Chalutz Ben-Gal, H. (2019), “An ROI-based review of HR analytics: practical implementation tools”, Personnel Review, Vol. 48 No. 6, pp. 1429-1448. https://doi.org/10.1108/PR-11-2017-0362
Question
RQ1: What are the major themes that have been developed within HR analytics research?
RQ2: What are the focus and ROI-based critique of HR analytics research?
RQ3: What is the future of HR analytics research?
Objectives
There are two objectives to this paper. The first is to offer an integrative analysis of the literature on the topic of HR analytics in order to provide scholars and practitioners a comprehensive yet practical ROI-based view on the topic.
The second is to provide practical implementation tools in order to assist decision makers concerning questions of whether and in which format to implement HR analytics by highlighting specific directions as to where the expected ROI may be found.
Methodology
The approach used for the review and analysis comprised of four steps. First, they developed a database by conducting a comprehensive and systematic search to identify and pull all the relevant literature on HR analytics that have been published in peer reviewed academic journals. Second, developed a template for analyzing and reviewing articles between empirical and theoretical derived themes. Thirdly, conducted a manual content analysis of the retrieved articles, based on the template, was used to extract descriptive and qualitative conceptual data. Finally, the results were interpreted and the findings meaningfully synthesized. The method used was to ensure a comprehensive, meaningful and high-quality data compilation.
Results
In reviewing and analyzing the papers they identified four HR analytics research clusters: empirical, conceptual, case-based and technical. There articles were coded by the lead category and then checked for consistency by an external judge who has experience with the topic. Any discrepancies were reviewed and discussed before a final classification was agreed upon.
For the results they used descriptive statistics and commentary to answer the first two research questions: RQ1 and RQ2. After analyzing the findings from a sample of 80 articles associated with research in HR analytics according to the chronological development of the research. They were able to identify a shift in trends over time and extract key themes of existing HR analytic literature.
Emergence of HR analytics research
The results clearly show an increase in the interest of HR analytics. There were three distinct periods. The first was between the beginnings 2000 to 2005 when 4% of HR analytics were published. The second was a period of growth between 2006 to 2010 in which 10% of HR analytics were published. The last stage was a period of substantial growth between 2011 to 2016 were 86% of research was published. The shift in publication increase shows that there is a growing academic interest in the field.
HR analytics research has evolved such that in the beginning none publications were found in management or business journals, whereas almost 40% of the publications did so in the 2011-2016 period. The results indicate that a vast share of HR analytics research (91%) was published in either HR management or in other business journals. In total 48% HR analytic research was published in HR management journals while 43% were published in business journals.
There has also been a shift over time in from geographical regions. Most articles on the topic of HR analytics shifted from Europe (10%) to North America (61%). The increase for North America can be linked to the emerging trend, which started in USA, which linked technology and HR. More technology that is introduced has shown more growth in HR analytics.
Most of the articles are conceptual (45%) rather than purely technical (24%). The conceptual studies in HR analytics provide management and the and analytical tools to facilitate working processes and procedures. These include talent analytics, tools for improved organization decision making and a conceptual framework. The focus has shifted over time to a predominance of conceptual articles to technical articles (24%). This shift may be to the growth in specific topics within HR analytics.
Trends in HR analytics research
The first trend that was noticed was the exploration of HR analytics as a strategic management tool. This approach yields a high ROI for the organization because its impact may be on the organization as a whole and on the business level for the purpose of continuous improvement. HR analytics is thought to be an integral part of management process, but the main challenge was answering specific questions regarding specific strategic measures.
The second trend is the evidence-based approach to HR analytics research. This approach yields a high ROI for the organization because it uses a variety of methodological and technological tools to predict improved individual or organizational performance. The key challenges associated with this trend includes figuring out which tool to use for a specific people analytic and which form of technology to use.
The third trend is using the effective organizational processes involving HR analytics as an affective decision-making support tool. The ROI associated with this trend is high because it suggests efficiency in the decision-making processes. The key challenge is the efficiency of the process itself. (Collecting and analyzing the data, thereby raising issues of efficiency and effectiveness)
The fourth trend is studies focusing on the future of HR analytics. This approach yields a low ROI because it is speculative in nature. The key challenges associated with this trend include discussions on whether HR analytics should be part of the HR function and the role of HR professionals.
Theoretical framework: ROI-based analysis of HR analytics
The literature suggests that ROI is an important measurement tool that may assists stakeholders in managerial decision making. ROI is rooted in the early theoretical research in the accounting and management professions that aimed to provide a qualitative approach to decision making. An example is in the corporate training and education literature, where ROI is used to measure the impact of training and educational investments on an organization’s financials.
ROI was used for two reasons. The first was that it is suitable in light of the limited high-quality research that has already been conducted in the field. The second is looking at HR analytics from an ROI-based perspective can increase the chances of the practical adoption of HR analytics.
Empirical studies
Empirical studies attempt to obtain knowledge in the field of HR analytics. The majority of studies were conducted by direct and indirect observations and or experience. Their analyses were either quantitative or qualitative. An advantage of empirical studies is that by quantifying evidence or making sense of it in a qualitive manner, scholars answer empirical questions that are clearly defined and answerable based on data and used of the evidence collected. There is a clear benefit to exploring HR analytics form an empirical standpoint. Some of these benefits are increased organizational performance, greater accuracy regarding performance specifications, accurate and rapid assessment processes, and better HR processes.
Conceptual studies
The advantage of the conceptual studies is that their contributions are wide; they range from providing management tools to providing a theoretical perspective to talent analytics and an analytics-based approach. The common feature is that they articulate a clear connection between HR investment in analytics and organizational effectiveness. They all have indicators of increased level of ROI. The conceptual research studies present a robust approach for strategic alignment with high organizational processes, which complements their overall effectiveness.
Code-based studies
First it covers studies that provide practical examples of organizations that have implemented HR analytics and recommendations for successful implementation. Second, some studies were written by scholars or practitioners who have consulting experience in HR analytics. The advantage of the case-based studies is their practicality in the field of HR analytics. Most of the articles do not show a clear connection between HR analytics investment, organizational effectiveness, and ROI. They also provide limited scientific evidence to aid decision-makers concerning whether to adopt or implement HR analytics tools in an organization.
Technical studies
The technical literature analyzed has four focus areas: informative research, focus on a specific subject within HR analytics, present a literature review, or illustrate future trends in HR analytics. The advantage of technical studies is their specificity. The common ground of what was categorized as technical studies is like case-based studies, most papers do not show a clear connection between HR analytics investment and organizational effectiveness. They also provide limited scientific evidence to aid decision makers concerning whether to adopt HR analytics.
Implications
This review of the literature shows the importance of two notable fields within HR analytics research, which is empirical and conceptual research. This research acknowledges that “despite the popularity of HR analytics there is very limited high-quality scientific evidence-based research on this topic and the second is the apparently limited adoption of HR analytics when the available research seems frequently to suggest that it is associated with positive organizational outcomes.” This means that more research needs to be done for specific HR tasks and challenges in light of practical implementation tools and the expected ROI within HR functions and within the organization as a whole.
From a practical perspective the ROI-based approach presented is important for a data driven decision making process in the field of HR analytics. It provides a step-by-step procedure for handling data and subsequently utilizing the data to attain meaningful managerial insights. It shows that there needs to be more focus in conducting and implementing HR analytics projects within organizations. It shows that some of HR analytics used today are reactive and not proactive. The ROI-based approach also supports continuous improvement in organizations.
From a theoretical perspective provides a ROI framework for conducting scholars and practitioners to focus on a desired topic in a more structured manner.
Challenge for future research
The challenge will be to reach beyond general studies in order to identify important contextual variables of HR analytics and to consistently add value to existing HR systems on both the contextual and practical levels. This can be done by more empirical and conceptual research in HR analytics. Creating and using new technologies will also contribute to the HR analytic field.
More focused and systematic research approach needs to be involved in future decision making. The contextual approach may offer a basis for understanding the organizational context in which specific ROI is to be found in line with new scholarly insights in the HR analytics field. There needs to be more integration of the LAMP framework with contextual elements, which also may offer appealing framework for testable hypotheses. Future research may propose a new methodology that differs from the ROI-based approach to systematically analyze the scholarly and practical field of HR analytics.
My Thoughts
I am not a fan of people discounting data. I feel like if you are going to be in data analytics, then you need to understand the importance of every piece of data.
I understand that they feel like any data that doesn’t directly cause a turn in profit is important, but I would argue that any type of data that helps improve HR data analytics helps create profit. Their dismissal of studies (especially technical studies) is not a philosophy I can agree with. I recognize that too much unorganized data can be harmful, but no data is actually harmful.
The biggest take away for me is just to see the growth of HR analytics.
