Data-Driven Decision Making: Application of People Analytics in Human Resource Management

Recently, the field of human resource management (HRM) has undergone a significant transformation due to the impact of technological advances and increasing relevance of business analytics. Organizations worldwide are increasingly applying people analytics, which enables making more rational, objective and effective decisions about people based on the analysis of data. People analytics has a huge potential while dealing with unpredictable challenges organizations and their employees are facing today. On the one hand, people analytics can reveal the efficiency, effectiveness, and impact of the HRM function, especially emphasizing the strategic partnership role of human resource (HR) professionals. On the other hand, people analytics changes the way organizations identify, manage, develop and control their workforce. The term “people analytics” refers to a novel, evidence-based and data-driven approach to manage workforce. The focus is very much placed on workforce planning, recruitment and selection, development and training, and employee performance while analyzing data to establish causal relationships or other insights and accordingly drive actions by influencing the key decisions. However, applying people analytics involves numerous challenges revealing that not all organizations are on the same maturity level. Although previous research provides some theoretical insights regarding the implications of people analytics in HRM, empirical studies dealing with organizational examples and readiness to create business value through people analytics are nonetheless lacking. The chapter aims to reveal how people analytics is applied in the HRM field. While doing this, a qualitative research was conducted including 12 interviews with HR professionals from different organizations operating in various industries. The results revealed that organizations mainly used only descriptive analytics and the focus was more on HR metrics. In most cases, the decisions about workforce planning or employee remuneration were data-based. However, analytics was less used in employee selection and recruitment, and training and development areas. Not rare were the cases, when intuition of HR professionals or line managers drove the decisions. This chapter has strong practical implications seeing that the results can encourage organizations to rely more on people analytics to optimize the HRM function and add value to organizational success and employee well-being. In addition, the results draw attention to the potential challenges of people analytics organizations should take into considerations.