HR analytics is the process of collecting and analyzing Human Resource (HR) data in order to improve an organization’s workforce performance. The process can also be referred to as talent analytics, people analytics, or even workforce analytics.
This method of data analysis takes data that is routinely collected by HR and correlates it to HR and organizational objectives. Doing so provides measured evidence of how HR initiatives are contributing to the organization’s goals and strategies.
For example, if a software engineering firm has high employee turnover, the company is not operating at a fully productive level.
It takes time and investment to bring employees up to a fully productive level.
HR analytics provides data-backed insight on what is working well and what is not so that organizations can make improvements and plan more effectively for the future.
HR Analytics Meaning
HR analytics, also referred to as people analytics, workforce analytics, or talent analytics, involves gathering together, analyzing, and reporting HR data. It enables your organization to measure the impact of a range of HR metrics on overall business performance and make decisions based on data. In other words, HR analytics is a data-driven approach toward Human Resources Management.
What are HR Analytics, Examples of HR Analytics, Example of HR Analytics
Having data-backed evidence means that organizations can focus on making the necessary improvements and plan for future initiatives.
How can HR Analytics be used by organizations?
Let’s take a look at a few examples using common organizational issues:
When employees quit, there is often no real understanding of why.
There may be collected reports or data on individual situations, but no way of knowing whether there is an overarching reason or trend for the turnover.
With turnover being costly in terms of lost time and profit, organizations need this insight to prevent turnover from becoming an on-going problem.
HR Analytics can:
- Collect and analyze past data on turnover to identify trends and patterns indicating why employees quit.
- Collect data on employee behavior, such as productivity and engagement, to better understand the status of current employees.
- Correlate both types of data to understand the factors that lead to turnover.
- Help create a predictive model to better track and flag employees who may fall into the identified pattern associated with employees that have quit.
- Develop strategies and make decisions that will improve the work environment and engagement levels.
- Identify patterns of employee engagement, employee satisfaction and performance.
Organizations are seeking candidates that not only have the right skills, but also the right attributes that match with the organization’s work culture and performance needs.
Sifting through hundreds or thousands of resumes and basing a recruitment decision on basic information is limiting, more so when potential candidates can be overlooked. For example, one company may discover that creativity is a better indicator of success than related work experience.
HR Analytics can:
- Enable fast, automated collection of candidate data from multiple sources.
- Gain deep insight into candidates by considering extensive variables, like developmental opportunities and cultural fit.
- Identify candidates with attributes that are comparable to the top-performing employees in the organization.
- Avoid habitual bias and ensure equal opportunity for all candidates; with a data-driven approach to recruiting, the viewpoint and opinion of one person can no longer impact the consideration of applicants.
- Provide metrics on how long it takes to hire for specific roles within the organization, enabling departments to be more prepared and informed when the need to hire arises.
- Provide historical data pertaining to periods of over-hiring and under-hiring, enabling organizations to develop better long-term hiring plans.
Benefits of HR Analytics, Importance of HR Analytics
Investing time and money into HR analytics can be daunting. However, some crucial benefits make it worth the effort and can save time and money long-term.
We’ve compiled a list of the 10 key benefits of using HR analytics:
1. Improves talent acquisition
When you track data on key recruitment metrics such as candidate experience, cost per hire, application completion, quality of the source, and quality of hire (to name a few), you instantly gain valuable insight into your recruitment process. You can identify areas that need improving using HR analytic tools, and make changes to your acquisition process that will have a noticeable impact.
2. Increases staff retention
Do you know why your staff leaves – or better yet, do you know what your retention rate is? These are important metrics that HR analytics could help you uncover. Without knowing why staff leave and what your staff turnover rate is, you’ll find it almost impossible to increase retention.
3. Prevents workplace misconduct
Another important benefit that HR analytics will help with is the prevention of workplace misconduct. For example, using data collected from incident reports might help a company or department identify trends or common occurrences in misconduct. This information could be used to spot areas where training might help prevent misconduct from happening in the future.
4. Increases productivity
Key performance indicators (KPIs) are one example of a performance-orientated metric that could be used to assess the ROI of each employee through HR analytics. This would benefit a company’s bottom line because you can identify employees who might be underperforming and offer them support.
5. Uncovers skill gaps
Identifying skill gaps within your teams is an essential part of growing your workforce and understanding who to hire. HR analytics tools often include data visualisation and automation – so you might, for example, plot the skills of a team on a grid against the skills required, to automatically identify areas of weakness.
6. Improves employee experience
Candidate and employee experience is a critical topic in HR and is one of the top HR trends. Experiences matter, so providing a great work environment or a flawless recruitment and onboarding process could improve retention and contribute to better future talent acquisition. One study found that 56% of job applicants encountered a technical issue during their application process (Talentegy, 2019), which could impact their interest in the available positions.
7. Highly engaged workforce
According to HR Cloud, only 36% of us are engaged at work. With HR analytics, you can get insights into your teams, and identify the kind of work, culture, and people that will make them more engaged and perform better.
8. Reduces attrition rate
HR analytics can quickly identify the causes and trends of attrition amongst employees. Attrition explains the reasons why employees want to leave and why they want to stay; understanding these reasons is crucial to your company’s performance. HR analytics can help support you in identifying these gaps – collecting data through employee surveys, for example, and compiling a useful report.
9. Better training
Professional development is often an integral part of company culture. Helping your employees grow and learn new skills will have a direct impact on company performance.
Collecting data on where employees might need upskilling (via HR analytics) allows you to identify if employees are making the most of training opportunities, and see if the training is relevant for them or not – saving your company time and money.
10. Machine learning spots patterns that you might miss
HR analytic tools often make use of machine learning to help spot patterns and trends that we might miss. This will feed into comprehensive management reports on areas that typically may have been overlooked.
Examples of HR analytics Metrics
Here are some examples of specific metrics that can be measured by HR:
- Time to hire – The number of days that it takes to post jobs and finalize the hiring of candidates. This metric is monitored over time and is compared to the desired organizational rate.
- Recruitment cost to hire – The total cost involved with recruiting and hiring candidates. This metric is monitored over time to track the typical costs involved with recruiting specific types of candidates.
- Turnover – The rate at which employees quit their jobs after a given year of employment within the organization. This metric is monitored over time and is compared to the organization’s acceptable rate or goal.
- Absenteeism – The number of days and frequency that employees are away from their jobs. This metric is monitored over time and is compared to the organization’s acceptable rate or goal.
- Engagement rating – The measurement of employee productivity and employee satisfaction to gauge the level of engagement employees have in their job. This can be measured through surveys, performance assessments or productivity measures.
HR analytics Dashboard
Tools for HR Analytics
Following are the most common HR Analytics tool for all.
- Microsoft Excel
- Power BI
HR Analytics Course
- Executive Development Programme In Digital HR Transformation & AI-Driven HR Analytics.
- Executive Programme in HR Analytics (EPHRA)
- Executive Development Program in HR Analytics.
- Executive Certificate Program in HR Analytics.
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Predictive HR Analytics
Functions as a supplement to a textbook for undergraduates studying Human Resources Management
Blends theory with practical guidance, making it easy to begin implementing analytics best practices
Comes with helpful video tutorials for using Excel to manipulate quantitative data