HR analytics professionals forecast the rise – and fall – of HR analytics

HR analytics will have a major impact on organisations’ decision-making by 2025 and this could help to enhance the influence of the HR department, according to a pioneering academic study drawing on the expertise of HR analytics practitioners working in the field today.

But the study also suggests that the distinct HR analytics functions now emerging in larger companies may not have a long-term future, with many practitioners predicting that there will be a need for organisation-wide analytical teams working independently of individual disciplines. Such a function would work across HR, marketing, finance and other areas to “identify valuable business cases and opportunities to improve business performance”.

Writing in the Journal of Organizational Effectiveness: People and Performance, Sjoerd van den Heuvel of the University of Applied Sciences Utrecht, and Tanya Bondarouk, Professor of HR management at the University of Twente, set out to address the question of what HR analytics will look like in 2025, and how it will differ from the situation in 2015.

Register now for a 60-minute webinar titled Using people analytics to drive retention success on Thursday 28 September, during which people analytics expert Sjoerd van den Heuvel will demonstrate how organisations are harnessing the power of people analytics to manage retention.

The authors began by reviewing the growth of technology in HR since the 1980s, with early automation of HR processes such as payroll leading on to early HR information systems in the 1990s and the development of e-HRM which moved beyond basic administrative systems to encompass talent acquisition, performance management and compensation management.

“Forward to today, and the explosion in self-reporting on social media facilitates the datafication of sentiments, emotions, interactions and relationships, with the outcome that our personal and professional lives become increasingly ‘datafied’,” with companies less cautious about digitising people management, a growth in “self portals”, and strategic services becoming more common.

Going back to basics, the authors define HR analytics as “the systematic identification and quantification of the people-drivers of business outcomes, with the purpose of making better decisions”. They also distinguish between three terms often used interchangeably:

  • HR analytics, which suggests that responsibility for identifying and quantifying the people drivers of business outcomes rests within HR;
  • Workforce analytics, which is detached from HR, but “may still have an exploitative association”; and
  • People analytics, which they suggest may be “the most neutral and employee-friendly label”.

They also spell out the difference between “metrics”, which is simply the data presented in tables, charts and dashboards, and “analytics”, which seeks to explain why something occurred, why there were differences in outcomes, or how likely it is that something will occur again in future.

Presenting the findings of their research, Van den Heuvel and Bondarouk compare the situation in 2015 and practitioners’ expectations in 2025 across four main topics: the application of HR analytics, the value of HR analytics, the structure of HR analytics, and system support for HR analytics.

Application of HR analytics

Respondents’ primary concern in 2015 was simply to establish HR analytics by proving that it added value to the business by realising measurable business improvements. Practitioners themselves were still exploring how and when HR analytics could be applied within their organisations, and seeking to create an awareness of the concept and its value. Practitioners also said that they were focused on basic reporting, with only limited time for analytics work, which itself was often focused exclusively on HR themes rather than business outcomes.

By 2025, they expected that the central objective of HR analytics would be to foster fact-based organisational decision-making, with the development of an evidence-based mindset. Respondents hoped to be able to prove that HR analytics could drive measurable improvements, and to be able to use HR analytics to help transform established organisational models. They expected data protection to be a more challenging issue as data volumes grow. But they also looked forward to a focus on predictive analytics or predictive modelling. “Such analytics could, for example, be focused on predicting peaks in employee turnover or changes in levels of engagement.” They also forecast an emphasis on data integration and the standardisation of measurements.

Value of HR analytics

Practitioners reported that in 2015 they were still trying to explain what HR analytics actually did and its purpose. There was also a concern that HR business partners were “not yet ready to apply a more statistical and analytical approach” when working with the business, and that many business managers still relied on “gut feeling”.

By 2025, they expect HR analytics to be an established practice within organisations. But they believe that the development of HR analytics will have benefited from a wider trend towards evidence-based decision-making, making analytics more generally an inevitable part of organisational improvement.

Structure of HR analytics

Most participants said that HR analytics in 2015 sat in a specialised team within the HR function. Most such teams were fairly new, and typically consisted of around five people. However, one respondent commented that it was “easier to teach HR to a statistical programmer than statistical programming to an HR professional”.

While some respondents thought that HR analytics would stay within the HR function in 2025, a larger group expected it to have been integrated into an organisation-wide analytical function, operating independently of disciplines and focus areas, and identifying valuable business cases and opportunities to improve business performance. They also believed that while analysts and data scientists would continue to play a central role, board members, directors and line managers would take a greater role in using HR analytics.

Support for HR analytics

Finally, respondents to the survey reported that support for HR analytics in 2015 was characterised by “fragmented and outdated IT landscapes”, with multiple systems, tools and platforms in use and limited IT support for HR analytics. This meant that a great deal of time was spent on the “manual labour” involved in retrieving, cleaning, restructuring and organising data for analysis.

By 2025, respondents hoped to see organisation-wide systems in place, with data from all disciplines in a single database. They predicted that the increased use of artificial intelligence would mean less need for human involvement in data management, and the growth of analytics as a self-service for managers. They also looked forward to a shift in focus, facilitated by technology from reporting to analysing data.

The authors conclude that the future development of HR analytics will be driven primarily by an emphasis on integration – of data, infrastructure and analytics teams. “Consequently, HR analytics as a separate team, function, discipline or practice could very well cease to exist.”

In a 60-minute webinar titled Using people analytics to drive retention success on Thursday 28 September, people analytics expert Sjoerd van den Heuvel will demonstrate how organisations are harnessing the power of people analytics to manage retention. Register now.