The Role of Big Data in Human Resource Management

By: Vikash Kumar on December 20th, 2018

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The Role of Big Data in Human Resource Management

Big Data  |  Human Resources

Highly successful organizations understand the importance of acquiring and keeping top talent. HR departments are starting to tap into a massive competitive advantage by leveraging data analytics to identify top performers before they're hired, improve their retention rates, and keep their employees happy and engaged. As the technology for dealing with large sets of employee data continues to advance, this competitive advantage will soon become the new normal. The time for human resource professionals to start embracing data analytics is now.

What it Means to Use Big Data for HR Purposes

Using a statistical model means that all of your previously held presumptions get replaced by validation and hunches with data. You're not abdicating responsibility to an algorithm, you're exchanging gut feeling with success ratios.

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In today’s fast-paced world, analyzing large quantities of different information isn’t easy, but it’s doable. When you tap into the power of big data, you're able to:

  • Decrease the cost of bad hires- With the help of HR analytics, you can observe a significant decrease in the cost of bad hires. A wrongfully chosen employee can cost the company way more than just their salary and benefits. It can also mean an increase in recruitment costs, training expenditures, productivity loss, and negative reviews from clients.

  • Increase retention rates- When you hire someone, you spend a significant amount of time, energy, and money on him or her. What happens when he or she resigns? You start looking for a new candidate, and the entire cycle repeats. With the help of big data technology, algorithms can flag employees at risk of leaving by interpreting their online activity, profile updates, employment history, job performance, and payroll data. When the system flags a highly valued employee, you have an opportunity to retain them by offering them a raise, a more challenging role, or more training. Several companies, including Xerox, Wal-Mart, and Credit Suisse, have successfully increased their retention rates by up to 20% using this method.

  • Predict performance- How do you know if a prospective new hire is the right fit for your work culture or that they are going to perform their duties at a satisfactory level? Going with your gut is unreliable, and attempting to consider all of the requirements for the job and compare the prospect to your current top performers is a lot of work. Instead, HR analytics models can use the records of successful employees to build out a profile of high performers. What you get is a targeted head-hunting tool that can send personalized messages to the right talent.

    Some freelancing platforms have already started using this approach, and the predictions are significant enough to evaluate future job openings, promotions, and even layoffs in a company. Big data could help save time and money on recruitment.

  • Improve your benefits packages- Have you identified what perks employees want as a part of their salary package? Following the lead taken by insurance companies, employers can gather health-related data on their staff and candidates. As a result, more attractive and beneficial packages can be created. It is import to note that the company should be transparent about what they're doing to avoid legal issues related to discrimination practices. This can be done by revealing how you are collecting and using this data.

  • Legal and ethical issues- Privacy is one of the major concerns of big data. Many fear that the numbers could be used against them, and such practices have been accused of being discriminatory. Using big data in HR should be viewed as a risk management technique.

Analytics & HRM Glossary

  • Analytics are solutions that identify meaningful patterns in a set of data. They are typically used to quantify the performance of an organization, product, operation, team, or even individuals in order to support business decisions. Data compilation to manipulation and statistical analysis are the main elements of analytics.

  • Business Intelligence allows business users to choose data from a system or multiple systems and manipulate it to produce reports, including data in a variety of forms.

  • Workforce Analytics- This methodology makes use of software to apply statistical models to employee-related data to optimize human resource management (HRM). It can assist organizations in developing recruiting methods, making general and specific hiring decisions, and retaining the best talent.

  • Predictive Analytics uses the analysis of current and historical facts to predict unknown events using statistics, modeling, machine learning, and data mining.

  • Big Data refers to the software tools that are able to analyze immense amounts of data across numerous systems in a short period of time. In regards to human resource management, people-related data is used to better understand the organization's human capital, workforce capacity, risk, and business performance.

  • Workforce Planning is a perpetual process for determining and assessing the needs of an organization and its workforce. By instituting that process, a foundation is provided for human resource decisions, and profits can be maximized through strategic budgeting and planning.


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About Vikash Kumar

Working as a manager at, Vikash Kumar also has a passion of blogging, he likes to cover topics on Big Data in different technological aspects and also published his byline on different major platforms like Entrepreneur, YourStory, SAP and many other publications.