LU2 History and Theories of HR Analytics PDF

LU2 Instructor: Helmi Sumilan [email protected] HISTORY & THEORIES OF KMS2154 HR ANALYTICS H R D A N A LY T I C S LEARNING OUTCOMES By the end of this lecture, you will be able: i. Describe a brief history of HR Analytics...

LU2 Instructor: Helmi Sumilan [email protected] HISTORY & THEORIES OF KMS2154 HR ANALYTICS H R D A N A LY T I C S LEARNING OUTCOMES By the end of this lecture, you will be able: i. Describe a brief history of HR Analytics ii. Explain the theories related to HR Analytics HISTORY OF HR ANALYTICS 1850s – 1970s: iron (1850s – 2000s) miners & steel industry HISTORY OF HR ANALYTICS (1850S – 2000S) During the 1990s, the focus shifted to viewing As a result, human and intellectual capital became people as a valuable organizational resource and key buzzwords in both academic research and in capability that can create competitive advantage the management community at large This Photo by Unknown Author is licensed under CC BY-NC-ND  The history of HR analytics can be traced back to the mid-20th century when organizations began to recognize the importance of data-driven decision- making in managing their HISTORY OF HR ANALYTICS workforce effectively. (1850S – 2000S)  HISTORY OF HR ANALYTICS Focus on Advent of HR Transition to Rise of Integration of People Early Stages Emergence of Information Strategic HR Predictive Big Data and Analytics and (1950s-1970s) HR Metrics Systems (HRIS) Management Analytics AI (2010s- Employee (1980s-1990s) (1990s) (2000s) (2010s) present) Experience (2010s- present) HISTORY OF HR ANALYTICS During this period, HR management primarily focused on administrative Early Stages tasks such as payroll processing, personnel record-keeping, and compliance with labor regulations. (1950s-1970s) While basic data collection occurred, there was limited emphasis on using this data for strategic workforce planning or decision-making. In the 1980s and 1990s, there was a growing recognition of the need for Emergence of HR HR metrics to measure the performance and effectiveness of HR processes. Key metrics such as employee turnover rates, time-to-fill vacancies, training Metrics (1980s- costs, and employee satisfaction scores became more prevalent as 1990s) organizations sought to quantify the impact of HR initiatives on business outcomes. Advent of HR The widespread adoption of HRIS platforms in the 1990s facilitated the collection, storage, and retrieval of HR-related data more efficiently. Information Systems HRIS enabled organizations to automate routine HR tasks, streamline data (HRIS) (1990s) management processes, and generate standardized reports for analysis. HISTORY OF HR ANALYTICS HR Management (2000s): In the early 2000s, there was a shift towards strategic HR management, where HR departments began to align their practices with broader organizational goals. Transition to Strategic This evolution prompted a greater emphasis on leveraging data and analytics to inform workforce planning, talent acquisition, performance management, and employee development strategies. With advancements in technology and analytics capabilities, the 2010s saw a surge in Rise of Predictive the adoption of predictive analytics in HR. Organizations started using predictive models and algorithms to forecast future Analytics (2010s) workforce trends, identify high-potential employees, predict employee turnover, and optimize workforce allocation. The proliferation of big data analytics and artificial intelligence (AI) technologies has further revolutionized HR analytics. Integration of Big Data & These tools enable organizations to analyze vast volumes of structured and unstructured AI (2010s-present) data from diverse sources, including employee surveys, performance reviews, social media, and external market data, to gain deeper insights into workforce dynamics and behavior. Focus on People Analytics In recent years, there has been a growing focus on people analytics and employee experience as organizations recognize the critical link between employee engagement, & Employee Experience productivity, and business success. HR analytics has evolved to encompass a broader range of metrics related to employee (2010s-present) well-being, diversity and inclusion, leadership effectiveness, and organizational culture.  Overall, the history of HR analytics reflects a gradual progression from basic data collection to sophisticated predictive modeling & analytics-driven decision- making. As technology continues to advance and organizations place greater emphasis on talent optimization, HR analytics will undoubtedly remain a cornerstone of HISTORY OF HR ANALYTICS strategic HR management in the years to come.  EVOLUTION OF HR ANALYTICS Early Stage - Integration Focus on Data Introduction Shift towards Advent of of Big Data Employee Collection of HR Strategic HR Predictive and Artificial Experience and Information Management Analytics Intelligence and People Reporting Systems (Early (2010s) (2010s- Analytics (Pre-2000s) (1990s) 2000s) present) (2010s- present) EVOLUTION OF HR ANALYTICS Early Stage - Data Collection Introduction of HR Information Shift towards Strategic HR and Reporting (Pre-2000s) Systems (1990s) Management (Early 2000s) During this period, HR The adoption of HR In the early 2000s, there was departments primarily focused Information Systems (HRIS) in a growing recognition of the on administrative tasks such as the 1990s revolutionized data strategic importance of human payroll processing, personnel management in HR. capital in driving record-keeping, and HRIS platforms facilitated the organizational performance. compliance reporting. automation of routine HR tasks, HR departments started Basic HR metrics such as centralized data storage, and aligning their practices with employee turnover rates, streamlined reporting broader business objectives, absenteeism, and time-to-fill processes. leading to a greater emphasis vacancies were tracked Organizations could generate on strategic workforce manually or through standardized reports on key planning and talent rudimentary HRIS systems. HR metrics more efficiently, management. Data collection was primarily enabling better tracking of HR analytics began to play a retrospective, and reporting workforce trends and more prominent role in was largely descriptive, compliance requirements. supporting decision-making focusing on summarizing related to talent acquisition, historical trends rather than performance management, providing predictive insights. succession planning, and employee development. EVOLUTION OF HR ANALYTICS Advent of Predictive Analytics Integration of Big Data and Focus on Employee Experience and (2010s) Artificial Intelligence (2010s- People Analytics (2010s-present) present) The 2010s witnessed a The proliferation of big data In recent years, there has been a significant shift towards analytics and artificial growing emphasis on employee predictive analytics in HR. intelligence (AI) technologies has experience and people analytics. Organizations started leveraging further accelerated the evolution HR analytics has expanded advanced statistical models and of HR analytics. beyond traditional HR metrics to algorithms to forecast future Organizations now have access include a broader range of workforce trends and outcomes. to vast amounts of structured and measures related to employee Predictive analytics enabled HR unstructured data from various well-being, satisfaction, professionals to anticipate talent sources, including HR systems, engagement, and organizational needs, identify at-risk employee surveys, social media, culture. employees, predict turnover, and and external market data. Organizations are leveraging optimize workforce planning Advanced analytics tools and AI analytics to understand the strategies. algorithms enable HR teams to drivers of employee experience, extract actionable insights from identify areas for improvement, this data, leading to more and design strategies to enhance informed decision-making in the overall employee journey. areas such as recruitment, employee engagement, performance management, and workforce optimization.  Overall, the evolution of HR analytics reflects a transition from basic data reporting to advanced predictive modeling and strategic workforce optimization. As technology continues to evolve and organizations place greater emphasis on talent management and employee experience, HR analytics will continue to evolve to meet the evolving EVOLUTION OF HR ANALYTICS needs of the workforce and the business.  RELATED THEORIES ON HR ANALYTICS  Human Capital Theory Human Capital Theory From an HR analytics posits that investments perspective, this theory HR analytics leverages in human capital (i.e., underscores the data to assess the value the knowledge, skills, importance of of human capital and abilities of measuring and investments, identify employees) contribute managing human skill gaps, and align to organizational capital to enhance talent strategies with success and economic productivity, innovation, organizational growth. and competitive objectives. advantage.  Resource-Based View (RBV) The Resource- According to this HR analytics By leveraging HR Based View theory, applies the analytics, emphasizes the organizations can principles of RBV organizations can strategic by analyzing gain a competitive internal optimize their significance of edge by workforce human capital internal resources data to identify resources to create leveraging unique, core and capabilities in valuable, and non- competencies, value and achieving sustained substitutable talent strengths, differentiate competitive resources. and areas for themselves in the advantage. improvement. marketplace.  Social Exchange Theory HR analytics can help Social Exchange Theory organizations By leveraging HR suggests that Employees contribute understand the analytics insights, relationships between their time, effort, and dynamics of the organizations can individuals and skills to the organization employee-employer enhance employee organizations are in exchange for relationship by experiences, strengthen based on mutual rewards, recognition, analyzing factors such organizational culture, exchanges of resources, and opportunities for as employee and foster positive benefits, and advancement. engagement, workplace relationships. obligations. satisfaction, and commitment.  By examining data on factors Various theories in such as compensation fairness, organizational behavior, such HR analytics applies performance feedback, and as Equity Theory, Expectancy these theories to goal alignment, organizations Theory, and Goal-Setting analyze employee can design HR policies and Theory, offer insights into performance, motivation, practices that promote individual and group and job satisfaction. employee engagement, behavior in the workplace. motivation, and job satisfaction. Organizational Behaviour Theories  While not a traditional theory per se, the concept of data- driven decision-making is foundational to HR analytics. It emphasizes the use of Data- empirical evidence and quantitative analysis to inform HR practices and policies. Driven HR analytics integrates principles from fields such as Decision- statistics, econometrics, and data science to extract actionable insights from HR Making data. By making evidence-based decisions, organizations can optimize talent management processes, mitigate risks, and drive strategic workforce outcomes.  By drawing upon these theories and frameworks, HR analytics enables organizations to leverage data-driven approaches to manage their human capital effectively, align talent strategies with organizational goals, and create value for both employees and the RELATED THEORIES ON organization as a whole. HR ANALYTICS POINT TO PONDER How has the evolution of How does Human Capital technology, particularly the Theory inform the practice advancement of HR of HR analytics, particularly Information Systems (HRIS), in terms of measuring & influenced the progression of managing investments in HR analytics from basic data employee knowledge, skills, reporting to predictive and abilities to enhance modeling & strategic organizational performance workforce planning? and competitive advantage?