What is HR analytics?
HR analytics is the process of collecting and interpreting HR data to support informed and intelligent business decisions.
What are HR analytics tools?
In our fast-paced tech world, HR analytics relies on software and tools to automate and streamline the analytics process. Data scientists also play a crucial role in organizing the information into a clear, presentable format for HR professionals.
HR analytics needs accurate and comprehensive internal and external data to be effective. Internal data refers to information from the HR department, such as records and metrics connected to employee compensation and performance appraisals.
External data consists of information from other departments or outside the organization, such as financial data, economic trends, or job-market research. There are many different HR analytics softwares and tools.
Different HR software tools offer different benefits, so it’s important to consider how it will fuse with your current solutions and enable data-driven decisions on how to improve employee engagement and satisfaction, reduce attrition, and improve your cost per hire, workforce diversity, and close pay gaps.
What metrics do HR analytics measure?
Typically, HR analytics relies on data collected from HR analytics key metrics, which include:
- Time to hire
- Time to fill
- Revenue per employee
- Training expense per employee
- Offer acceptance rate
- Voluntary turnover rate
- Absenteeism rate
- Human capital risk
What are some examples of how companies use HR analytics?
To better understand HR analytics, let’s take a deeper look at how it applies to three of the metrics mentioned above.
1. Absenteeism rate
A manufacturing company measures its absenteeism rate and discovered that it’s unreasonably high. Using the analytics process, HR leaders can collect data on employee absenteeism and tardiness. Analyzing the data helps them identify negative patterns, effective strategies, and methods to get their people excited about coming to work. Then, the company can make informed decisions about how to reduce absenteeism, perhaps through adjusting management practices, changing work policies to support better work-life balance, or raising compensation for certain positions.
2. Time to hire
A software development company has dozens of job openings. The HR analytics team gathers data to determine how long it takes the company to hire someone– from the day you start advertising the job until the day a candidate accepts the position. With this information, HR leaders can identify which positions take the longest to fill and why. HR can evaluate factors such as advertising methods, recruitment strategies, and compensation and benefits to determine how to reduce time to hire.
3. Voluntary turnover rate
People are voluntarily leaving a marketing company. Calculating the voluntary turnover rate gives HR the numbers they need to understand better why people are quitting. With the voluntary turnover rate calculations, HR can discuss the numbers with the company executives to determine how to reduce turnover.
What is predictive HR analytics and how can it help optimize HR processes?
While HR professionals must make critical decisions during the analytics process, they aren’t alone. Enter predictive HR analytics, a tool that guides better decision-making based on past and current practices.
Using predictive analytics, HR can reduce human error and risk while forecasting probable, upcoming trends. HR analytics tools can enhance HR software to elevate employee engagement, talent acquisition, and learning and development opportunities.
Why should HR leaders care about HR analytics?
HR analytics provides the key to unlocking effective HR strategies, enabling HR professionals to identify successful practices and pinpoint areas for adjustment. Analytics enables HR professionals to make data-driven decisions to:
- Reduce turnover
- Provide competitive pay
- Boost performance
- Improve workforce planning
- Reduce costs and increase profit
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What can HR leaders do to implement HR analytics?
Incorporating the following practices can pave a smooth path for effective integration of HR analytics:
- Create a plan. Determine the issues to focus on, ranking the most pressing ones first. Include a detailed breakdown of the HR functions and how to adjust them to overcome the company’s business challenges. Identify metrics to drive results and elevate HR functions to reach long-term goals.
- Involve data scientists. Welcoming data scientists into the process enhances HR analytics. Data scientists can monitor the quality and accuracy of the data while helping HR professionals understand the information and implement it strategically. With well-organized and clearly displayed information, HR leaders easily share the information with stakeholders to promote an agenda.
- Prepare HR personnel. Request that HR team members evaluate how influential the role of HR analytics is in developing the company’s business strategy. Once they cultivate an awareness of their standing and determine what they need to do to reach the next level, they can take steps to progress.
- Educate HR professionals. Analytics brings an abundance of AI that challenges the status quo at work, so HR professionals must educate themselves about developing technological trends. HR leaders can help HR generalists and business partners adapt to the digital transformation by facilitating professional development opportunities.
- Ensure legal compliance. It’s up to HR to ensure managers, executives, individual contributors, and other HR team members understand the importance of complying with local and national labor and privacy laws. Be transparent concerning the type and amount of data the company collects. HR leaders can consult a specialist in employment law to assist them in following regulations and implementing bylaws.
Why should HR analytics be part of the modern HR strategy?
With the continuous influx of tech innovations challenging the workplace, HR analytics enables intelligent decision-making for better talent and business management. Equipped with analytics, HR leaders can elevate their strategy to improve the employee experience, reduce attrition, and boost the company’s bottom line.