AN EXPLORATORY STUDY OF HUMAN RESOURCE (HR) ANALYTICS: IMPLICATIONS FOR HUMAN RESOURCE MANAGEMENT PRACTICE

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ABSTRACT

Effectively managing human capital is very critical to organisations today. This has strategic implications for businesses that want to gain competitive advantage over others. HR analytics is gaining widespread attention in businesses with the goal of increasing their competitiveness. This study, therefore, sought to investigate the implications of HR analytics on human resource management practice in Ghana. Adopting a qualitative approach to research, twenty organisations were purposively sampled with ten each from public and private organisations. Data was collected in a span of two months with the appropriate institutional approvals. The interviews lasted for thirty (30) to forty (40) minutes where responses were audio recorded. The data collected were analysed using the thematic analysis. The findings showed that Microsoft Excel, Microsoft Power BI and regression and decision tree were the predominant tools and methodologies used in HR analytics. The study further found that the use of HR analytics use has brought great gains on how applicants are recruited in job roles, performance has increased both at the individual and organisational levels and the best talents retained for continuous growth and effectiveness. Finally, the study revealed that organisations that use HR analytics have faced several challenges as: lack of HR analytics competency, lack of management support and poor data and tools management in appropriately digging into their employee data. Through the study findings, it was recommended that, the Government of Ghana draft a policy document to promote the use of HR analytics in public organisations due to the benefits that comes with its usage. Also, educational and professional institutions need to review their course catalogues to include courses in HR analytics to train experts in the field. The Ghana Employers Association need to encourage their members to take advantage of HR analytics especially to member firms that are currently not using it and to recommend to other sister companies. Conducting further research into the field will help establish strong connections between HR analytics and other Human Resource Management practices. Value can be created by promoting the use of analytics in the HR unit or organisation to reap the enormous benefits.

CHAPTER ONE

            Introduction

INTRODUCTION

The growing trend in businesses is the application of data analytics which is making a great impact in functional areas of firms. These areas are accounting (Earley, 2015) which has used analytics to mine data about customers and competitors to make decisions about their products and services by reducing errors and finding tax-saving opportunities to cut administrative costs; Supply chain (Souza, 2014) which has centred on the use of global positioning systems, radio frequency identification chips and data visualization tools to manage with real-time information regarding quality and location of goods in the supply chain and to better match supply and demand; and healthcare (Ward, Marsolo & Froehle, 2014) mainly focusing on well- established techniques as biostatistics to analyse patient data to improve health care and to generate accurate prescriptions from patient symptoms analysis. This goes to analyse how often patients visit the hospital and what it means and this enables the health facilities to reduce waiting time and potentially improve patient outcomes. The interest in the use of big data or data analytics increases by the day due to the fact that it helps understand a social phenomenon, a host of real-world applications (Raguseo, 2018) and plays a central role in decision-making (Power, Heavin, McDermott & Daly, 2018). Big data has been described by extant literature as complex data sets used in analysis and processes although it adds value to a firms productivity and operations (Manyika, Chui & Brown, 2011; Marr, 2015). For data-driven organisations (McAfee & Brynjolfsson, 2012), volume is an inherent property of big data aside other properties such as velocity, variety, and variability. Companies now have access to a growing volume of data to be able to derive insights for operational and strategic means (Brynjolfsson & Saunders, 2009; Laney, Lettong & Lapkin, 2013). According to literature, the introduction of technology has enabled the human resource function to gather, store and access

a chunk of employee data ( Heuval & Bondarouk, 2017) and insights generated through them for improved organisational processes (Carter & Sholler, 2015).

Although Human Resource Management is late in joining the data analytics trend (SHRM Foundation, 2016), HR professionals have recognized its potential for understanding and optimising the workforce (Edwards & Edwards, 2016; Sullivan, 2013). The interaction between HR analytics and human resource management is obvious as analytics help in optimising recruitment, assessment, promotion, retention, remuneration, turnover as well as other aspects related to human capital management. The continuous growth in the use of analytics has unlimited potential for organisational effectiveness and efficiency. This is as a result of the ease with which data is collected and analysed (Mclver, Lengnick-Hall, & Lengnick-Hall, 2018).

            Background of Study

The introduction of information technology in recent years has had a significant impact on human resource management practices (Gueutal & Stone, 2005; Parry & Tyson, 2011; Kavanagh, Thite & Johnson, 2015). This has brought about a change in how firms recruit, select, motivate as well as retain their employees. Now, leading firms or companies are looking for a competitive advantage in their employees due to the importance of employees to organisations (Kalianna & Ajovu, 2015).

Human resource management has evolved over the last three decades to replace the traditional personnel management (Snell, 2011; Ulrich, & Dulebohn, 2015) and this evolution has been in its theory, research, and practices. The work of the personnel manager ranged from taking care of employee problems to administering labour contracts and being an administrative expert (Osei, 2017). Human resource management helps to improve on the quality of work life, ensure legal compliance and productivity (Kramar et. al., 1997) and this can be achieved through the effective operation of its functions (Osei, 2017).

Organisations are now using HR analytics in their recruitment and selection (Mohapatra, & Sahu, 2017) where employers are able to track, measure, gather and analyse their candidate data to make better hiring decisions (Koshy, 2016). Google through analytics has revolutionised Human Resources by building retention algorithms and has refined their recruitment processes (Mohapatra, & Sahu, 2017). The introduction of HR analytics enables firms to track the skill set of their employees in a database that will serve as a yardstick towards employee’s continuous development in the organisation. This is to make informed decisions on when an employee will need a particular training and development program to suit the ever- changing market demands. In terms of performance, Google is able to use analytics to predict their employee performance (Craig, Harris, & Egan, 2011). The use of analytics or HR analytics is growing in the compensation literature (Mohapatra, & Sahu, 2017). Through this, there is effective oversight of the compensation and benefits programs within the organisation which are very important especially when it comes to organisational performance (Karia & Omari, 2015).

Although HR Analytics has been in existence since 1900, some researchers argue that it is a new concept in Human Resource Management (Johannink, 2015) and they believe, it can help businesses to be more effective and improve performance. HR analytics has been described as an indispensable HR tool (Boston Consulting Group, 2014). This has been noted by researchers on the powerful impact of HR analytics on organisational performance and a way for HR to contribute or add value to the organisation (Lawler III, Levenson & Boudreau, 2004). Examples are Google, Bestbuy, and Sysco that has improved on their competitive advantage through the use of HR analytics (Davenport, Harris & Shapiro, 2010).

The hype in the cycle today is HR analytics (Soundararajan, & Singh, 2017) and as the interest rises, organisations want to know more about it and how they can use them to improve organisational effectiveness and to make strategic decisions about their workforce (Kavanagh,

& Carlson, 2012). A LinkedIn report in 2018 has indicated that, the United Kingdom, Sweden, and Denmark are the top three countries that has adopted HR analytics fully. Also, there has been an increase in the volumes of professionals in these countries who have indicated HR analytics capability in conducting analysis on their human capital. This implies that, more countries including Ghana need to embrace this new trend in HR both in tools and capability to match up with other thriving economies like the ones indicated above.

In Ghana, the adoption and implementation of HR analytics has not been fully explored due to the high cost incurred in acquiring an HR analytics tool making it available to a few fraction of firms that can afford. Sierra-Cedar (2016) postulated that, about 45% and 51% of large and mid-sized organisations respectively are investing huge sums of money on HR analytics. With the complex nature of businesses in Ghana coupled with economic challenges such as weaker currency, low savings, and low productivity (Amposah-Tawiah & Dartey-Baah, 2011), makes it difficult for organisations especially public or indigenous ones to invest in HR analytics as other countries due to the high cost of purchasing an HR analytics software (Jensen-Eriksen, 2016).

            Statement of Problem

Scholars of management have identified that organisational effectiveness is one of the most central topics when it comes to the study of organisations (Lee & Brower, 2006). Therefore, for organisations to be more competitive, frequent studies need to be carried out to identify deviations and to solve workplace problems. It is very essential to identify and develop ways of assessing organisational effectiveness rather than adding on to theories (Cameron & Whetten, 1983) as no one approach to effectiveness is inherently superior to another (Cameron & Whetten, 1983).

HR analytics is unknown in most business organisations (HR Analytics, 2017) making managers rely on their instincts rather than statistical and analytical approaches to data

evaluation. There is a goal to create awareness about HR analytics as a discipline to aid business decision-making (HR Analytics, 2017). This study, therefore, seeks to contribute towards creating the awareness of HR analytics both in the domain of academia and organisations. It also seeks to find out if organisations use the HR analytic tool and if they do, to what extent this tool is used and how they can use it if they do not use it. Also, benefits, as well as challenges, will be identified to guide the analytics implementation process.

Since the emergence of HR analytics, HR functions seem to be under intense pressure to demonstrate its value (Holbeche, 2009) but the needed skills and competencies of those involved in HR analytics is important (Bassi, Carpenter, & McMurrer, 2012). The ability to carry out effective analytics to reap organisational benefits is not forthcoming as most individuals within the HR function lack the necessary skills, knowledge, and insight (CIPD, 2013). Organisations, therefore, need to measure the capabilities of the employees within the HR function to ascertain their readiness for HR analytics. The study seeks to explore how capable Ghanaian HR functions are towards the adoption and use of HR analytics in their organisational processes.