CASE STUDY

How HR Analytics Helped an Organic Chemicals Manufacturer to Drive Savings Through Reduced Attrition – A Success Story by Quantzig

Nov 4, 2019

What are the Benefits of HR Analytics?

HR analytics is a well-rounded approach that leverages statistical modeling and advanced analytics methodologies to analyze employee data sets and extract actionable insights to improve decision-making and resource allocation.

HR Analytics

Challenge

Attracting and retaining personnel for blue-collar production jobs turned out to be a major challenge for a leading manufacturer of certified organic chemicals based out of Canada. More than half of their total workforce was directly involved in the production process, with each manufacturing process requiring 10 to 15 hours on an average to produce the final compound that could be shipped to their customers from across the globe.

The rapid developments and the sudden surge in urbanization contributed to the high demand for organic chemicals in Canada. To tackle the growing demand, the company sought to recruit over 300 employees for the target role. To do so, they had to employ new candidates based on the expected headcount and replacement hire predictions. While incremental headcount was crucial to support their future projections, replacement hires comprised a huge chunk of the expected volume for the desired role based on the attrition rate which was about 28% at that time. A detailed analysis of the client’s challenges revealed that the cost of replacement was approx. US$ 5,000 per employee which was equivalent to the cost of attrition of US$ 1.75 million/year. This provided a high impact opportunity to leverage HR analytics to demonstrate significant business value by reducing the employee attrition cost.

Solution Offered

Chemical manufacturing companies often lack the expertise to analyze data sets and improve decision-making though they possess huge volumes of unstructured data. In such a scenario, businesses will never be able to gauge the impact of data on decision making until they determine that the conclusions drawn from the data sets are not worthy of action. In this success story, the manufacturer had deployed an information management system for human resources (HRIS) that maintained all the employee data and their transaction logs.

Our HR analytics solutions played a significant role in decision making by helping them analyze data sets to examine the hire date, exit date, pay changes, and other compensations. Leveraging the insights and contextual perspectives from meetings with multiple focus groups and employee interactions helped us implement a systematic approach to developing multiple predictive models. The outcome of each model differed in sophistication and ranged from about 60 percent to 89 percent reliability in forecasting churn rates of employees.

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Business Outcome

The leaders involved in this case study witnessed a significant surge in business value on solving the employee attrition problem. Detailed analysis and the use of advanced HR analytics solutions helped quantify their return on investment. Based on the outcome of the predictive models, the best model was able to address 89 percent of the total cost of attrition. When deployed in real-life, the predictive model helped them achieve 80% accuracy as opposed to 89%, which helped the client save a significant sum- approximately US$1 million per annum through reduced attrition.

Our HR analytics solutions made it possible for the client to invest a small amount of resources to address a significantly bigger problem that revolved around attrition. This, in turn, generated sufficient momentum and leadership buy-in to continue our client’s HR analytics journey.

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