03/14/2026

 

Samuel Clifford

 

Chapter 3: People Analytics: The Financial Impact of HRM Activities

 

Technology has increased the amount of data businesses receive. However, there are still two problems:

 

1. Businesses are drowning in data and yet still need more information.

2. Even with data-driven decisions, managers still need to use informed judgment and intuition. 

 

Data should be used by managers by analyzing it and taking useful information to gain or maintain a competitive advantage. 

 

Big Data “is the collection and analysis of the digital history created when people shop or surf the Internet, but it also includes the tests and measures of aptitudes, behaviors, and competencies that employers compile about applicants and employees.” (Cascio 60). 

 

Three features distinguish Big Data from other analytical approaches:

 

1. Volume

2. Velocity 

3. Variety

 

Four Perils of Big Data:

 

1. Managers must accept/embrace Big Data

2. Data Scientists need to be hired

3. Correlation doesn’t mean causation as some assume

4. Data alone isn’t enough to make a good judgement 

 

Competitive Strategy is the “decisions, processes, and choices that organizations make to position themselves for sustainable success.” (Cascio 61). Competitive Strategy and HR Strategy are interdependent. HR Strategy is is similar in that it deals with decisions, processes, and choices, but it focuses on how to manage people. 

 

LAMP Model:

 

L- Logic

A- Analytics

M- Measures

P- Process

 

Logic refers to the underlying reasoning that connects HR activities to business outcomes. It clarifies why a metric matters. Analytics transforms raw HR data into insights. Measures are the actual metrics used, such as turnover rate, time‑to‑hire, or training ROI. Process is how insights are communicated and used to drive action.

 

People Analytics uses quantitative methods to understand workforce patterns and translate those insights into effective organizational action. It relies on descriptive, prescriptive, visual, and statistical analyses, along with external benchmarks, to show business impact and support data‑driven decisions. Many firms still fail to use analytics because of limited capability, resources, or understanding of its value.

 

“Attitudes are internal states that focus on particular aspects of or objects in the environment.” (Cascio 66). Attitudes have three elements:

 

1. Cognition: Knowledge of the object of the attitude

2. Emotion: Feeling of the individual toward the object

3. Action: How they Respond to the object

 

Absenteeism is the failure of an employee to report to work and also to remain at work. An employee is absent if they don’t show up to work or if they leave work without permission.

 

Reasons for Continual Absenteeism from an employee:

 

1. Low employee engagement

 

2. Lack of a flexible work schedule

 

3. Mental health issues (e.g., burnout, anxiety, depression

 

Hiring, training, and development can cost businesses a lot of money which is why it’s critical for businesses to decrease employee turnover. Employee turnover is when an employee leaves an organization in a permanent manner.  The rate of turn over can be calculated by:

 

(Number of Turnover Incidents Per Period/Average Workforce Size) x 100%

 

Separation Costs

 

• Exit interview

• Administrative termination functions

• Separation pay

• Increased unemployment tax

 

Replacement Costs

 

• Communicating job availability

• Pre‑employment administrative functions

• Entrance interview(s)

• Testing or assessment procedures

• Staff meetings related to hiring decisions

• Travel and moving expenses

• Post‑employment information processing

• Medical examinations

 

Training Costs

 

• Informational literature

• New‑employee orientation

• Formal training instruction

• On‑the‑job training

 

Some of those are only applicable to certain jobs or applicants. Either way, as you can see turnover can cost companies a lot of money. Not all turnover is bad though. It depends on the performance of the employee and how easy it is to find a replacement. 

 

A work‑life program is an employer’s set of policies and supports that help employees manage the demands of their jobs alongside their personal and family responsibilities. It can span areas such as dependent‑care support, flexible work arrangements, leave options, informational services, and a supportive organizational culture, all of which influence employee well‑being and organizational outcomes. When well‑designed and well‑supported, these programs increase satisfaction and retention while improving financial and operational results.