HR Analytics: Examining the new trend in Human Resources Management

HR Analytics: Examining the new trend in Human Resources ManagementABSTRACTAim/Research QuestionUtilizing Big Data in business has been a new trend over the past few years. ‘Big Data’ is a common buzz word circulating... [ view full abstract ]

HR Analytics: Examining the new trend in Human Resources Management

ABSTRACT

Aim/Research Question

Utilizing Big Data in business has been a new trend over the past few years. ‘Big Data’ is a common buzz word circulating within the business industry. Big Data was brought to the public’s attention in the movie “Money Ball” and was successfully implemented by the Boston Red Sox who have utilized Big Data analytics to win their first World Series in 86 years in 2004. Big Data refers to an enormous amount of data, both structured and unstructured, that are used to make effective business decisions (Russom, 2011). A number of companies such as Amazon and Google have notably taken advantage of the Big Data trend. 

The role of Human Resources (HR) has seen a dramatic change over the past decade. HR employees are no longer viewed in the traditional sense as administrative or clerical. Rather, they are viewed as strategic partners tasked with leveraging a qualified workforce.  HR departments can benefit and capitalize on the Big Data trend, and assist organizations in reaching new levels of success.  HR analytics, which manages HR-related data, is of great importance to organizational success.  HR analytics helps to make enhanced data-driven decisions (in place of ‘gut feelings’) on who to hire, who to fire and who to monitor for job retention. Evidence-based and data-driven analytics have been used in various HR dimensions to help enhance organizational effectiveness.  That being said, HR analytics also faces numerous challenges. This paper intends to examine the impact of HR analytics in the workplace at multiple levels. It also aims to address the challenges that HR analytics is currently facing. In the end, the current paper makes an effort to point out the future direction for data analytics research in the field of human resources management.

Design/Methodology Approach and Findings

This project conducts literature review related to HR analytics and aims to provide a framework regarding the link between HR analytics and company/employee performance. Big Data, as an essential part of organization, is now being married with organizational strategic activities (Davenport, Barth, & Bean, 2012;). Big Data is increasingly perceived as an asset. Drawing upon Resource-Based Theory (Barney, 1986), Big Data helps to facilitate organizational competitiveness, creativity and efficiency. Hence at macro level, Big Data in HR may boost company performance. Studies have found that companies that were using data-driven decision making were 5% more productive and 6% more profitable compared to their competitors which was ultimately reflected in their increased stock market valuations (McAfee, Brynjolfsson & Davenport, 2012).

In addition to organizational level success, Big Data can also contribute to increased individual performance. Conservation of Resources theory (COR, Hobfoll, 1989) stipulates that individuals strive to acquire and maintain resources that help them to reach their goals. Resources include “objects, personal characteristics, conditions, or energies that are valued by the individual or that serve as a means for attainment of these objects” (Hobfoll, 1989, p. 516). Technology support are significant resources for employees, which can save time and be more efficient at work. At micro-level, deploying Big Data may help to enhance employees’ job performance. The United Parcel Service (UPS) has used Big Data in conjunction with GPS to ensure that their employees are driving safely (Davenport & Dyché, 2013). Also, Big Data in HR could help to increase employee performance and ultimately employee retention and enhance employees’ learning (Espenson, 2017). 

Here are the propositions:

Proposition 1. At micro-level, HR analytics is highly correlated with employee learning.

Proposition 2. At micro-level, HR analytics is highly correlated with employee training.

Proposition 3. At micro-level HR analytics is highly correlated with employee recruiting and

retention.

Proposition 4. At macro-level, HR analytics is highly correlated with company

performance.

Research Limitations/Implications

            One of the major limitations of this review study is that current research on HR analytics remains very meager. Very limited empirical research studies have been conducted on HR analytics. Moreover, Human resources management has failed to develop the right metrics and analytic models (Lawler & Mohrman, 2003).

Practical Implications and Social Implications

Despite the increasing importance of HR analytics, there are huge gaps between research findings and applications. In reality, compared with other business fields, such as Finance and Marketing, Big Data has not been as widely used in HR as people expected. A global study conducted by Tata Consultancy Services found that only 5% of big-data investments were made in Human Resources (Boudreau, 2017). Further, even now more and more companies start investing in Big Data and analytics to make HR more data-driven, there is a huge gap between research findings and applications (Bersin, 2013), i.e., what has been found vs. what has been done. HRM departments may have to redefine the skill set they are looking for in HR professionals to hone in on data analytical skills. For the right action to occur, the person deploying the analytics has to be able to read the data and make the sound, evidence-based decision for how to act on those results (Campisi et al., 2016).

Originality/value

            Human resources management is the key to an organizations survival and success. Data analytics has been a critical role in promoting human resources management, as evident in recruiting, selection, training, performance appraisal and the like. The amalgamation of Big Data and HR will tremendously cement HR’s role as a strategic partner of the organizations. The marriage between HR and Big Data will be a long lasting one, although the beginning stage needs time and patience to adapt.  The net benefit gained from deploying Big Data for HR will undoubtedly lead to greater utilization and ultimately greater insights.

References

Barney, J. B. (1986), “Can Organizational Culture be a Source of Sustained Competitive

Advantage?”, Academy of Management Review, Vol. 11, pp. 565 – 665.

Bersin, J. (2013), “Big data in human resources: A world of haves and have-nots”, Forbes.           

Boudreau, J. (2017), “HR must make people analytics more user-friendly”, Harvard Business          Review. Available at https://hbr.org/2017/06/hr-must-make-people-analytics-more-user-

friendly.

Brown, B. and Gottlieb, J. (2017), “The need to lead in data and analytics”, McKinsey &

Company. Available at http://www.mckinsey.com/business-functions/digital-

mckinsey/our-insights/the-need-to-lead-in-data-and-analytics.   

Campisi , V., Gupta, A., Karu, Z., Nilson, V., and Sigala, R. (2017), “How companies are using

Big data and analytics”, McKinsey & Company.

Davenport, T. H., Barth, P., and Bean, R. (2012), “How big data is different”, MIT Sloan   Management Review, Vol. 54, pp. 43-46.

Davenport, T. H. and Dyché, J. (2013), “Big data in big companies”, International Institute for     Analytics, Vol. 3, pp. 1-31.

DeRose, C. (2013), “How Google Uses Data to Build a Better Worker”, The Atlantic. Atlantic           Media Company. Available at

https://www.theatlantic.com/business/archive/2013/10/how-google -uses-data-to-build-a-better-worker/280347/.

Espenson, A. (2017), “How to utilize Big Data for HR”. business.com. Available at             https://www.business.com/articles/how-to-utilize-big-data-for-human-resources/.

Gover, I. (2016), “5 companies using Big Data to transform Human Resources”, Modern           Workforce. Available at https://www.geteverwise.com/human-resources/5-companies           -using-big-data-to-transform-human-resources/.

Harvard Business Review Analytic Services Report. (2015). “The Big Data opportunity for HR and Finance”, Harvard Business Review. pp. 1-16.

Lawler, E. E., and Mohrman, S. A. (2003), Creating a strategic human resources organization:

An assessment of trends and new directions, Stanford: Stanford University Press.

McAfee, A., Brynjolfsson, E., and Davenport, T. H. (2012), “Big data: the management

Revolution”, Harvard Business Review, Vol. 90, pp. 60-68.

Russom, P. (2011), “Big data analytics”, TWDI Research, Vol. 4, pp. 1-35.