HR Analytics Case Study

1. Aditya Rajeevan
2. Ashish Mishra
3. Biswajit Pain
4. Ravi Susarla
Abstract

Problem Statement

• XYZ company employs around 4000 employees. Every year, around 15% of its employees
leave the company and need to be replaced with the talent pool available in the job
market. This is causing issues within the company and in marketplace.

Key Takeaways Expected

• Factors to focus in order to curb attrition.

• Identifying variables that needs immediate attention.

Goal of the Case Study

• Model the probability of attrition using a logistic regression.

 Problem solving methodology

• Data used to build the model is from 01/01/2015 to 12/31/2015. It includes basic information of employees like demographics, manager
Understanding survey results, employee survey results, employee login and logout time.
the Data

• Checked missing and duplicate values. Formatted in and out time created derived matrices and merged data.
• EDA and univariate analysis of employees who have left the firm.
Data Cleanup
and EDA • Identified outliers, created dummy variables, and scaled continuous variables.

• Logistic regression techniques to build a predictive model.

• A 70/30 split of training and test data
Model Building • Initial model build using stepAIC function and subsequent models based on P-Value and VIF

• Confusion Matrix
• Sensitivity and Specificity
Model
Evaluation • KS Statistics
Understanding attrition for 2015

The attrition percentage for 2015 is 16% which is

considerably higher.

Out of 4,312 employees, 697 employees have left the firm

(from 01/01/2015 to 12/31/2015)
 Univariate Analysis – Attrition of Employees

1. Business Travel
I. Attrition rate is highest in the employees who rarely travel
II. Interesting point to note – Attrition is least in the employees who
do not travel

2. Department
I. Attrition is higher in R&D department
II. Attrition is least in HR department. These might be the employees
who does not travel

3. Education Field
I. Attrition is highest in the employees who have studied Life science
or Medicine
II. Least attrition in employees who have studied HR or other courses

4. Gender
I. Attrition rate in Male employees is higher as compared to female
employees

**Data of employees where Attrition = Yes

 Univariate Analysis – Attrition of Employees (Cont.)

5. Job Level
I. Attrition rate is highest in the employees at Level 2
II. Attrition rate is least in the employees at Level 4 and 5

6. Marital Status
I. Attrition is highest in Single employees
II. Attrition is least in Divorced employees

7. Stock Option Level

I. Attrition rate is highest for employees with least stock option and
is least for the employees with higher level of stock option.
II. First three attributes shows that employees at higher hierarchical
level have not left the firm

8. Environment Satisfaction
I. Attrition is highest in employees with satisfaction level 1
II. Attrition is least employees in with satisfaction level 3 and 4

**Data of employees where Attrition = Yes

 Univariate Analysis – Attrition of Employees (Cont.)

9. Job Satisfaction
I. Attrition rate is highest in the employees who have rated job
satisfaction level as 3
II. Attrition rate is least in the employees who have rated job
satisfaction level as 2

10. Work Life Balance

I. Attrition rate is highest in the employees who have rated work life
balance as as 3
II. Attrition rate is highest in the employees who have rated work life
balance as as 1

11. Job Involvement

I. Attrition rate is highest among the employees with job involvement
level of 3
II. Attrition rate is highest among the employees with job involvement
level of 1

12. Performance Rating

I. Only low performers have left the firm
II. Attrition highest at performance rating of 3

**Data of employees where Attrition = Yes

Final Model

Total Number of variables in Final model = 12

Model Evaluation – Confusion Matrix, Sensitivity and Specificity

Confusion Matrix 1. Confusion Matrix at probability cut-off of 50%

Predicted Attrition (Test of Accuracy)
Actual Attrition No Yes
No 1,063 22 I. This provides a summary of how your prediction compares with the
Yes 154 55 actual values.
Accuracy 86.40% II. The model is 86.40% accurate, which means that it got 86.40% of
the predictions made on the test data correct.
III. This alone does not give a clear picture hence we went ahead and
identified optimal probability cutoff

2. Sensitivity and Specificity

I. In order to find optimal probability cutoff we created cut-off values

from 1% to 80%.
II. Final cut-off decided for the model was 0.1616162
a. Accuracy = 0.7233385
b. Sensitivity = 0.722488
c. Specificity = 0.7235023
 Model Evaluation – KS Statistics, Lift & Gain Chart
LiftChart
4
3.5
3
2.5

Lift
2
1.5
1
0.5
0
0 2 4 6 8 10 12

KS Statistic: 0.4459903 Decile

Gain Chart
120

100

80

Gain(%)
60

40

20

0
0 2 4 6 8 10 12
Decile
Factors that Need Immediate Attention & Positively Related to Attrition

Employee - Years Since Last Promotion

• Higher the years since last promotion, likelihood of employee leaving the company increases

Employee - No. of Previous Companies

• Higher the number of previous companies, employee is more likely to leave the company

Marital Status - Single

• Single employees are more likely to leave the company

Extended Work Hours

• Higher the number of extended work days, higher the chances of employee leaving the company
Factors that Need Immediate Attention & Negatively Related to Attrition

Age of Employee

• Higher the age of employee, its less likely that they will leave the company

Years with Current Manager

• Employees with higher work years with a single manager are less likely to leave the company

Environment Satisfaction

• Higher the Environment Satisfaction, less likely that employee will leave the company

Job Satisfaction

• Higher the Job Satisfaction, less likely that employee will leave the company

Work Life Balance

• Higher the Work life Balance score, less likely that employee will leave the company