HR Analytics Essay Example | Topics and Well Written Essays - 2000 words

HR Analytics - Essay Example Analytics mainly focus on the trend with respect to performance, results, behaviour, growth and development, which further draws management’s attention to specific areas unlike reporting tools that only focus or gather historic data and performance. Contemporary businesses and management lay strong emphasis on measurement of all aspects related to the business and management. Lundgaard (2009) emphasizes the significance of HR analytics in enabling the establishment of HR as a strategic organisational function and credits this to the high competition in business environment which is further pressurizing achievement of greater performance, productivity and profits for business/organisational sustenance. For this, firstly HR initiatives must be made quantifiable through appropriate measures. Lundgaard (2009) suggests a six-domain framework that identifies six key areas for HR: staffing, training/development, appraisal, rewards, organisational governance, and communication. Obtain ing HR analytics based on these six core areas makes measuring HR function feasible. Application of this framework to HR initiatives still depends upon the measurability of these areas, for which Hunter et al (2005) have suggested the Balanced Score Card (BSC) system. First proposed by Kaplan and Norton, this framework allows linking strategy to value creating processes. As stated by Kaplan and Norton (1996; p.2), ‘the BSC translates an organisation’s mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system.’ The BSC measures organisational performance across four balanced perspectives: financial, customers, internal business processes, and learning and growth. It helps in capturing the critical value-creation activities of skilled and motivated employees. All activities that an organisation needs to perform in order to achieve its goal can be categorized according to these perspectives, which include categorization of all initiatives by the HR department into these four core areas. The BSC helps in assessing the total business value derived from particular department. To assess the total business value of HR initiatives, they must be made or converted to measurable objectives (Hatry, 2006). For measurement, Lawler and Boudreau (2009) advocate the use of efficiency, effectiveness and impact for measuring HR programmes, where efficiency refers to resources used by HR programmes such as cost-per-hire; effectiveness refers to changes produced by HR programmes such as learning from training; and impact refers to business or strategic value created by the programme such as higher sales from better-trained product developers or sales people (p.61). All three, efficiency, effectiveness and impact are equally important to assess the actual weight of any activity/programme. For instance, measuring the monthly/daily sales without measuring customer satisfaction will be of no use for the business in long run. Similarly, paying out more incentives to staff for over performance without assessing employee satisfaction may or may not yield any improvement in employee satisfaction. Efficiency and effectiveness of HR initiatives can be measured by assigning specific measurable objectives to each initiative. Paladino (2007) emphasized Managing by Objectives (MBO) as an effective tool to enhance organisational efficiency at