An ROI-based review of HR analytics: practical implementation tools

Publication Date02 September 2019
DOIhttps://doi.org/10.1108/PR-11-2017-0362
Date02 September 2019
Pages1429-1448
AuthorHila Chalutz Ben-Gal
SubjectHr & organizational behaviour,Global hrm
An ROI-based review of HR
analytics: practical
implementation tools
Hila Chalutz Ben-Gal
Department of Industrial Engineering and Management,
Afeka College of Engineering, Tel Aviv, Israel and
School of Management, San Jose State University, San Jose, California, USA
Abstract
Purpose The purpose of this paper is to provide a return on investment (ROI) based review of human
resources (HR) analytics. The objectives of this paper are twofold: first, 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; second, 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.
Design/methodology/approach This paper is a review paper in which a four-step review and analysis
methodology is implemented.
Findings Study results indicate that empirical and conceptual studies in HR analytics generate higher ROI
compared to technical- and case-based studies. Additionally, study results indicate that workforce planning
and recruitment and selection are two HR tasks, which yield the highest ROI.
Practical implications The results of this study provide practical information for HR professionals
aiming to adopt HR analytics. The ROI-based approach to HR analytics presented in this study provides a
robust tool to compare and contrast different dilemma and associated value that can be derived from
conducting the various types of HR analytics projects.
Originality/value A framework is presented that aggregates the findings and clarifies how various HR
analytics tools influence ROI and how these relationships can be explained.
Keywords Quantitative, Literature review, Human resource management, Mixed methodologies,
Return on investment, Strategic human resource management (SHRM)
Paper type Literature review
Introduction
In recent years, there has been a trend in many organizations toward data-driven decision
making in various aspects of business (Holsapple et al., 2014) with the use of big data in
daily activities (Chong and Shi, 2015). Albeit with an element of delay, the human resources
(HR) departments of some organizations follow this trend. HR departments are experiencing
a period of transformation as modern businesses both exploit opportunities and face
numerous and complex challenges. Todays HR transformation is a direct result of rapid
changes within organizations caused by the combined forces of demographics, globalization
and information technology. Some HR departments rely on data to execute activities that
were traditionally performed in a somewhat intuitive manner. This transformation plays a
crucial role in firmsability to achieve a competitive advantage in todays challenging
economy (Kapoor and Sherif, 2012; Sparrow, 2012; Fulmer and Ployhart, 2014). In light of
the rapid changes in technology and the environment, traditional HR metrics have become
unsuitable for many situations (Fink, 2010; Handa and Garima, 2014; Sharif, 2015).
Personnel Review
Vol. 48 No. 6, 2019
pp. 1429-1448
© Emerald PublishingLimited
0048-3486
DOI 10.1108/PR-11-2017-0362
Received 27 November 2017
Revised 12 April 2018
Accepted 15 October 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0048-3486.htm
This research was partially supported by the Koret Foundation grant for Digital Living 2030.
Corrigendum: The publisher of the article: Chalutz Ben-Gal, H. (2019) An ROI-based review of HR
analytics: practical implementation tools,Personnel Review, Vol. 48 No. 6, pp. 1429-1448 added the
acknowledgement that the research was partially supported by the Koret Foundation grant for Digital
Living 2030at a later stage.
1429
ROI-based
review of HR
Analytics
The use of data in HR is referredto in terms such as workforce analytics,”“human capital
analyticsorHR analytics,among others.In this paper, we use the last term,which seems to
provide a wider context for the addressed challenges. Because HR analytics is an emerging
discipline, there are several definitions of the term. HR analytics is defined asthe application
of sophisticateddata mining and business analyticstechniques to the field of HR(Vihariand
Rao, 2013, p. 1). It is also referred to as quantitative and qualitative data and information
management thataims to gain insight and support decision-making processes with regardto
managing peoplein organizations (Fitz-enz, 2000;Handa and Garima, 2014; Zhaoand Carlton,
2015). A third definition pertains to processes to collect, transform and manage key HR
related data and documents; to analyze the gathered information using business analytics
models; and to disseminate the analysis results to decision makers for making intelligent
decisions(Kapoor and Sherif, 2012,p. 1626). Recently, Marler and Boudreau(2017) conducted
an evidence-based review of HR analytics, which they define as A HR practice enabled by
informationtechnology that uses descriptive,visual and statistical analysesof data related to
HR processes,human capital, organizationalperformance and external economicbenchmarks
to establish business impact and to enable data-driven decision-making(p. 15).
HR analytics has several goals. The first is to gather and maintain data for predicting
short and long-term trends in the supply and demands of workers in different industries and
occupations and to help global organizations make decisions relating to optimal acquisition,
development and retention of their human capital(Kapoor and Sherif, 2012, p. 1627). The
second is to provide an organization with insights for effectively managing employees in
order to achieve business goals quickly and efficiently(Davenport et al., 2010; Hota and
Ghosh, 2013, p. 169). Third, some scholars emphasize that the goal of HR analytics is to
positively influence the successful execution of an organizations strategy (Heuvel and
Bondarouk, 2016; Huselid, 2015; Kapoor and Sherif, 2012; Levenson, 2005; Levenson, 2011;
Zang and Ye, 2015).
In this paper, we propose a new definition for the adoption of HR analytics by focusing
on the return on investment (hereafter ROI) gained by an organization when utilizing
HR analytics tools. We propose an ROI-based focus in HR analytics, which enables
organizational insights and supports decision makers with respect to the human capital
dilemma by providing business insight and consequently helping them make better
business decisions. Our proposed ROI-based approach is grounded upon a systematic
review and analysis of the literature in the field. In recent years, the connection between
data analytics and HR has resulted in a growing body of literature that proposes various
approaches to combining the two disciplines, sometimes in an unstructured, blunt
manner. Moreover, despite notable evidence of a growing interest in HR analytics,
researchers have found very limited scientific evidence to help decision makers determine
whether and how to adopt HR analytics (Rasmussen and Ulrich, 2015).
This paper aims to bridge this gap by proposing an ROI-based review of HR analytics in
the sense that the efforts required to adopt analytic methods to HR tasks must
be justified. This study has two objectives. The first objective is to provide an integrative
analysis of the literature on the topic of HR analytics through the lens of ROI to provide
scholars, executives and practitioners with a comprehensive but practical view of the topic
(Huselid, 2015). The study emphasizes the developments in HR analytics research in recent
years, particularly by highlighting works that have been published within the past five
years (Vihari and Rao, 2013; Rasmussen and Ulrich, 2015; Heuvel and Bondarouk, 2016;
Bamber et al., 2017). The second objective is to systematically analyze the literature from the
ROI perspective, highlighting scientific evidence to assist decision makers in determining
how to adopt HR analytics (Rasmussen and Ulrich, 2015). This work aims to aid both
researchers and practitioners with respect to specific directions within HR in which an
expected ROI may be found.
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48,6

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