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Big data in HR: Why People Analytics is on the rise

The latest data and analytics buzz comes from the field of advanced HR analytics, where the application of new thinking to talent management is becoming more mainstream. After years of HR being regarded as a ‘hiring and firing function’, big business is now talking about the opportunity to apply big data to people decisions, and companies are stepping up and making the investment.

“There is a major shift taking place in the HR department. The role of the HR practitioner has changed - HR is no longer a soft function, but a serious business imperative that has the ability to directly impact profits. Workplace analytics can give insight into Absence Management, Presenteesim (present but unproductive), Talent Acquisition and Retention, Fatigue and Accident Management, and tell you exactly where your business is bleeding and what to do about,” says Joash Narainsamy, Organisational Wellness Specialist at ICAS Southern Africa.  ICAS Southern Africa is part of ICAS International (Independent Counselling and Advisory Services, a division of AXA PPP), the world’s leading provider of behavioural risk management services to the business community.

One of Narainsamy’s biggest clients knew they had a problem with absenteeism but were struggling to pin point the exact reason. This prevented them from implementing a targeted intervention. Working closely with ICAS, the client supplied as much data and detail around absenteeism that they could. This data was plugged into Headline, ICAS’ specialist software, and the resulting algorithm was surprising. It turned out that this particular group of employees were absent mainly due to substance abuse, which was driven by two factors:

  1. Financial pressure from too many garnishee orders to the point where the employee couldn’t afford to get to work, and
  2. Work permit expiration which was hugely stressful for this group of blue collared workers, so they looked to alcohol and drugs for some sort of relief

“By assisting employees with their work permits and helping them manage the application process, the client saw a great improvement in absenteeism rates. This, coupled with education initiatives around financial planning and substance abuse, empowered their employees to make better lifestyle decisions while drastically cutting down on human capital risk,” says Narainsamy.

Accident Management is a great value add to any industrialised business in mining, transport or construction. Working in close conjunction with Occupational Health services, ICAS can predict to within a 90% accuracy rate (depending on quality and scale of data available) elevated risk in the different operational areas.

Considering an accident can have devastating impacts for both the employee and the business, the ability to track and analyse this kind of risk is incredibly powerful.

What HR analytics does is correlate business data and people data. This establishes important connections later on in the process. The key aspect of HR analytics is to conclusively show the impact the HR department has on the organisation as a whole. “Establishing a cause-and-effect relationship between what HR does and business outcomes - and then creating value-based employee strategies based on that information - is what HR analytics is all about,” says Narainsamy.

The top 5 reasons to invest in HR analytics and metrics*:

  1. To increase profit – a study by the Harvard Business Review group found that firms which most effectively managed their workforce using analytics improved their firms profit by as much as 65%.
  2. Metrics allow you to demonstrate your business impacts – working with the CFO’s offices, it is possible to quantify the Rand impact that HR actions have on business goals. Quantifying the business impact in Rands makes it easy to compare your business impacts to those of other more visible business functions.
  3. Numbers are the most effective way to influence managers and executives – executives and managers are fanatical about numbers, which can be used to influence them and to change their behaviour. Since a great deal of people-management work is done by managers, provide them with whatever numbers and data that might be required to make them more compliant.
  4. Continuous improvement is likely and error rates will go down – metrics drive and allow for continuous improvement. The stark reality of metrics forces many to realise that there is much left to be done. Because metrics also highlight errors, the use and distribution of metrics will dramatically increase the number of major errors and weak decisions in your function (i.e. bad hires, preventable turnover, delayed terminations etc.).
  5. Increased focus among your employees – the practice of selecting what to measure and what not to measure unambiguously lets everyone know what’s important and what’s not. Gathering and reporting metrics has the effect of getting everyone focused on the right things.