HR analytics in all aspects

Which department comes to mind when you think of data analysis? Finance, marketing, sales, IT..?  You are right; data analytics has been associated with these departments so far. Today, data analyses that concern HR departments stand out, thanks to the fact that 69% of companies create databases that focus on people. Measuring diversity, equality and inclusion, retention, productivity, employee engagement, team performance, employee turnover rates, learning and development needs… Today, HR is driven by data analyses in all of its core areas and this automatically entitles HR to the strategic partnership it deserves.

Business and HR leaders have realised that the missing piece of the people management puzzle is data analysis. With this missing piece in place, companies can plan their people investments well and gain a major competitive advantage.

HR analytics is a data-driven approach to managing people in the workplace. In short, it is the process of collecting and analysing your HR data to make strategic business decisions. HR analytics, also defined as people analytics, workforce analytics or talent analytics, means analysing people problems using data to answer critical questions about your organisation. This makes it possible to make the right decisions based on data.


HR: Data generation centre

As we entered 2023, we see this clearly: HR departments are generating more data than ever before. Transforming this data into reliable insights has become one of the top priorities of management teams. Organisations that structure and manage HR analytics correctly have much better performance in attracting, retaining and upskilling talented people than their competitors. HR analytics helps businesses identify the right competencies for them, reach and hire the right candidates, manage talent effectively, and also identify issues that negatively impact staff morale and can be addressed quickly later.

Research shows that insight or data-driven companies grow by an average of 30% per year and experience an 8 per cent increase in profits.


What does HR analytics bring to your organisation?

Before answering this question, we suggest you think about how you have achieved the answers to the following questions so far:

  • What is your employee attrition rate and turnover rate?
  • Which of your employees are likely to leave the organisation within a year?
  • How long is your company’s recruitment period?
  • What are the recurring patterns of your employee turnover problem?
  • How much does a hiring cost your organisation?
  • Which HR practices have a positive impact on employee productivity and performance?
  • What is the rate at which your employees recommend you?

None of these questions can be answered properly without data. With HR analytics data, you can make statistics-backed decisions that reduce risks and optimise current and future strategies without any room for prediction.

AIHR (Academy to Innovate HR) lists the benefits of data analytics for companies in 18 segments:

  1. Practicing evidence-based HR

According to AIHR experts, traditional HR management was always based on trends, biases or temporary fixes.  This led to inconsistencies between HR professionals’ approaches and results. Data-driven HR management enables HR professionals to base HR decisions on facts and evidence.

  1. Recruitment and talent acquisition processes:

HR analytics provides you valuable insights into your hiring process by tracking data pertaining to key recruitment metrics such as cost per hire, application completion rates, quality of hire, quality of source, and candidate experience.  This enables you to optimise and improve the process.

  1. Managing employee performance and productivity

With HR analytics, you can create and evaluate KPIs objectively and efficiently. A better understanding of motivation, productivity, and efficiency has a positive impact on the performance and engagement of all employees.

  1. Helping build equitable compensation and benefits packages

One of the most important areas in which HR should act with data is the determination of compensation and benefits packages and creating strategy. Data analytics supports making concrete and fair decisions in every area from performance to insurance premiums.

  1. Effective workforce planning

HR analytics enables companies to forecast and prepare for future workforce demands.  For example, predicting attrition rates help organisations improve their workforce planning, particularly for critical roles. According to the IBM example given in the AIHR article; IBM used data on recruitment, tenure, performance, role, salary, promotion history and location to reduce turnover rates in critical roles by 25% in four years.

  1. Easily conducting skills gap analyses

Through HR analytics, algorithms are used to identify employee skill and knowledge gaps. The existing skills of teams are compared with the skills needed, deficiencies are identified and more accurate plans are put forward.

  1. Boosting learning and development, upskilling and reskilling

HR analytics clarifies many issues such as upskilling or reskilling, whether your employees utilize training opportunities, and whether the training is relevant for them. Thus, by creating relevant learning and development programmes, it is possible to boost performance, achieve organisational goals, save time and money.

  1. Preventing turnover

HR analytics enables you to accurately analyse and take action on issues such as which employees are leaving and why, your retention rate, which departments have a higher than average turnover, early  attrition rates for new hires and which employees are most likely to leave in the future.

  1. Improving candidate and employee experience

HR analytics can help you analyse the candidate experience during the recruitment process and your employees’ experience at work day-to-day. For example, how strong their sense of belonging is, where they perform best, how they feel about every aspect of their job and how they can continue to grow in their role and the organisation… This information can help you improve the daily experience of your employees and create a better working environment and company culture.

  1. Identifying inefficiencies

HR analytics supports HR professionals to make process improvements by enabling them to look at business processes from the outside. Inefficient processes can be identified and redesigned

  1. Money saving

Data analytics can help an organisation use its budget more effectively by demonstrating the potential value of each dollar spent. Software can unite HR and finance departments and offer one single source of truth, enabling both teams to have a strong understanding of metrics, thus supporting cohesion and budget alignment.

  1. Supporting internal mobility

You can analyse the skills of your employees in the most effective way with the help of data and use in-house human resources much more effectively. Allowing employees to have different experiences within the company, gain new skills, and advance in their careers increase engagement. In addition, the effective use of the internal talent pool will save you money in many ways, while positively affecting your retention rates and naturally your profitability.

  1. Preventing workplace misconduct

HR analytics software can help identify trends in misconduct, such as workplace harassment and bias, with data it collects from incident reports. The data enables organisations to make tactical plans to anticipate and combat these issues and improve workplace conduct across the business.

  1. Improving workplace safety

All issues under the heading of occupational health and safety are managed much more efficiently thanks to HR analytics. A safe workplace means fewer injuries at work for employees and also saves the company money on injury-related costs and compensation. By using your safety incidents data, you can prevent future workplace injuries and create a safer working environment for all your employees in the process.

15. Uncovering trends

The majority of HR analytics platforms today utilize machine learning to spot patterns that the human eye easily misses. Such a platform can also help produce reports on areas and issues that may otherwise go overlooked. Patterns related to behaviour, performance, commute times and recruitment source quality can all be observed and reflected on.  

  1. Supporting diversity, equity and inclusion objectives

HR analytics allows organisations to track diversity on all levels of the company—from entry-level to management all the way through to leadership teams. You can also track how candidates pass through your selection process to ensure you’re increasing the diversity of your workforce and track the progress you’re making along the way.   Analytics can help organisations map out their current organizational culture, gain insight into where the gaps are, and then take conscious steps towards bridging these.

  1. Advantage of being proactive

Through continual insights, feedback, and analysis of results, organisations can be proactive in their approach rather than reactive.  It helps them stay ahead and anticipate and prevent future problems.

  1. Adding value to the business

HR analytics not only enables you improve HR but also helps you improve the business’s overall operations through hiring, training, and retaining your top performers. Analytics can help you maintain an accurate record of progress, compare this over time, and observe any fundamental changes.