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Running head: HUMAN RESOURCES: THE ANALYTICAL APPROACH 1
Human Resources: The Analytical Approach
Lincoln Memorial University
Business Communications 350
Jonathan Karg
November 2016
HUMAN RESOURCES: THE ANALYTICAL APPROACH 2
Abstract
Human resource departments have restructured the maintenance of employee records. This
tedious but necessary process allows companies to assure alignment with growing demands of
the rapidly modernized business world. The use of data analytics has been a key factor in
determining positive standards and reducing turnover rates. In this paper, the author discusses
how data analytics has become a staple in the business process, legal considerations for those
involved in the growth of Human Resource markets, the use of data analytics in the field of
Human Resources, and how analytics can be used to successfully develop a more qualified
workforce. Through the utilization of Big Data, companies are able to develop standards
throughout their own companies and the way other organizations structure their own workforces.
HUMAN RESOURCES: THE ANALYTICAL APPROACH 3
Contents
Introduction ......................................................................................................................... 4
The Rise of Big Data in Human Resources ........................................................................ 5
Legal Considerations for Human Resources ....................................................................... 7
Approaches of Analytics in Human Resources ................................................................ 10
Implementing Successful Analytics in Human Resources ............................................... 13
Conclusions ....................................................................................................................... 15
References ......................................................................................................................... 16
Appendix A Annotated Bibliography ....................................................................................... 19
HUMAN RESOURCES: THE ANALYTICAL APPROACH 4
Introduction
The use of analytics within the field of human resources is helpful in determining
recruitment strategies and improvement of hiring operating procedures within the 21st century
workforce. Human resource analytics has, in the past few years, become its own separate entity
instead of a side thought within organizations, though many aspects which talent analytics have
derived from have been around since the dawn of the business era, such as personnel economics
and HR metrics. (Rasmussen and Ulrich, 2015) Human resource analytics, or, talent analytics, is
defined as, “the gathering and analyzing of data from a company’s current and prospective
employees…to optimize what the company spends on its workers”. (Espenson, 2015 p.3) With
the ever changing structure of the workforce, advances in collegiate education, and influx of
workers into the job market, a company’s human resource department is a crucial part to the
success of the company and employees alike. In fact, 44 percent of companies around the world
are utilizing data when it comes to making hiring decisions, while, at the same time, over 80
percent of all companies’ leadership consider data analytics to be top priority when determining
any business decision, including hiring or recruiting employees. (Biro, 2016) This supports that
the data is available to employers to find the best employees. Employees are, in fact, a
company’s greatest asset and, with the many resources available to the departments that handle
the human resource aspect of these companies, it is not difficult to understand why companies
are compelled to positively retrofit new practices into the everyday workings of the human
resources departments.
The widely varying programs and opportunities available in human resource data analysis
allow companies to decide the best route to take when it comes to choosing and maintaining the
most qualified individuals for positions. This helps to increase retention rates and reduce
HUMAN RESOURCES: THE ANALYTICAL APPROACH 5
turnover in an effort to reduce costs on the company induced by the training and retraining of
new employees, as well as costs associated with recruitment efforts, such as job advertisement.
In regards to how data is used, “armed with actionable analytics, leaders and managers have
immense opportunities to use talent data in reducing workforce costs, identifying revenue
streams…and executing business strategy”. (Collins, 2013, p.11) Through the use of data
analytics, employers are now able to research and develop practices which have worked for other
companies, and themselves for that matter, in the past in order to gain the greatest rate of reward
toward the company and its employees.
The purpose of this analysis is to explore how the human resource department utilizes
data analytics to ensure the best possible fit of personnel within the organization. The average
number of HR personnel in a company is equal to one for every hundred employees the company
employs which is a significant disadvantage without the proper practices in place to remain
successful. (Westfall, n.d., p.5) This paper explores the rise of data analytics in the growing
human resources sector of business, the laws that must be considered when working with
personnel and company data, the best approaches to take when dealing with Big Data, and how
to utilize and implement the data into successful practices. Determining these is the first step in
creating and recruiting employees of the future. Implementing these, however, is the first step in
developing companies of the future.
The Rise of Big Data in Human Resources
Big Data in human resource is a collaboration of many different aspects of an
individual’s traits, personality, and work habits, combined with their ethnic and geographical
background. Human resource utilization of data analytics, or, talent analytics, represents a
powerful strategy within a global workforce. Kabra and Kapoor (2014) determined companies
HUMAN RESOURCES: THE ANALYTICAL APPROACH 6
have shown a strong link to their level of use of analytics to their own financial performance and
vice versa. Those companies choosing not to utilize analytics or are new to the analytics field of
data research are learning data analytics can help find and maintain the best possible candidates
for specific important positions in companies, and positions that may simply require talented
individuals, such as the blue-collar worker.
Within the organizational structure, it is important to ensure proper employee placement
while, at the same time, not settling for the wrong hire just to fill open positions. This is a larger
issue than one may think. Over 50 percent of companies in the U.S. currently have open
positions which are left vacant or wrongly filled due to the difficulty in finding qualified
individuals through the channels they currently utilize. (Ferguson, 2015.) This is where data
analytics is useful to fall back on. To sort through the many applicants to pinpoint the best
candidates more quickly, many computer applications have been created which use a number of
algorithms and formulas to narrow a Human Resource managers choices to a few qualified
individuals who fit the necessary criteria. Examples of these applications will be discussed in a
later section of this paper.
On average, almost 80% of turnover of all employees in the country is due to badly made
decisions during hiring. (Yager, n.d.) Sadly, this is all too familiar information to many
companies who do not realize what Big Data is or what it could do to assist them in finding the
most qualified candidates for their positions and maintaining those employees. A high turnover
rate means increased costs associated with recruiting and training new individuals who may not
be as experienced or talented in their respected positions as those who the company failed to
maintain. The replacement cost for an ill-placed candidate in a position merely six months after
HUMAN RESOURCES: THE ANALYTICAL APPROACH 7
hiring them would amount to, “[approximately] two and one-half times the person’s salary”.
(Yager, n.d.) This is an unnecessary cost incurred to the company.
Solving problems with the human workforce represents the primary rationale as to why
the utilization of analytical data is such a rising power in Human Resource planning, prediction,
and operation. Big data provides answers to questions nobody even thought to ask before. Why
do some employees outwork others? What is the driving factor for motivation among the
different levels of management? How long does an employee need to be employed with a
company before they reach the level of productivity expected of them at the time of hire? The
gathering and grouping of data allows the company to collect these answers into a combined
pool of data in order to find the different traits, skills, and abilities the best employees contain
and decide, in the future, which candidates fit these similar skill-sets. (Hemmadi, 2015.) The
