"Human Resources is a business function just like sales and operations, so it should be managed like a business and its performance measured accordingly.” Dr. Jac Fitz-enz, acclaimed as the ‘father of human capital strategic analysis,’ said this in an interview. One of the biggest proponents of HR metrics, Dr Fitz-enz was the first to state that human resources decisions have a real impact on a company’s bottom line. The decision to select the best-suited candidates, align the reward strategy, train and develop them, offer a career path, drive relevant HR interventions, and even manage the experience at exit stages—every action across an employee’s lifecycle impacts the company’s bottom line. The only way to understand the impact is by collecting relevant data points to gauge the effectiveness of such decisions, since employee experience leading to retention or employee separation certainly impacts an organisation’s bottom line and the employer brand. Gathering data, drawing insights from it, and making decisions based on the metrics is the most powerful way that any HR department can help drive organisational decisions.
Forward-thinking CHROs have recognised that decisions cannot be led by intuition and gut feelings. Instead, they must rely on data to make important organisational decisions. Does this mean data will turn things around for me? Not entirely. It’s about the insights one can derive from the data. A Deloitte survey revealed that 71% of companies now view people analytics as a top priority. It's about making sense of the data and uncovering meaningful insights to help HR professionals achieve positive business and human outcomes.
How does this play out in the real world?
Various methods and tools are being used to search for talent, interview them, and guide them through the onboarding process. Brother International leveraged an AI recruiting platform and a chatbot to capture details on prospective candidates, sending them to HR’s CRM for follow-ups. A few years ago, Google developed a tool that generated tailored interview questions based on specific job requirements. This allowed them to hold more structured and effective interviews. IBM took a different approach by using AI to analyse resumes to cut down on hiring time and to improve candidate selection.
Employee retention is essential for every organisation. Losing valuable talent can disrupt team dynamics, lower morale, reduce productivity, and ultimately, impact the bottom line. Additionally, rehiring costs businesses time and money. With access to accurate data, analytics can help organisations control employee retention effectively. Cisco Systems, for instance, implemented a predictive analytics model that identified employees at the risk of leaving, allowing HR to address concerns proactively before it led to resignations. This method identified employees with an impressive 95% accuracy, and HR’s efforts.
Measuring performance and promoting learning
Managers and employees view performance management as a challenge. Work practices and roles are constantly changing. Assessment practices are not updated regularly enough to take into account deviations from the norm, and then there is the ever-present danger of bias that can affect morale and attrition rates. Analytics can help correct this using data-driven insights and real-time feedback, just like Deloitte did to its performance management system. They went from annual reviews to weekly checks and quarterly snapshots, which improved performance and lowered the time spent on evaluations. GenAI-powered knowledge searches can provide more insights into employee productivity, helping HR teams make accurate and timely decisions.
This goes in tandem with learning and development programs. Walmart used predictive analytics to identify which of its employees would benefit from specific training programs. AI-enabled hyper-personalisation and content curation features offered by various e-learning platforms has been a big game changer in addressing current and future development needs of employees, leading to superior performance and structured career path for employees while bringing tangible ROI for organisations and their clients.
Ironing out the kinks
However, human analytics comes with its own set of challenges. Data quality and integration are two of the biggest headaches when an organisation has to deal with multiple HR systems, leading to duplications, errors, and inconsistencies. HR teams also have to be mindful of issues related to privacy and the ethical use of employees' personal information. Here, it is always advisable to implement HR-related AI tools along with legal advisors, to ensure that data practices are not flouting privacy norms and regulations.
Another critical issue is skills. HR professionals are employees too, and their roles have evolved over the years. Today, it's not just about managing people—they now need to blend data analysis with their expertise in human capital management. Technology is intimidating to many, and the only way around this is for organisations to invest in upskilling existing talent and changing their mindset about working with new tools and processes.
Start small, finish big
Generative AI, machine learning, real-time predictive analytics, advanced employee management and engagement solutions are transforming the way an HR team functions, helping them put the focus back on employees and their well-being within the organisation. For CHROs, starting small is the key. Pilot projects that address specific, high-impact areas will yield valuable insights and build momentum. This is a preferred route instead of large cumbersome projects that prove to be an expensive mistake. Invest in data infrastructure and solutions that support heterogeneous legacy systems. This will solve the data silo problem and mitigate data integration, allowing the organisation to chart a more effective modernisation plan. Most importantly, keep your HR teams informed about such changes, listen to feedback, allay fears and misconceptions about using new tools, and provide training programs to get them up to speed when the implementation goes live.
Those who leverage analytics will be best positioned to attract, retain, and develop the talent needed for success in today's competitive business environment. That said, organisations must never lose sight of the human element. Every business function consists of people. While data is being used to improve business outcomes, it is also being used to improve human outcomes like productivity, compensation and career growth. That’s why it’s time to embrace AI and data analytics with a focus on people—because when your team thrives, your business does too.
Manish Kotwani, Global Head of Human Resources & Corporate Services at C5i. With over 24 years of progressive experience in Human Resources. He brings a wealth of knowledge on how AI is reshaping the workplace and the critical need for upskilling in the age of automation.
