Strategic Human Resource Management and Financial Sustainability in Modern Enterprises

Abstract

Strategic human resource management (SHRM) is a vital element for workforce retention and may even help in ensuring the sustainability of the contemporary organizations in the future. The current study analyses the link between the individual variables related to employees and workforce attrition on the basis of IBM HR Analytics Employee Attrition & Performance data set which consists of 1,470 observations with 35 variables. A quantitative research methodology was utilized including descriptive statistics, Welch’s t-test, chi-square test, logistic regression analysis and model evaluation. An attrition rate of 16.12% is obtained with significant variation in the attrition rates based on whether the employees work overtime and their job role. The adjusted regression results suggested that working overtime increased attrition probabilities, while job satisfaction, environmental satisfaction, job involvement, work-life balance, and the frequency of training reduced attrition probabilities. A logistic regression classifier was built in addition to the one mentioned above; it resulted in an ROC-AUC of 0.801 for the holdout validation and 0.823 for the five-fold cross-validation. However, the recall on the default classification threshold for this model was low, which is why it is important to assess other metrics of model performance. This project illustrates the power of HR analytics for discovering workforce trends relevant to HR strategies and decision making. However, as the data set lacks any financial indicators, the financial impact of employee retention remains indirect and needs to be explored.