HR Analytics is basically the process of using and interpreting data to assist Human Resource functions like staffing, retention, training and performance management. If used properly, this information can help HR and the organizations they serve to improve all aspects of people management and make a positive contribution to the bottom line.

Managing people has come a long way since the days of the hiring and personnel office. Today, Human Resource sections and managers are charged with key elements of an organization’s business plans and are expected to minimize human costs while generating revenues and mitigating risks. HR analytics can help with all those outcomes by integrating people management statistics with financial and operational data.

Why HR analytics are important

We have always collected data about people and products. That’s how we’ve learned. Measuring and testing has helped us make better decisions about widgets and people. Some big companies started collecting massive amounts of information but had no real way to analyse them, while most smaller organizations did the best they could to track trends amongst their workgroups. All this started to change with the rise of Big Data and the tools to help manage that.

Led by the Internet giants like Google they found ways to not just manage the data, but to manipulate it for commercial purposes. Out of that came analytic systems for other purposes including helping to improve the people management systems of today. McKinsey & Company has been tracking HR analytics and their progress in recent years.
What they have found is that some organizations have been able to generate millions of dollars in savings while improving employee engagement at the same time. Others have reduced their voluntary attrition rates by half and dramatically improved their long-term retention rates.

No one knows the full potential of HR analytics to improve HR practices and generate even more positive changes, but the trends towards greater efficiency and improved productivity are clear.

How HR analytics work

Analytics help to track and interpret data. In Human Resource analytics that includes a range of employee-related information on things like time to hire and employee turnover rates. It can even help companies track how efficient each individual employee is in generating revenue for the organization. None of this information is new and employers have been collecting this type of information for many years. What is different is how the information is collected and stored and how it can generate reports that show how to make improvements in HR and organizational practices.

One place is in training and development. When data is collected and analysed on training efficiency, an organization can track multiple data points in areas like performance improvement, and whether an employee can move to the next tier of their career after the training has been completed. It is also easy to see exactly how much money the business is spending on each employee’s development and how that compares to others in the organization.

In staffing and recruitment companies can streamline their planning and implementation based on data acquired through HR analytic software like applicants tracking systems and recruitment marketing platforms. Organizations can even track employee engagement and employee morale as well as working on the constant need to reduce voluntary absenteeism and to encourage employee wellness.

How to get moving with HR analytics

Most organizations already collect human resource data. But to move to a HR analytics system will require more than just acquiring new software. There needs to be an internal discussion from top to bottom on whether there is a need and how the data will be stored, protected and utilized before you begin. You will also need to talk with the experts who can give you suggestions about an analytic solution that will meet your organization’s needs. These experts which are called data scientists, can help both senior managers and the Human Resource practitioners understand how not just to operate, but to get the maximum results from their new system.

Like all major changes, and the move to utilize HR analytics can be a big change, it should likely start off small. Your data scientist can help you identify some areas, like time to hire, for example, where better data management and analysis can give the organization some early successes. This is important and can allow the organization to move gently, but with confidence, into this new field. At the same time it is important to get both legal and privacy advice to ensure that the data collected meets the current information and privacy provisions of all laws and regulations.

This should include protection for employee’s personal information as well as their consent to collect certain types of data and information on things like their health and wellness. There are also many questions around security like where the data will be stored and whether suppliers also meet privacy and consent requirements. In addition, it needs to be made absolutely clear who will have access to the data that is collected, for what purpose, and how and when they are able to share that information, or the findings gleaned from that data. with others inside and outside of the organization.

Is HR analytics the right fit for your organization?

There is no question that HR analytics offer benefits like streamlined processes that can reduce costs, reduce attrition, and ultimately improve the bottom line. Automation is helping to free HR professionals so that they can work on developing employees and maximizing their contribution to the organization. But there are some lingering issues about HR analytics, including relying too heavily on machines when it comes to managing people. But even before you get to the concerns about HR data management to guide personnel decisions, there are many other questions an organization should consider.

Let’s take an issue like employee attrition and retention. Do you have an issue with high employee turnover? If yes, do you have the information on hand as to why people are leaving and how much this is costing the organization? Do you know which groups of employees might be more likely to leave than others and how easily can they be replaced? If you have the answers to all of these questions, you may not need an HR analytic solution. If not, you should at least consider it.

What about training and development? Do you know if your current training meets your operational requirements? Are your managers and supervisors happy with the results that they are seeing from the training? Do you have individual training plans for each employee that tracks their growth in the organization over time? Do you know how much you spent on each employee for training five years ago? How much do you intend to spend in two years from now? Once again, most HR people could answer some of these questions easily. Others, not so much.

In order to get answers to these and many more people related questions, you may need to look at HR analytics for your company or organization. Once you have that in place you may still have to use people brains to come up with the best solution. But with HR analytics at least you will be operating with the best available data.