Category Archives: Create Vision

This section will help you provide thoughts on creating a case, building a team, managing stakeholders and creating a vision for your organization

Research : Three-Way Complementarities: Performance Pay, HR Analytics and Information Technology

Aral, Sinan and Brynjolfsson, Erik and Wu, Lynn, Three-Way Complementarities: Performance Pay, HR Analytics and Information Technology (August 25, 2010). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1665945

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Relationship between HR and Analytics

Well yeah, it’s hard to grow up and coming off age is always a confusing phase in life. To think of it HR is just coming off age and so is Business Analytics and thus quite often when I listen people talk about HR Analytics it is more like getting into a relationship not knowing what you want out of it.

In the first decade of the millennium, it was very common to hear leaders say that HR has to shows its relevance to the business. “Move ahead from just being a cost center to becoming a profit center” was a common line because that is what HR leaders thought differentiated them from the more dominating functions in the organization. But what could HR leaders do, their teams were busy managing all the paperwork and processes that come along with managing a workforce in an environment constantly scrutinized by labor departments. Thankfully, HR Technology came to their rescue and helped them free up their mind from a lot of day-to-day operational hassles. It also helped them show monetary benefits at times, but the question still remained what is the value they bring. As HR looked at itself through the Johari Window, it realized that the systems it bought were capturing a lot of data and it also saw that many functions had made great use of data to change the way they worked.

As other functions started using numbers to project their accomplishments, HR too felt the need to be able to show numbers. It looked into the data repository of the systems it implemented, created data warehouses and implemented tools to pull out the numbers that showcased the efforts that they had put in. Other functions have now started driving their operations on the basis of the numbers they project. With the evolving role of HR as a custodian of employee interests and adviser to business on how they can best leverage their talent-pool to achieve their goals, HR needs to stop looking at analytics only as a tool for showcasing the value that HR brings to the business, rather it should focus on using analytics as a tool to evaluate and increase the value that HR brings to the business. And, there are more than a handful of organizations that are doing this!

Organizations that have been most successful with HR analytics have focused on exploring the science behind the art of helping people get things done. Just like HR Technology freed-up our minds from some operational issues, similarly analytics can help us better guide business leaders to make more informed decisions. Decisions that are not just feeling/gut based but guided by research and analysis. Show them the impact their decisions have and why. This might be outrageous to say, but you might be able to effectively use analytics to make smart decisions even if there isn’t a standard formula that is used across your organization to calculate attrition rate. 😛

Going back to the analogy that I started with, lets think of Analytics and HR as young teenagers who are infatuated each other. As their relationship grow they need to spend time to discover each other and discover themselves in the process.