HR analytics is essential for any business that employs teams of people. More than 70% of company executives today advocate people analytics as a top priority in their organization; it's all about how you collect data to gain key insights into people's performance and beyond.
The key to efficient human capital management is to have an understanding of what data is important to you, how to analyse it, and if technology can help you improve your data-driven insights, processes, and strategic decisions.
This guide aims to help you understand the core benefits of using HR analytics.
What is HR analytics?
HR analytics is the intentional collection of data on your workforce and teams to understand their effectiveness. Analysing this data will provide you with useful insights into which areas could be optimized to improve your business functions.
For example, a recruitment agency might collect analytics on individual performances by tracking the number of people they've hired each month. This could help identify return on investment per hire and employee performance.
HR analytics tools can help to translate people data, such as demographics, skills, pay, and performance into actionable insights that support business decisions about the talent management needed to build a competitive advantage.
Which HR metrics should you be measuring?
There are various aspects of the workplace you could track HR metrics on to feed into your analysis. From talent sourcing and acquisition to employee engagement and retention; it really depends on what HR data is meaningful to your business and how measuring it could support you in achieving your business goals.
Examples of HR metrics include:
- Time to hire
- Cost per hire
- Retention rate
- ROI for each employee
Ultimately, HR analytic tools could help you analyse these metrics using technology, AI, and automation.
What are the key benefits of using 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.
45% of companies are still in the initial stages of basic process automation according to Shortlister - automating tasks is critical to improving HR analytics.
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 toHR 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.
Example HR analytics tools
With the benefits above considered, you might now be asking which HR analytic tools could help your business. We encourage you to do your research but here are some to start with:
- Sisense: Build custom analytic experiences with this platform using its fantastic data visualisation features.
- Orgvue: Specifically designed for HR, Orgvue allows you to analyze, plan and monitor your organization through data.
- Bamboo HR: An all-in-one platform for HR teams. Build data throughout your employee life-cycle, from onboarding and hiring to creating culture and teams.
- Sage HR: Automate your HR process and gain meaningful insights with this complete HR solution.
- Neuroworx: A talent acquisition platform best for HR teams. Using behavioural science, augmented intelligence & talent assessments, helps companies build the workforce of the future.
Just remember, these HR tools are only as good as the data you collect and track. We encourage you to review your processes and find the best ways to measure success through analytics – it all starts with small incremental changes that can have a huge impact.
June 24, 2021
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