Data Capture
80%
Analysis
20% Data Capture
Go out and
measure &
analyze the
reasons for
turnover of
my sales
people
Build a
dashboard
that
continuously
correlates
retention with
engagement,
competency
scores and
other
measures
Measurement as a
Project
Measurement as a
Process
How does Analytics fit in HR delivery model
Shared Services
/ Process
administration
Center of
Excellence
HR Business
Partnering
HR Head
Zonal HR Head
Location 1 HR
Location 2 HR
Business Unit HR
BU 1 HR
BU 2 HR
Compensation & Benefits
Recruitment & Selection
Learning & Development
HR Analytics
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
Thanks! Q&A time
For one last time
LinkedIn: in.linkedin.com/in/akshayraje/
Twitter: @akshayraje
Email: akshay.raje@gmail.com

HR Analytics

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