Updated: Apr 25, 2022
Development & Management
The importance of HR analytics for workforce development cannot be overstated. Its role has been changing for the past few decades as we move from an industrial age to a knowledge worker economy.
The need for data-driven decision-making within organizations and the importance of organizational planning and strategic leadership necessitates using HR analytics in talent acquisition, retention, succession planning, and human capital management.
Here, we will briefly introduce what HR analytics entails while demonstrating why this trend cannot be ignored by any organization looking to grow its business or improve efficiency.
In addition, we'll cover how employers can incorporate it into their strategy to optimize processes and workforce.
Meaning and purpose of HR analytics
The phrase HR analytics is used to describe the application of statistical analysis, data mining, and artificial intelligence techniques, among others, to make better decisions about human resources at the organizational level.
HR analytics aims to help organizations better use their current workforce to gain a competitive advantage by using its talent resources effectively.
Transforming HR data into actionable insights, businesses can proactively align their workforce with the organization's goals and objectives.
The most comprehensive data must be collected and analyzed to identify trends, patterns, and best practices. Having this information with hr analytics software at one's disposal will enable employers to make more informed decisions on various matters, from recruitment strategies to staff retention efforts, among others.
In addition, organizations can utilize hr analytics tools to identify where weaknesses exist within their current workforce and take active measures to improve performance in that area of concern.
HR trends remote work is booming
In light of the pandemic, more and more people see the value of telecommuting. According to Enterprise Technology Research (ETR), "The percentage of workers around the world that is permanently working from home is expected to double in 2021 as productivity has increased during the coronavirus pandemic."
In addition, the Gartner CFO survey revealed that about 74% of organizations plan to shift employees to remote work post-pandemic permanently.
Companies like Google are already famous for allowing their employees to work remotely. Still, this trend is going mainstream and will become an increasingly common practice among employers due to the popularity and success of these schemes.
Technology adoption and deployment
With the advent of digitalization, companies have made it a priority to unify their dispersed workforces. This is done by implementing new technologies for communication that can keep up with a modern digitally-focused force.
Such technologies include video conferencing apps that allow employees worldwide to share thoughts in real-time.
Additionally, software like Slack has become an integral part of enterprise communications infrastructure by enabling businesses to communicate via chat rooms, giving teams instant access throughout global offices.
Employee's employee's value feedback
Many employees report they are most satisfied when their feedback is heard and acted on. Employees crave recognition and want their opinions heard.
When the Company listens, it validates employees' inputs, making them feel more engaged in work activities because they're getting credit for doing a good job.
The best way companies can motivate is by listening actively to what employees have on their minds at any given time so that adjustments are made accordingly before an issue causes employee productivity to go down or their morale takes a nosedive.
Companies are showing more support for mental health
Mental health has become a growing concern for many companies, as more and more employees are struggling with emotional disorders. In the face of this adversity, some organizations have used the data from hr analytics tools and have begun to react by providing resources or cutting costs to support their well-being programs better.
Business leaders are adamant about relevant skills
Business leaders recognize the importance of ensuring employees have the skills they need to succeed in their day-to-day work. It's no longer acceptable for employees to be disengaged and unmotivated.
Companies and hr professionals within the human resources leadership realize through their workforce analytics and data analysis that an employee's skills can directly affect job performance and whether or not a company is successful.
By analyzing data, companies can use hr metrics and predictive analytics to ensure more priority is placed on practical training programs that enable employees to develop skills, resulting in a more skilled and productive workforce. Employers also realize that investing in an employee's development and having the best hr systems and hr analytics tools will provide the actionable insights and relevant data needed to increase loyalty and retention.
Data has become a significant asset for HR departments
The economics of data is changing, and having the appropriate business intelligence and hr metrics to provide the people analytics and hr context for human resource management initiatives is now becoming a critical asset for HR teams. Big Data is indeed the new currency and the cornerstone of HR operations.
In addition, studies by Deloitte and Gartner show that data helps HR teams make informed and more effective decisions to deliver better services to the employer, employee, and other stakeholders.
Data-enabled decision-making allows HR teams to capitalize on emerging trends and patterns which otherwise might have gone unnoticed. Today, data is widely used to make critical decisions such as training and development, recruitment processes, compensation management, employee engagement levels, etc.
According to Deloitte, "The use of workforce data to analyze, predict, and improve performance has exploded in practice and importance over the last few years, with more growth on the horizon."
Furthermore, their 2018 Global Human Capital Trends survey showed that "84% of respondents viewed people analytics as important or very important, making it the second-highest-ranked trend in terms of importance."
Employers have started using Big Data and machine learning to meet the requirements of new talent marketplace dynamics. This has been possible due to advanced ways of collecting, analyzing, sharing, and storing data compared with conventional methods like interviews and paper surveys traditionally deployed in organizations.
Data sharing is essential among all associated with an organization - be it employees, partners, or even customers (in the case of B2B). Using hr practices that are tied to measured insight, for example, human resource leaders can identify areas to increase employee performance, improve HR processes, and employee retention to provide optimized business outcomes by focusing on developing business practices that increase employee performance. With different hr systems and people analytics software, hr leaders collect data, get data visualization and can track key metrics that make hr a more strategic business partner to increase business performance and improve employee performance.
Automated systems or platforms have been developed which store all kinds of employee data that had previously been stored manually on paper records such as performance-related actions, attendance issues, grievances filed by employees, etc.
As much as data can be used to make better business decisions and provide relevant insights, great care has to be taken in this regard. Why? Because there are a number of regulatory requirements that an organization must follow while collecting data, or else they risk receiving hefty fines.
In addition to staying compliant, the HR team must handle the risk of storing sensitive consolidated data about employees on their database.
Driving business value with HR analytics
As with any other aspect of a business, HR analytic tools and hr analytics metrics can have an enormous impact when used effectively.
The following are some examples of how organizations can leverage HR analytics to drive organizational performance and value:
A salesforce can benefit from HR analytics by identifying top performers through analyzing attrition rates among their workforce. This information can be used to identify candidates with the best potential fit for a specific role within the organization.
HR analytics can be tracked in a performance management system to track employee performance and gauge output levels against established goals. By examining such data regularly, employers can identify problem areas and implement corrective measures to ensure that performance levels remain optimal.
HR analytics can also be used in the hr department to develop recruitment strategies by analyzing an organization's hiring sources and labor market indicators to determine the most successful way of sourcing candidates for available positions. This will allow organizations to implement the appropriate recruiting strategy most likely to result in a high number of quality hires.
For an organization to be successful, it is essential that employees remain productive and happy. A hr department can utilize people analytics tools and workforce data, to determine culture and engagement.
Simple processes to gather data include surveys that incorporate the employee experience to provide additional insights through employee journey maps and pulse surveys. In today's market some of the best hr analytics tools (like Culture Amp, Effectory, VibeCatch, Willis Towers Perrin) enables hr to gain quality data, business intelligence and insights into the unique needs of each employee within the workforce. A human resource department can use HR analytics software to assess employee needs at various points in time and incorporate continuous listening to measure employee satisfaction.
Organizations can enhance the employee experience through HR analytics, and provide their greatest asset, their people, with the resources they need to succeed. This provides organizations with a way to use workforce analytics to create an environment where employees can thrive, leading to higher levels of productivity.
By using the right HR analytics tools, HR can continuously improve the work experience and reduce high employee turnover, gain a better understanding of the current business climate, and build better relationships within their organization to minimize risks and increase employee retention.
Implement HR analytics into the company to collect employee data
The first step in implementing Human Resource analytics into your organization is understanding the various available data sources. Of course, the primary source of data will be from the workforce itself, but as mentioned previously, other factors contribute to an organization's overall effectiveness and productivity.
The first step in HR analytic implementation should be reviewing organizational workforce data and determining which is most helpful. This can include information about employee participation in certain activities (for example, training programs), performance-related issues, team-building schemes, etc.
These are the data points that need to be considered:
-The source of the data (for example, is it coming from external partners or a third party) and how reliable the information is.
-The frequency at which data needs to be collected, analyzed and used (one-time collection or continuous). In addition, there should also be a clear outline of how long this data needs to be stored so that it doesn't become outdated.
-The various methods that can be adopted for collecting the data (For example, self-administered surveys or external data sources).
How analytics can be used with employee data collection
Once you have identified all relevant employee data points and where they are collected, you need to figure out how you will use the data to derive value for your organization.
This is where HR analytics can help you better understand how employees react to different situations and provide guidance on the most effective strategies that your organization should implement to maximize employee performance and satisfaction.
For example, if you examine employee performance data regarding attendance levels over time, you can assess whether specific initiatives are proving to be effective.
The level of complexity will vary from organization to organization depending on the amount and types of data the Company collects. As a result, this should also impact your approach to using HR analytics to derive meaningful outcomes.
Data results and insights
After HR analytics has been implemented into your organization, you will be able to access various reports, which will serve as indicators for what strategies are proving to be effective (or not) and the areas that require further improvement.
Rather than simply viewing the information from the massive data sets as just another management tool, it is crucial to pay attention to data aggregation. By utilizing data science, organizations can experiment with different internal mechanisms to improve employee engagement, which leads to higher productivity and a more engaged workforce.
For example, suppose you have identified a need for more team-building activities in your organization. In that case, you can use HR analytics to identify the most effective way of implementing them. To succeed, for example, smaller groups with task-based objectives may be created or regular team meetings may be organized. With this knowledge, companies can avoid implementing strategies that may not achieve the desired result and ultimately waste time and resources.
Can HR analytics be Implemented into a small business?
HR Analytics is about more than just collecting employee data points and analyzing them through advanced statistical models to derive value from this information. It involves understanding how you can use your insights to improve your employee engagement, drive talent outcomes and productivity levels. HR analytics software even has hr analytics tools that can optimize the hiring process, identify candidates who will fit the company's culture, as well as collect and analyze data and identify people metrics.
According to Gartner, when companies can focus talent analytics on delivery and not just data, employers can drive talent outcomes by up to 23%. This also requires a certain level of expertise to optimize the results you achieve from your HR analytics strategy. If you have limited experience implementing these strategies into your organization, it may be worth pursuing some external support for this matter before attempting to do this yourself.
However, there are ways a small business can utilize HR analytics to improve its overall organization. For example, you can collect feedback from your employees through anonymous surveys and analyze it to understand how they feel about their job and what they would like to see implemented in the future.
You can also examine employee performance data collected regularly (such as attendance levels) and compare it with historical data to assess whether specific initiatives are effective.
Small businesses can use HR Analytics to improve the workforce by optimizing internal processes, increasing employee job satisfaction, and ultimately achieving the level of engagement required to create a competitive business.
The most forward-thinking organizations already recognize the immense potential of HR analytics as it becomes a core part of how all HR functions operate. The use of digital HR tools has been shown to be highly effective for employee turnover and performance management for data scientists who work with structured and unstructured HR data across a broad range of applications.
If you haven't considered including analytics in your talent management practices, and other areas of your organization, now is the time to rethink your current practices to stay on top of the ever-changing HR landscape.
To gain a competitive advantage, all companies need to embrace big data, and HR analytics tool and predictive HR analytics are a by product of hr analytics software which can be implemented to gather, analyze, and identify important people metrics.
Businesses that want to be employers of choice will utilize data, and a business management consultant can partner with you to assess and implement a data-driven human resource model that optimizes the organization's workforce to make better, more informed
This article was written by Consultant, Leigh Cly and Fawn Hentrel, Managing Partner.