BIG DATA AND HR ANALYTICS : FACILITATING HARD ANSWERS TO HARD QUESTIONS

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1 BIG DATA AND HR ANALYTICS : FACILITATING HARD ANSWERS TO HARD QUESTIONS Prof. SN RAI Zeenat Shaikh Sonali Naik Assistant professor Student, MBA Student, MBA ASM s Institute of ASM s Institute of ASM s Institute of professional studies, professional studies professional studies India [email protected] [email protected] [email protected] Leon Trotsky said, Tell me anyway - Maybe I can find the truth by comparing the lies. ABSTRACT : With the arrival of Big Data, HR is faced with an unprecedented opportunity to become more data- driven, analytical and strategic in the way that it acquires talent. Indeed, HR has spent much of the past decade trying to find increasingly better ways to apply metrics and analytics to its human capital decisions. Now, powerful new technologies make it possible for HR to blend its internal data with an unprecedented amount of data from external sources to make evidence- based talent management decisions and to raise the department s profile as a strategic partner to senior leadership. This is particularly true when it comes to job boards, which continue to be a top source for employers to tap into active job seekers. Today s more evolved job boards provide a goldmine of information, and the need for HR to successfully leverage this information to win the war for talent has never been greater. Key Words: Big Data, Job Boards, HR Analytics, Leverage INTRODUCTION : In many ways, Big Data and Human Resources are a natural fit. HR already owns much of an enterprise s most valuable internal data: its human capital information. In fact, HR Departments have long invested in software and systems devoted entirely to capturing, reporting and securely storing its people data. HR also spent the better part of the past decade investing in solutions to manage human capital more effectively. According to Gartner, global spending on talent management software rose to $3.8 billion in 2011, a 15 percent increase over If you look at all of these investments in context, you can actually see HR s gradual movement toward Big Data-style analytics. Big Data offers HR the opportunity to take its evidence-based decision making to an entirely new level by factoring in an unprecedented amount of data from a wide array of sources, some of which might never have been considered previously. Big Data will enable HR to test theories, proactively solve problems and conduct more complex predictive analytics related to sourcing and hiring INCON X

2 strategies. The real value of Big Data is that it gives HR the ability to capitalize on more powerful technologies and an exponentially greater amount of data to make more accurate evidence- based decisions and then take faster action on those decisions. This creates significant competitive advantages not only in the war for talent but also in the organization s ability to execute its business strategies more effectively. Employers hire for a reason: they have an immediate need for talent that is critical to the execution of their business objectives. Uniformed sourcing and hiring practices lead inevitably to hiring delays and poor candidate selection, and these results in delays to the achievement of business Without HR analytics, organizations will lose the race for talent. HR leaders recognize they must change how they recruit, engage, develop and retain people in order to improve business performance and remain competitive. As an experienced HR Professional you are facing a perfect storm of global macro competition, shrinking HR resources, fierce competition for superior talent, disruptive HR technologies, and an explosion of available workforce data, all the while your CEO is asking you for more and more input to make faster and better business decisions. In today s new economy, data is the new oil and big data projects when implemented well can give you the answers to questions that make you a power player in your organization s strategic planning process, making you an invaluable strategic asset with access to actionable business insights that improve talent acquisition, retention, development and organizational performance. Big data is being generated by everything around us at all times. Every digital process and social media exchange produces it. Systems, sensors and mobile devices transmit it. Big data is arriving from multiple sources at an alarming velocity, volume and variety. To extract meaningful value from big data, you need optimal processing power, analytics capabilities and skills. Big data is changing the way people within organizations work together. It is creating a culture in which business and IT leaders must join forces to realize value from all data. Insights from big data can enable all employees to make better decisions deepening customer engagement, optimizing operations, preventing threats and fraud, and capitalizing on new sources of revenue. But escalating demand for insights requires a fundamentally new approach to architecture, tools and practices. Data is emerging as the world's newest resource for competitive advantage. Decision making is moving from the elite few to the empowered many. As the value of data continues to grow, current systems won't keep pace. New skills are needed to fully harness the power of big data. Though courses are being offered to prepare a new generation of big data experts, it will take some time to get them into the workforce. Meanwhile, leading organizations are developing new roles, focusing on key challenges and creating new business models to gain the most from big data. Companies are analyzing their employee data with workforce analytics to answer a variety of critical questions: Why does one sales person outperform his peers? What is the impact of learning programs on company results? How long does it take for new employees to be productive? Why do certain leaders succeed and others fail? INCON X

3 Indicative Diagram of big data & HR Analytics: Recruitment Metrics Learning and Development Performance Metrics Employees Engagement Metrics Key Performance Indicators DASH BOARD Business Intelligence Return on Investment Evidence based decision Predictive HR Perspectiv Effective Manpower Planning Objective: 1. To carry out conceptual study of Big Data and HR Analytics. 2. To understand how Big data HR analytics will help the HR professionals to take evidence based decision and be able to predict. 3. To know, how the integration of Big Data HR Analytics, Business Intelligence and information and communication technology helps HR professional to expedite decision making in the context of accuracy, transparency, cost effectiveness and ROI. 4. To also understand the challenges faced by organization to adopt Big Data HR Analytics system. Research Methodology: This research paper is a conceptual research and based on secondary data. Information has been collected from different blogs and related web sites. INCON X

4 Literature Review: Almost every major organization we talk with wants to build a data-driven HR program to help understand who to hire, identify the factors that drive retention, analyze employee engagement, and apply data to make better decisions about who to promote, how much to pay people, and just about every other talent-related decision. As in all the other areas of business analytics and Big Data (marketing analytics, financial analysis, analysis of customer buying patterns, supply chain analytics), organizations have to build internal capability, get help from IT to bring the data together, and then move down the learning curve to better understand their data and what it means. In the case of Human Resources, which deals with some of the most difficult decisions we make (who to hire, for example), most companies are behind the curve. Research shows that only about 4% of HR departments are really using any form of predictive analytics today and more than 60% are struggling with a mess to just get good reports (many cannot even tell you how many people are on the payroll in a given day, and most don t track hourly workers well). Well this world is about to change. Almost all the new cloud-based HR systems vendors now offer what I d call embedded analytics solutions built into their software, ready to turn on and analyze employee data right out of the box. The analytics applications help predict retention (a huge topic in business) by trying to figure out which factors correlate to employee departures (i.e. salary? job rotation? commute distance? manager?). The HR Analytics also analyzes effective and ineffective career paths, a big issue in business. (I.e. Which career moves seem to cause people to leave the company and which would help retain them?). The Wall Street Journal recently reported that 85 percent of Fortune 1000 executives have projects planned or underway for getting more business value out of data their companies generate and collect. And a recent Gartner report projects that Big Data will account for 28 billion of IT spending globally this year and will increase to $34 billion in What isn t so clear is exactly how they will extract real business value from the vast amounts of data they gather. At this early stage of the game, companies are already awash in data. They know there s value to be mined from the data but they re unsure of where to focus their attention, how to unearth the insights buried deep within the often-unstructured data, and how to act on their findings with sufficient speed and purpose. These challenges are understandable. After all, we re entering a promising new frontier that hasn t been mapped out yet. We re blazing trails with technologies and software so astonishingly powerful that we re literally inventing new ways to apply them. Even in the face of these challenges, Big Data holds tremendous business potential. And for Human Resources, in particular, Big Data offers an historic opportunity: the opportunity to make the most rigorously evidence-based human capital decisions ever made. Big Data can help solidify HR s reputation as a strategic business partner that makes analytics-driven, evidenced-based decisions, especially when it comes to talent acquisition. Big Data-fueled hiring means getting the right people into the company at the right times, the first time. It means improving candidate sourcing and selection, speeding up the hiring process and reducing costs, all of which equate to significant competitive advantages. INCON X

5 In PricewaterhouseCoopers s 15th Annual Global CEO Survey 2012, 66% of the CEOs surveyed believe they need to spend more time developing their talent pipelines. And while almost half of all CEOs are confident their companies will grow over the next three years, only 30% believe they will have the talent they will need. Big Data can help organizations allay some of these CEO concerns. Big Data s potential for improving talent acquisition was compellingly illustrated in a recent Wall Street Journal article titled, Meet the New Boss: Big Data. The article highlighted the fact that Xerox slashed its call center attrition rate by roughly one half after it began using Big Data to assess job applications. While the company once hired people based on their job experience, new data evidence informed Xerox that experience didn t matter in hiring a good call center worker (in this case, one who would remain employed long enough for Xerox to recover its new hire training investment). Instead, the evidence highlighted that personality was more relevant than experience. After a trial period proved the data to be correct, Xerox began hiring its entire call center employees based on this evidence-based recommendation. Of course, finding the right sources for talent is just as important as finding the right types of talent, and Big Data can be invaluable in this capacity. Big Data can show employers precisely which sources have the greatest likelihood for generating the flow of the specific types of candidates they need. Employers need to leverage a mix of sourcing strategies to build their talent pipelines. Savvy employers are careful to allocate their resources time, money and people to activities that produce optimal outcomes. Big Data can be leveraged to identify both which sources will be most effective and what the expected volume of candidate flow will be. The forecast for the optimal sources and the anticipated candidate flow can now be made with greater accuracy and precision. Companies have to leverage their employee data to improve operational performance. Research shows that while more than 60% of companies are now investing in Big Data and analytics tools to help make their HR departments more data-driven, there is a huge chasm between the haves and the have nots. It is found that only 4% of companies have achieved the capability to perform predictive analytics about their workforce. (Understanding the drivers of performance and retention, using statistics to decide who to hire, analyzing how pay correlates to performance, etc.) In fact, only 14% have done any significant statistical analysis of employee data at all. What are the rest doing? These remaining 84% on the other side of the chasm are still dealing with data management and reporting challenges, trying to get out from under the burden of ad-hoc reports to deliver standard operational metrics. The research also showed that these leading companies generate high returns for their hard work: their stock market returns are 30% higher than the S&P 500, they are twice as likely to be delivering high impact recruiting solutions, and their leadership pipelines are 2.5X healthier. In addition, these HR teams are four times more likely to be respected by their business counterparts for their data-driven decision-making, giving them true potential to help change the business. Big Data Defined The definition of Big Data depends on the industry, company or expert offering it. Generally, though, Big Data refers to a collection of large amounts of information and INCON X

6 complex data sets from a wide variety of sources. As the experts point out, Big Data initiatives are characterized by three criteria: 1) Volume (the data sets used are enormous), 2) Variety (data streaming in from a vast number of sources), and 3) Velocity (the increased pace at which data is being created and then incorporated into the analytic process and the ability to put the data to use in real time as it streams in). Big data is an evolving term that describes any voluminous amount of structured, semistructured and unstructured data that has the potential to be mined for information. Although big data doesn t refer to any specific quantity, the term is often used when speaking about petabytes and exabytes of data. Big data can also be defined as a large volume unstructured data which cannot be handled by standard database management systems like DBMS, RDBMS or ORDBMS". What is big data for Human Resources? Big Data in HR refers to the use of the many data sources available to your organization, including those not traditionally thought of in HR; advanced analytic platforms; cloud based services; and visualization tools to evaluate and improve practices including talent acquisition, development, retention, and overall organizational performance. This involves integrating and analyzing internal metrics, external benchmarks, social media data, and government data to deliver a more informed solution to the business problem facing your organization. Using these tools, HR organizations are able to perform analytics and INCON X

7 forecasting to make smarter and more accurate decisions, better measure efficiencies and identify management blind spots. Typically, if HR uses data, it collects business intelligence on things or events that have already occurred. Through predictive analysis, however, big data can tell HR professionals why something happened and allows them to make some pinpointed forecasts. In fact, it is this predictive nature of data analytics that is changing the role of HR for the better. "Earlier, when CEOs and CFOs talked, the conversation was based on solid data. HR conversation, however, was merely anecdotal. Now, thanks to data analysis, HR is able to spot trends, make predictions, create a roadmap to succeed and have conversations with other C-suite members of the company based on solid facts," says Shaswat Kumar, partner, Aon Hewitt. Says B Sivaramakrishnan, managing consultant, Hay Group, India, By using data analytics in work force management, HR can help companies maximise return on manpower investment. For instance, in manufacturing the impact could be per cent of total sales while in services industry, due to its people intensive nature, the impact on ROI could be 70 to 80 per cent." In his view, the recruitment cost in a company is on an average 15 per cent of an employee's cost to the company and typically 12 to 15 per cent of an employee's salary is trainingcost. Those are quantifiable results. That apart, predictive analytics can help companies maximise return on employee investment and help them figure out if any increase in recruitment cost increases the chances of finding the right candidate who can fit in with the culture of the company. Now come back to employee engagement. If numbers are anything to go by, by deploying data analytics companies have been able to reduce attrition by more than 15 percentage points, improve hiring cycle by 30 per cent. According to a Hay Group study, The Business Case for Effective Employee, by investing in engagement and enablement of employees, companies can reduce turnover rates by 54 per cent and increase revenue growth by 4.5 times. In fact, in retail the difference in sales could be 3x or 4x between a person who is engaged and the one who is not. Challenges for the Organisations to adopt Big Data HR Analytics : The main challenge of Big Data, for most organizations, is developing the ability to tap into and extract value from all of this information. It takes tremendous resources and expertise to acquire, normalize, process and analyze Big Data in real time. In the past, technology and computing limitations made Big Data analysis impossible. Companies wanting to glean insights about their business practices had to scrutinize smaller amounts of data from a limited number of sources. Big Data has changed this forever. As Dion Hinchcliffe wrote in his excellent article, How Is Big Data Faring in the Enterprise, just like Google enabled the layperson to query the entire contents of the additional data-savvy managers in the U.S. alone to analyze, interpret and share Big Data findings effectively. Obviously, HR will be charged with helping to find these individuals and assisting in the assembly of teams with the right mix of business, analytical and technical expertise to unleash the power of Big Data. The time has come for HR to raise its profile as a strategic business partner by plugging into Big Data and lifting talent acquisition strategies to a new level of success. Talent acquisition touches every part of the organization. Nothing else is as critical to the organization s ability to achieve business objectives. With help from the INCON X

8 right external partners, HR can jump-start their organizations Big Data efforts, make decisions that are exponentially more evidence-based, and build strategic business advantages that will empower the entire organization web with a few keywords, the next generation of enterprise big data seems to be about connecting workers with the data landscape of their organizations. One of the biggest challenges to BigData analytics in companies we ve talked with is getting people to change their behavior once they have the data. Most managers have years of belief systems and experience that holds them back from using the data science we provide. What can Big Data HR Analytics specifically do for my organization? Big data and hr analytics can provide a company with meaningful insights and clear guidance on how their sources are performing. Benefits extracted from this data: You will know in advance where to place your online recruitment marketing for optimal performance and cost How to accurately predict the outcome of your investment in your online Talent Acquisition strategy efforts Know where job candidates are viewing and responding to jobs (by job board, job classification, title, location, skill set even by day and hour, anywhere in the world) Know where your competitors are posting jobs more effectively Calculate the effectiveness of your current job advertising efforts Create more effective recruiting strategies while also reducing costs Understand how to target candidates faster reveals the end-to-end effectiveness of your Talent Pipeline activities from Posting Source to Hire Big Data HR Analytics helps to pinpoint the business problems and ensure to get higher return on employee investment, improved talent analytics, and predictive analytics for human resource functions Help to be a strategic member of the executive management team by connecting what you are doing with the organizational business plan Will create the required governance structure and get buy-in from key stakeholders Work as enabler to Implement the organizational changes needed to support new processes around data collection, cleansing, and analysis Help to identify the best tools, process and techniques to solve the business problems you are trying to solve for measurable benefit The ability to capture and analyze big data has enabled many enterprises to both increase revenues by better understanding and more accurately targeting customers and cut costs through improved business processes. INCON X

9 Conclusion: Certainly many big firms providing diversified sets of IT services, such as IBM and KPMG, are treating analytics as a legitimate new frontier and desirable arm of their business. The issue here is if and how these concepts and services can be applied to HR, and the notoriously difficult to pin down people side of business. Certainly, something is at stake politically and professionally for HR. KPMG itself has argued in 2013 that people are the real numbers, and that workforce analytics is the key for HR to move away from offering unconvincing generic models and towards more insightfully tailored solutions that carry employee value (and HR practitioners) further into the boardroom, alongside finance and other executive functions. KPMG note the many labels (HR analytics, big data, talent analytics and strategic workforce analytics) but define the phenomena as the synthesis of qualitative and quantitative data and information to bring predictive insight and decision making support to the management of people in organization. This sounds great in principal, but problems abound and change is needed; in the form of better data management/integration, new skill sets, and being able to ask the right questions critical to a particular context. References 1. search cloudcomputing.techtarget.com/definition/big-data-big-data Analyst Blogs Josh Bersin's Blog data-in-human-resources 9. en.wikipedia.org/wiki/big data _1.html ****** INCON X