Electronic copy available at: https://ssrn.com/abstract=2896602
THE RISE OF HR ANALYTICS: A PRELIMINARY
EXPLORATION
Dag Øivind Madsen, University College of Southeast Norway
Kåre Slåtten, University College of Southeast Norway
ABSTRACT
In recent years, HR analytics has risen greatly in popularity among practitioners and consultants in the field of human resource management. To this date, however, HR analytics has not been subject to much scrutiny from academic researchers. The aim of this paper is therefore to examine the rise of HR analytics over the last few years through the theoretical lens of management fashion theory. This theoretical lens places particular emphasis on how different supply-side actors involved in the human resource management field have developed and positioned HR analytics as a necessary solution to contemporary challenges.
JEL: M10
KEYWORDS: HR analytics, Human Resource Management, Management Fashion, Big Data INTRODUCTION
The term “HR analytics” (HRA) has different meanings to different people (Bassi, 2011, p. 15). In a recent article, HRA is defined as “the systematic identification and quantification of the people drivers of business outcomes, with the purpose to make better decisions” (van den Heuvel & Bondarouk, 2016, p. 4). In other words, HRA is about analyzing human resource (HR) related data in a systematic way to make better business decisions. HRA is currently one of the biggest buzzwords in the field of human resource management (HRM). Commenting on the phenomenon of HRA, several authors have noted that there currently is a lot of hype and buzz, and that it is generally seen as something
organizations “must have” (Platanou & Mäkelä, 2016; van den Heuvel & Bondarouk, 2016).
However, despite all of the buzz, academics have largely been absent from the debate and have only to a very limited extent scrutinized the HRA phenomenon (van den Heuvel, 2016; van den Heuvel & Bondarouk, 2016).
Against this background, the purpose of this paper is to examine more closely the rise of HRA, and to explore how and why HRA in a relatively short period of time has gained this “must have” status in the HR field. This paper uses management fashion theory (e.g. Abrahamson, 1996) as a theoretical lens through which to view the popularity trajectory of HRA. In particular, this theoretical lens puts emphasis on how different fashion-setting actors have developed and positioned HRA as a “must have” solution to contemporary HR challenges.
To the best of the authors’ knowledge, management fashion theory has not previously been used in the context of HRA. However, the management fashion perspective has been shown to have some
explanatory value in the context of other popular HR ideas and practices such as Talent Management (Iles, Preece, & Chuai, 2010; Preece, Iles, & Chuai, 2011). In the broader HR literature, researchers have pointed out that actors in the HR field are not immune to institutional pressures (Boselie et al., 2009; Ewerlin & Süß, 2016; Gooderham, Nordhaug, & Ringdal, 1999; Paauwe & Boselie, 2003, 2007). As Paauwe and Boselie (2003, p. 64) note, fads, blueprints, and mimetic mechanisms are influential in the HR field. In light of these findings, we argue that the management fashion could be a promising theoretical lens to shed new light on the rise of the HRA phenomenon.
Electronic copy available at: https://ssrn.com/abstract=2896602
used to analyze the rise of HRA. In Section 4 we describe and analyze the roles and activities of different supply-side actors involved in the HRA field. In Section 5 our findings about the rise of HRA are discussed in light of management fashion theory. Finally, in Section 6 we conclude, discuss limitations, and outline areas for future research on HRA.
HRA: EMERGENCE AND EVOLUTION
Although HRA only recently has become a big buzzword, HRA builds heavily on ideas and practices that have existed in the HR field for a long time. As noted by Bassi (2011), metrics and measurements were discussed as far back as the late 1970s. More than 30 years ago, HR researchers grappled with issues related to the measurement of human resource management (Fitz-Enz, 1984). Although the origins of the field of HRM can be traced back to Peter Drucker’s writings from the 1950s, HRM got its big breakthrough during the mid-1980s (Beer, 2015; Kaufman, 2015; Marciano, 1995).
During the 1990s, the focus shifted to viewing people as a valuable organizational resource and capability that can create competitive advantage (Barney & Wright, 1998; Huselid, 1995; Pfeffer, 1994; Ulrich, 1997; Ulrich & Lake, 1990; Wright, Dunford, & Snell, 2001). As a result, human and intellectual capital became key buzzwords in both academic research and in the management community at large (Edvinsson, 1997; Stewart, 1997; Ulrich, 1998).
In the years that followed, much attention was directed at developing new techniques for calculating the return on human and intellectual capital (Bontis & Fitz-Enz, 2002; Fitz-Enz, 2000). During the first half of the 2000s, new ideas such as HR Scorecards and Workforce Scorecards were developed (Huselid, Becker, & Beatty, 2005; Ulrich & Beatty, 2001), tools that would allow organizations to measure the impact of HR activities and practices on organizational performance. During the mid-2000s, there were many calls for more scientific and evidence-based approaches to HR (Boudreau & Ramstad, 2007; Pfeffer & Sutton, 2006; Rynes, Colbert, & Brown, 2002; Rynes, Giluk, & Brown, 2007).
In previous contributions, it has been noted that HRA has existed as a research topic for about 15 years (Angrave, Charlwood, Kirkpatrick, Lawrence, & Stuart, 2016). In addition, HRA relatively early become a topic of discussion in journals focusing on HR and people strategy (e.g. Feather, 2007; Fink, 2010; Levenson, 2005, 2011; Waber, 2013). In the last few years, HRA has received considerable attention in influential practitioner-oriented management outlets such as Harvard Business Review, and in a string of reports written by global consulting and technology giants.
The topic of HRA is currently the subject of much debate in the HR literature (Rasmussen & Ulrich, 2015; Ulrich & Dulebohn, 2015). Currently, a main focus of the research on HRA is how to use HRA as a decision support tool predict future events, so-called “predictive analytics” (Fitz-Enz & John Mattox, 2014; van den Heuvel & Bondarouk, 2016, p. 8). In addition, it is evident that the
profileration and availability of Big Data has paved the way for HRA, as much of the thinking around HRA has been developed in the aftermath of the introduction of Big Data (Angrave et al., 2016). Big Data makes it possible to use large amounts of data to support HR-related decision making processes (Angrave et al., 2016; Shah, Irani, & Sharif, 2016).
A MANAGEMENT FASHION PERSPECTIVE ON HRA
In this paper, we take a management fashion perspective (e.g. Abrahamson, 1996; Kieser, 1997) on the rise of HRA. A key focus of management fashion research is to understand why some management concepts become popular, while others do not (Madsen & Stenheim, 2013). A management concept is, in the words of Benders and Verlaar (2003, p. 757), a “more or less coherent, prescriptive vision on (aspects of) organization design.” In the HR field, there are many examples of management concepts, e.g. HR Scorecard (Becker, Huselid, & Ulrich, 2001), HR Transformation (Ulrich, Allen, Brockbank, Younger, & Nyman, 2009), Performance Management (Smither & London, 2009) and Talent
However, not all new HR management concepts end up as HR fashions. Jung and Kieser (2012, p. 329) suggest that management fashions are “management concepts that relatively speedily gain large shares in the public management discourse.” In the management fashion literature it is pointed out that the actors involved in the “management fashion arena” (Jung & Kieser, 2012; Klincewicz, 2006) play key roles in the popularization and rise of management fashions. For example, supply-side actors (e.g. consulting firms, technology firms and management gurus) create awareness and a wave of interest, triggering bandwagon effects. In the next section, the focus will turn to the various actors involved in the HRA field.
THE SUPPLY SIDE OF HRA
A wide range of supply-side actors are involved in the HRA field, e.g. consulting and technology firms, management gurus, business school professors, conference organizers and professional organizations. These actors offer various types of products and services aimed at helping potential consumers of HRA (i.e. organizations and managers) implement and apply HRA in their
organizations. In the following, we will analyze the roles of several types of actors that we deem to have been particularly influential in shaping the evolution and popularity trajectory of HRA: 1) consulting firms, 2) technology firms, 3) professional organizations, 4) conference and seminar organizers, 5) business media organizations, 6) business schools, 7) management gurus, and, finally, 8) social media.
Consulting firms
In the literature on management concepts and ideas, it is emphasized that consulting firms play key roles in the diffusion and dissemination of new management concepts (Heusinkveld, 2013).
Management consulting firms have also had a strong involvement in the HRA field. During the last few years, HRA has become an important practice area for most global management consulting firms, and the concept is heavily marketed via these firms’ websites. Just in the last two or three years, a number of reports have been published by leading consultancies such as McKinsey (Fecheyr-Lippens, Schaninger, & Tanner, 2015), Boston Consulting Group (BCG, 2014), Accenture (Accenture, 2014), KPMG (KPMG, 2015), and Deloitte (Deloitte, 2015, 2016).
Technology firms
Technology firms play important roles in creating software solutions for new management fashions, in particular in relation to more technologically infused management concepts such as Knowledge Management (Klincewicz, 2006) and Customer Relationship Management (Madsen & Johanson, 2016). As noted earlier, HRA draws on heavily on recent technological advances such as Big Data. Therefore, it comes as little surprise that technology firms have played leading roles in the
development of the HRA field. In addition, technology firms are commercial actors who have sensed a lucrative market opportunity in relation to HRA. After all, the market for HR related software is massive, estimated at about $14 billion (Bersin, 2016a).
A number of well-known technology and software firms have developed software solutions for HRA and people analytics. For example, firms such as Oracle, IBM and SAP offer solutions that help generate statistics and overviews of a number of different HR processes (Angrave et al., 2016, p. 5). In addition, Google has been heavily involved in the development of the HRA field (Bryant, 2011; Sullivan, 2013), by introducing its people analytics function (Davenport, Harris, & Shapiro, 2010). Professional organizations
Professional organizations have many functions in relation to new management concepts and ideas, e.g. licensing, training, certification, and professional development. In addition, professional
2002). Professional organizations shape what are seen as rational and legitimate management
practices. In the context of HR, it has been noted that professional organizations have a key function in creating legitimacy for HR practices (Farndale & Brewster, 2005). Professional organizations have also played an important role in relation to HRA. For example, local HR associations in countries such as Norway (www.hrnorge.no), England (www.cipd.co.uk) and US (www.shrm.org) have placed HRA high on their priority lists, e.g. by arranging conferences and meetings where HRA gurus and
spokesmen have been invited to speak and present their solutions. Conference organizers
Conferences and seminars are important arenas where new popular management concepts are introduced and discussed (Kieser, 1997). Usually other supply-side actors such as consulting firms, management gurus and software firms actively partake in these conferences and seminars as speakers and exhibitors. There has been a growth in the number of conferences related to HR and people analytics, in addition to analytics-related streams at other more general HR conferences (Green, 2016). It should be noted that several of these conferences have been co-hosted and/or sponsored by well-known technology firms (e.g. IBM) or business schools (e.g. Wharton).
Business media
Different types of business media are influential in the diffusion of management concepts (Alvarez, Mazza, & Pedersen, 2005; Sahlin-Andersson & Engwall, 2002). For example, management books geared toward managers are influential in spreading new management ideas and practices (Furusten, 1999; Røvik, 2002). Just in the last few years, a large number of books about HRA have been published (e.g. Bassi, Carpenter, & McMurrer, 2010; Davenport, Harris, & Morison, 2010; Fitz-Enz, 2010; Isson & Harriott, 2016; Sesil, 2013; Soundararajan & Singh, 2016).
Business schools
In the management fashion literature it is pointed out that business schools play an important role in legitimizing and circulating new management concept and ideas (Sahlin-Andersson & Engwall, 2002), by integrating them in courses and educational programs. The network around Harvard Business School has played a role in legitimizing HRA. For example, articles have been published in Harvard Business Review (Davenport, Harris, & Shapiro, 2010) as well as a special Harvard Business Review Report (HBR, 2014). A number of business school professors have been involved in the propagation of HRA, by publishing books and speaking at conferences.
Business school professors may also play a different role, by carrying out a due diligence function. However, relatively few academics have scrutinized HRA from a critical outsider perspective. As mentioned in the introduction, academics have largely been absent from the debate on HRA (van den Heuvel, 2016; van den Heuvel & Bondarouk, 2016).
Management gurus
Management gurus are “thought leaders” that are influential in shaping the popularity of new
management ideas and practices (Huczynski, 1993; Jackson, 2001). In the broader HR field there are many thinkers and gurus (HR Magazine, 2016). Jac Fitz-Enz may be considered the main guru in the HRA field (www.drjacanalytics.com). However, other HR thinkers have also established a high profile in relation to HRA.
by HR Norge in Norway). Like Bersin, Holley is actively contributing to the discourse about HRA on social media platforms such as Twitter. Next, we will turn to the role of social media in the rise of HRA.
Social media
In recent years, the Internet and social media have emerged as important channels for the diffusion and dissemination of new management concepts and ideas (Madsen & Slåtten, 2015). There is a number of websites and online blogs about HR issues that are visited and read by HR professionals (Jensen-Eriksen, 2016). Examples of important websites and blogs include HR.com, HRN Blog, and GlobalHRU.com.
Social media platforms such as Twitter and LinkedIn have enabled much of the discourse about HRA. Today there is a heavy presence of HRA actors on social media platforms such as LinkedIn, Twitter and YouTube. On LinkedIn there is a number of relevant groups such as “HR Analytics”, “People Analytics” and “Workforce Planning and Analytics.” Twitter has also become an important channel for news and debate about HRA. A number of HRA spokesmen are actively tweeting using HRA related hashtags (e.g. #HRanalytics, #PeopleAnalytics, #HRtech, #BigData). Finally, a search for “HR analytics” on YouTube results in several thousand hits, and many of the videos feature the
aforementioned HRA gurus. DISCUSSION
The brief historical review has shown that HRA has intellectual roots within the field of HR that date back several decades. Measurements and metrics have a long history in the field of HR, and the recent technological advances, such as the profileration and availability of Big Data have paved the way for the development and popularization of new approaches such as HRA. However, some of the ideas and practices associated with HRA are not new, which means that HRA, at least some extent, can be considered a repackaging and relabeling of existing HRM practices using new rhetoric (cf. Legge, 2005).
It is clear that HRA in a relatively short period of time has risen to prominence in the HR community. What may explain the widespread appeal of these new ideas? As Kieser (1997, p. 61) points out, timing plays a key role in the popularization and rise of management concepts, as new concepts have to hit the “nerve of today‘s managers.” Concepts that fit well with the current zeitgeist will stand a greater chance of becoming fashionable. In this regard, HRA benefits from the strong position of the evidence-based movement in the social sciences (see e.g. Rousseau, 2012; Young, Ashby, Boaz, & Grayson, 2002) and the historical and ongoing quest within the field of HR to play a more important and strategic role within the organization (Guest & King, 2004; Kaufman, 2014).
Therefore, an important question pertains to whether HRA can be considered a management fashion. If we use the definition by Jung and Kieser (2012, p. 329), HR fits the definition of a management fashion since it is a concept that quickly has gained large shares of public management discourse, particularly in the HR sphere. The analysis of the supply-side of HRA has shown that a wide spectrum of actors have been involved in the popularization and rise of HRA. In particular, consulting and technology firms have spearheaded these efforts. There is also much discourse about HRA on the conference scene and in management books. Similar to what has been seen in the case of Big Data (Madsen & Stenheim, 2016), much of the discourse around HRA is taking place on social media platforms. This is an indication that social media play an important role in the diffusion of contemporary management fashions (Madsen & Slåtten, 2015).
currently is viewed as legitimate and socially appropriate. The supply-side actors in the field of HRA have contributed to the diffusion and institutionalization of HRA by carrying out what Perkmann and Spicer (2008) label “institutional work” (e.g. publishing books, educating users, and creating user networks).
It is difficult to speculate about the future popularity trajectory of HRA. However, judging by the hype and rhetoric surrounding HRA, it is reasonable to assume that the expectations with respect to the performance enhancing effects of HRA are currently very high. If the perceived effects should fall short of the expectations, the result could be disillusionment among users. This could over time “wear out” the HRA label (Benders & Van Veen, 2001). HR researchers have warned that the current wave of interest in HRA may not be sustainable, and that it may wane. For example, Rasmussen and Ulrich (2015) argue that it is important that HRA is grounded in real business challenges. Therefore, the HR function needs be involved from the beginning and provide the rationale for gathering data and
conducting analyses. If not, there is a risk that organizations end up with large amounts of data that are not really needed, and not used to solve actual organizational problems.
CONCLUSION
In this paper we have provided a needed critical examination of the HRA phenomenon, a concept that van den Heuvel (2016) points out has not received much attention by HR researchers. Furthermore, we have examined the rise of HRA using the management fashion theory as a theoretical backdrop. Although this theoretical lens has been used in previous HR research, it has not been used specifically in the context of HRA. In our view, the management fashion lens sheds new light on the rapid rise in popularity of HRA. The analysis has shown that a number of supply-side actors have played
influential roles in the HRA field. In particular, the roles of consulting and technology firms stand out. However, professional organizations have had a key role in legitimizing HRA in local markets. Furthermore, the important role of social media in the popularization of HRA is also notable, and it appears that the dissemination and diffusion of technologically infused management concepts such as HRA and Big Data is increasingly happening online.
The approach taken in this paper has been explorative in nature. Therefore, our conclusions should be viewed with a level of caution. First of all, we have only viewed the rise of HRA from a supply-side perspective, and we do have any data about how and to what the extent HRA is used by actors on the demand-side of the market. A follow-up study should combine both supply and demand perspectives on HRA. Data about how and the extent to which HRA is used by actors on the demand-side could be gathered using surveys and/or interviews.
Another limitation is related to our choice of management fashion as a theoretical lens. Viewing HRA through the lens of management fashion does not mean that the authors are ruling out that adopting and implementing HRA practices can have real effects. We recognize that if used to solve actual organizational problems, HRA can be very useful (Rasmussen & Ulrich, 2015). In our view, the main contribution of the fashion lens is that it puts the spotlight on the rise and fall in the popularity of management concepts and ideas, as well as directing our attention to the field of actors involved in diffusing and popularizing new management concepts and ideas.
Finally, in our study we have only taken a broad macro view of the rise of HRA at the international level. In future studies, researchers could carry out detailed case studies of the popularity trajectory of HRA in different countries or regions, which could involve tracking the activities of the actors involved in national markets, e.g. local consulting firms, HRA gurus and HR associations. REFERENCES
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