HR analytics is a promising field that has been on the rise in recent years. Organizations believe that by examining the right HR metrics, one can identify what lies behind employee engagement, productivity, turnover, and retention. As a result, the predictive power of HR analytics can propel better decision-making when optimizing workforce capacity.
Workforce expectations are changing faster than companies can adapt. The role of HR analytics is becoming crucial for companies to be ahead of the curve. That is why it is important to understand the benefits of HR analytics and ways to implement it in your organization.
What is HR Analytics?Â
HR analytics is a data-driven way of managing human resources. It is a process of gathering and analyzing data related to your employees to determine what hidden drivers are behind their actions, performance, failures, and success.Â
With the right tools, companies can get insights that will help them improve workforce processes, boost overall employee experience, and spot growth opportunities.
HR analytics helps to translate metrics into actionable insights and compelling reports for decision-makers. There are various HR metrics organizations can track and analyze to meet their goals, but the most common among them are:
- Time to hire;
- Cost per hire;
- Employee turnover rate;
- Employee retention rate;
- Revenue per employee;
- Engagement rate; and
- Employee absenteeism.
Modern technology offers numerous tools that can provide HR professionals with valuable insights on different stages of the employee lifecycle. Those include AI-based HR tech tools in pre-hiring, Human Resource Management Software, and Business Intelligence tools such as R for statistical analysis, Tableau for data visualization from different sources, and Excel for simple data analytics.
Role of HR Analytics in Organization
HR analytics plays a crucial role in organizations these days. It aims to improve and optimize internal processes such as hiring, employee onboarding, engagement, and performance. Simply put, without proper HR analytics, your company may be losing money where it could have been saved.Â
HR analytics helps companies make data-based decisions rather than relying solely on intuition. By collecting and measuring data about employees, one can detect trends and patterns that could affect low/high performance.
With the right data, businesses can predict a perfect candidate for a position. Ultimately, the overall team management becomes easier when companies know what lies behind their employees’ behavior.
Why is HR Analytics Important?Â
Even though two-thirds of executives pinpoint the importance of HR analytics, only few companies have a good grasp of what exactly they will get out of it. So let’s have a closer look at four undoubtful benefits of employing HR analytics.
Improved Recruitment ProcessÂ
It is no secret that rigorous recruitment is among the most essential steps for any successful talent management. With robust HR analytics, one can get insights into the recruitment process. It is easier to detect weak areas in your hiring strategy and improve it by examining such metrics as:Â
- time to fill (a period of time between advertising a position and having this position filled)Â
- time to hire (a period of time between reaching a potential candidate and them accepting the offer)
Reduced Employee AttritionÂ
Minimizing employee turnover is among other HR analytics benefits. By examining such metrics as job satisfaction, engagement, performance, and absenteeism, one can uncover the pitfalls of an employee’s desire to quit their job.
With the right data analysis, you can learn what employees have a tendency to resign and why. Turnover rates may differ in various departments and teams, and by digging deeper into the root of the problem, companies understand how to improve their retention strategies.
Saving Company’s Costs
HR analytics goes hand in hand with examining financial data. One can uncover the real figures showing the revenue per employee, the cost of hiring, training expenses for employees, and other metrics.
It is crucial to learn how to analyze financial data thoroughly if you want your organization to allocate its budget more effectively. HR analytics allow companies to define what employees bring the most value to their business and monitor financial performance for any changes.Â
Creating Relevant Training
Since the people-centric approach is at the heart of successful talent management, improving the employee training experience is important for overall performance results. HR analytics enables learning about employees’ abilities and capabilities, ambitions, and motivations.
Consequently, one can adapt training resources to meet employee’s learning speed rate with customized content. By measuring training efficiency and training expenses per employee, you will then have the data needed to improve the overall effectiveness of your training program.
Examples of HR Analytics
Many well-known companies use HR analytics to detect behavioral patterns and minimize the risks of losing employees. One such example is Credit Suisse Bank, which predicted the risks of quitting and the reasons behind it.
Another example is the credit reporting agency Experian, which applied the same method and then created personalized retention strategies. Finally, an American retailer, Best Buy, detected a pattern that a tiny increase in employee engagement results in a huge increase in income.
ConclusionÂ
HR analytics helps businesses understand the causes behind their employees’ engagement, performance, and turnover. By translating HR metrics into visual reports, HR professionals can easily uncover the patterns behind absenteeism or employee’s risk of quitting their jobs. Businesses can improve the hiring process and overall decision-making when it’s based on HR data.
Nadia Basaraba is a Marketing Specialist at Coupler.io, a data analytics and automation platform. She’s passionate about content creation and data-driven marketing. Apart from experimenting with marketing tactics, she’s an avid reader and traveler.
