Workforce Analytics and HR

Not only does the development of workforce analytics such as cost per hire, time to fill, absence rates, benefit costs per employee and other metrics change the way human capital issues are viewed outside of the HR function, it is also helping to transform HR into what is known as a “decision science.” HR as a decision science means that as a function it has analytical rigor and empirical precision with a measurable impact on business results. The use of workforce analytics supports this by helping to define what is to be measured in order to better understand the return on investment of HR programs and processes and using the data derived from these measurements to make further improvements and drive change as it relates to human capital and talent. As Boudreau and Ramstad write in their work on a decision science for human capital talent, “the marketing decision science enhances decisions about customers, and the finance decision science enhances decisions about money, so a talent decision science should enhance decisions about talent, both within and outside the HR function.”

The evolution of HR into a decision science depends largely on the ability to measure human capital accurately because, without measurement, the human capital notion is just a concept and difficult to apply in the real world. Increasingly, measurement and application depend on technology, especially when forecasting or using complex calculations that take into account a large amount of data. As a result, new technical applications are being developed across HR functional areas and may be used to better link HR functions. For example, workforce analytics were first developed with a significant focus on the cost of benefits and compensation, while knowledge management systems were developed to track and measure company skills, knowledge and the effectiveness of training programs.

As human resource technologies evolve, it will become easier to link human capital measurement systems and, in so doing, better understand how different types of human capital interventions relate to and impact each other.