The evolution of HRM from payroll and administration to strategic business partner is arguably the most significant functional transformation in management history.

Among the factors that have contributed to this evolution, information technology (IT) is chief. By equipping HR managers with the information and tools they needed to manage the function effectively and serve their constituents better, IT has revolutionised HR. HRIS is now a standard feature of IT solutions. Self-service enabling technologies are par for the course. HR and IT now stand at the cusp of the next wave in HR Transformation, namely HR Analytics.

While there is certainly plenty more information today than was the case a decade ago, the ever-increasing complexities of business mean that information in and of itself is insufficient. The ability to measure the right things and measure them right and the imagination to see connections among apparently disparate data sets will be critical to success going forward.

Welcome to the Science of HR Analytics

Analytics are not the production of endless streams of data. Good analytics seek to illumine our understanding of phenomena by identifying causal or correlative connections between different data sets. Thus, by connecting data relating to performance, attrition and career progression, new insights and meanings can occur, which none of the data streams, in and of themselves, would be able to provide. This in turn can help solve seemingly intractable problems or hint at possible actions that can secure for the organisation a long-lasting source of competitive advantage in the market for talent.

But analytics are not all IT! To make analytics work requires imagination. And this is the job of an HR manager. What data sets should be seen together? Why? What kind of data, when juxtaposed, can provide us fresh insights? These are questions that only the user, in this case HR, can pose. And if the questions are not posed, then the analytics cannot help.

HR executives must therefore develop the skills and the imagination required to seek out connections where none apparently exist. How can they do so? First by ensuring each data stream is comprehensively and accurately organised. Then, by thinking through what they wish to measure, why and how (HR Metrics). And lastly by asking the question “might this not be the case?” which would lead them to seek and examine relevant metrics that matter across HR processes.

For organisations that have implemented large IT solutions, metrics and analytics are the next evolutionary step. Developing and implementing the right metrics is the first step in using IT’s analytical capabilities. PwC’s Saratoga is uniquely positioned to help organisations do this. With information relating to nearly 500 metrics covering all HR processes and going back several decades, Saratoga is the most diverse, rich and comprehensive global database of HR metrics.

The consistent use of Saratoga to measure HR’s contribution across a range of processes coupled with the implementation of robust systems for information capture will prepare the organisation for HR Analytics.

Concerned about the high level of attrition at its stores, a global retail major reviewed hiring data by channel (search firm portal, referrals etc), source of hire (location, university), and interviewer. It helped that when the company was implementing an enterprise-wide IT solution a few years earlier, its managers were thoughtful and imaginative about the information they needed to capture and store.

The analyses revealed that among the top performers, there was a higher probability of retention among graduates living within a five kilometre radius of the store and sourced through referrals from its existing workforce. Armed with this insight, the company strengthened its referral program and used ‘distance from store’ as a criterion for short listing applicants. Attrition levels came down as predicted as did the cost of hiring.

To know more about the wonders HR Analytics can do, join Workforce Analytics Conclave on Mar 3rd, 2016. Register here.