Analytical intelligence applied to human resources

Analytical intelligence applied to human resources

It’s been a few years since companies have begun to turn their efforts into creating statistical analyses of their human resources. First, they did it through the databases of their Human Resources systems and, then, the more advanced ones, with a human resources data warehouse that would allow them to obtain several reports and certain indicators such as turnover percentage, and an amount of employees per area, among others.

As of today, new technologies such as Big Data, social networks, mobile and cloud-based software allow companies to perform processes of applied analytical intelligence for human resources departments.

Currently, the way to make decisions for human resources management is drastically changing. The human resources department has gradually positioned itself as a strategic partner of the company. The leader of this sector should foresee what kind of human capital they will need in the organization to meet their goals in the medium to long-term, and they should contribute with their advice to the success of the business in general. Human capital is the most important one in the company, and it’s also the most complex one to manage, particularly with the reality of the coexistence of up to four generations within the same institution, with motivations, expectations and personal aspirations which are very different, that should be contemplated and satisfied in favor of building a harmonious and enthusiastic environment in the daily work.

Some time before, in order to make business decisions, you could count on data obtained from basic, static and historical indicators. For instance, turnover indicators by area would provide the percentage of people that came in and went out of the company. Then, this data could be crossed with the indicator of dismissal causes to determine if there were any firings or if the job losses happened by decision of the employees themselves.

However, up until now it was not possible to determine what was the probability of losing a manager, or why was the retention policy not working, or what were the common characteristics of the managers that were leaving the company. In order to obtain this information, a much deeper analysis is needed, through predictive models and simulations of different scenarios through HR Analytics.

In the immediate future, companies will include these predictive analysis tools within the core of their HR systems. From then on, it would also be necessary to hire data scientists, new members of the staff of Human Resources which would be mathematicians, engineers, statistics or computer scientists, which represents a true challenge in order to integrate them into the traditional team. The human resources department is already beginning to count on new tools and special resources.

Indicators

Human Capital Management is the most strategic and sensitive task of the organization. People are the most important capital that a company can possibly have.

For the department of Human Resources, it’s important to perform periodic audits in order to determine the effectiveness of measures and processes that they start in order to manage the organization’s human capital. This takes place through certain indicators that are a part of the area’s integral system.

Indicators measure which Human Resource Services are the most important ones, how accurate is the priority that is being given to them, how can the management be improved even more, what is the cost-benefit relation of the service, and what would be the cost of improving those services at the required level. From knowing this scenario, a company can define which services can continue, which ones can be outsourced, which can be improved or redesigned and which can be discarded altogether.

Definition of parameters to work with indicators

Each area determines the variables over which they will measure their performance, a goal or range of action is assigned, and that way the performance indicators are set. In order to audit the effectiveness of the decisions of any sector in the organization, it’s necessary for each one to establish the parameters to control that performance, which will later be assessed with a performance evaluation.

When it comes to HR management, there are four large variable groups to consider to, later on, analyze the results of corresponding indicators. Let’s take a look at them:

Image courtesy of T'ruah at Flickr.com
Image courtesy of T’ruah at Flickr.com
  • The general ones of HR management
    • Income per human capital
    • Cost per human capital
    • Productivity of the human capital
    • Mean payroll
    • Worked hours
    • Extra hours
    • Human capital turnover
    • Absenteeism
    • ROI (Return on Investment)
    • Added value of human capital
  • Hiring and selection
    • Cost of hiring
    • Selection
    • Selection times
    • Quality of hiring
  • Environment, development, and training
    • Voluntary firings
    • Talent retention
    • Motivation and satisfaction of human capital
    • Promotions
    • Development of key skills
    • Conflictivity
    • Trained employees
    • Cost of training
    • Quality of training
    • Return on investment (ROI) of training
  • Hygiene and security at work
    • Dangerousness
    • Corrective actions
    • Costs of prevention and individual protection equipment

Related content: Read Jason Hanold’s “More on the worst mistakes in team relationships”

 

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