The Role of HR Analytics in Predicting Employee Performance

‘’The global HR analytics market size was valued at USD 2.7 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 14.3% from 2022 to 2030. The growing need to efficiently use human resources, reduce operational costs in an organization, and gain real insights into employee behaviors is a key factor driving the market. Even though the COVID-19 pandemic has changed the business landscape, the use of HR analytics solutions to make data-driven decisions has become critical for monitoring and measuring organizational and employee productivity.’’

Human Resource Analytics or sometime also referred to as People Analytics is an integrated process that improves the individual and organizational performance by assisting to improve the quality of people related decisions. HR analytics mostly depends on statistical tools and analyses and requires high quality data, well-chosen targets, talented analysts, leadership, as well as broad-based agreement that analytics is a legitimate and helpful way to improve performance. (Opatha, 2020). With the increasing practice of data mining in the field of finance, accounting, and sales it was only a matter of time before human resource departments would also enter the world of data analysis to forecast future employee demand – supply, attrition rates or even evaluating employee performance to ultimately support the objectives of their businesses. The goal of HR Analytics is to optimize the use of information collected and to check the effectiveness of the current HR processes throughout these seven areas/pillars of the organisation.

Another function of HR analytics is to predict, this is also called Predictive HR analytics. During this process HR professionals will use historical data to possibly forecast what will happen next in terms of employee performance, absenteeism trends in the company or even attrition index and the times of the year where attrition is at the highest or lowest. This data helps the HR department to improve their recruitment and selection processes, decrease turnover rates in the company, optimize employee performance and even highlight potential barriers to desired employee performance. This predictive HR analytics ultimately uses artificial intelligence and various software solutions to design an employee profile which is in line with the company’s vision and mission i.e., an employee who will thrive in the organisation in question. Once this profile is created, predictive HR analytics will give real-time solutions to the HRM of such companies to implement so that their employees are motivated to work and thus, will have higher performance rate.

When it comes specifically to performance evaluation of the employees, predictive HR analytics plays a huge role. Before they grow into an issue that results in a terminated employee or decreased performance and profits at the corporate level, HR may see warning signs or low-performance metrics and handle them all thanks to the data collected by HR analytics software programs. To improve output and worker efficiency, things like increasing absences, missing deadlines, and other issues can be tracked and shared with the manager and staff. With this data, HR managers may be able to dig further into inherent problems, such as discouraging supervisors, an absence of learning and development programs or opportunities for growth, or even the requirement for improved internal relations, if they notice a lot of low performance or staff leaving divisions of the company.

Once the data is generated, managers can implement different strategies to increase employee morale or remove employees who are actively dis-engaged in the company. HR analytics will give managers a broad picture of the workforce they currently have on their desktop in real time which will make implementation of change or new strategies very easy and in a timely manner. (Chrisos, 2019). Another way that predictive HR analytics helps in evaluating employee performance is by highlighting the Training and Development needs of the employees. An employee who has attended various CPD programs conducted by the organisation or personally is likely to perform better than another worker who does not invest in their learning and development. HR analytics will gather this data and will help managers identify gaps in knowledge throughout their organisation which will in turn help them in making informed decisions for future training plannings.