Introduction – What is HR Data Analytics?
Organizations are sitting on a goldmine of data. This data can be used to improve a variety of business functions, including human resources (HR). HR data analytics is the process of using data to improve HR decision-making.
Through HR analytics, organizations can identify trends in employee behavior, performance, and retention. Additionally, HR analytics can be used to predict future needs and trends. By using data to improve decision-making, organizations can create a more strategic and efficient HR function.
So, in this guide, we’ll be discussing HR Analytics, including the field’s history, current developments, and what it can mean for your business.
What are the Benefits of HR Data Analytics?
There are many benefits that come with utilizing workforce analytics. Perhaps the most important benefit is that it can help organizations save money. For example, by using data to identify trends in employee behavior, organizations can prevent or resolve issues before they become costly problems. Additionally, data can be used to develop more targeted and effective training programs. This can lead to improved employee performance and reduced turnover.
Additionally, workforce analytics can help organizations improve their customer service. By understanding employee behavior, organizations can develop strategies for improving the customer experience. Additionally, data can be used to identify potential areas of improvement in the customer experience.
Finally, workforce analytics can help organizations make better decisions about their workforce. HR metrics can be used to identify which employees are most likely to succeed in certain roles. Additionally, data can be used to understand how different types of employees contribute to the organization. This information can help hr professionals to make decisions about hiring, promotions, and transfers.
What are the Challenges of HR Data Analytics?
Despite the many benefits of HR analytics, there are also some challenges that come with utilizing this technique. One of the biggest challenges is collecting the data. In order to utilize data effectively, organizations need to have complete and accurate data sets. This can be difficult to achieve, especially if data is spread across different departments or locations. Additionally, data sets can be incomplete if employees do not correctly input their information.
Another challenge that comes with HR metrics is analyzing the data. Even if organizations have complete and accurate data sets, they still need to be able to understand what the data means. This can be a challenge for organizations that do not have experience with data analytics. Additionally, analyzing data can be time-consuming and resource-intensive. Employing a data science team in your organization is a hugely effective investment, and even engaging a data science consultant or firm can reap huge advantages for your organization.
Finally, one of the biggest challenges that come with HR data analytics is making decisions based on the data. It can be difficult for organizations to trust data when making decisions about people. Additionally, data can be misinterpreted, which can lead to poor decision-making.
Utilizing HR Data Analytics In Your Organization
Despite the challenges that come with talent analytics and HR management, the benefits of this technique far outweigh the challenges. By utilizing data, organizations can improve their HR functions in a variety of ways. Additionally, data can help organizations save money and improve their customer service. When used correctly, HR data analytics is a powerful tool that can help organizations make better decisions about their workforce
According to Gartner, HR analytics (also known as people analytics) is…
“…The collection and application of talent data to improve critical talent and business outcomes. HR analytics leaders enable HR leaders to develop data-driven insights to inform talent decisions, improve workforce processes and promote positive employee experience.”
As a business owner, HR analytics is vital to being able to direct and optimize your business operations. Without employees, a business does not exist. Only by understanding your workforce can you understand how to best utilize your talent effectively, improving productivity.
A Brief History of HR Data Analysis
David Green, author of Excellence In People Analytics, breaks the history of HR analytics into 5 ages:
The Age of Discovery
This age started in 1911, when Frederick Taylor’s The Principles of Scientific Management became a foundational document in management practice. Taylor introduced the idea of optimizing business processes by measuring all aspects of employee activity. During this era measuring personnel impacts on production in a mass indsutralization scenario was the focus of research in this field. Human Resources was largely an administrative function at this time.
The Age of Realization
This era in HR data analytics starts in 2008. With the advent of the Internet and the ability of large organizations to gather large amounts of data quickly, an interest developed in developing top to bottom data analysis of all aspects of organizations. This is where “big data” first debuts, and the ability to correlate large data sets enabled organizations to understand their labor usage patterns for the first time. It also enabled companies to understand factors such as work-life balance and workplace satisfaction and to correlate these factors to profit sales, and productivity metrics.
The Age of Innovation
This period runs from 2015 to 2020. In this era, organizations devise models to fully understand the data realized during the age of realization. This is where we first see HR data analytics arise as a field separate from HR administration functions and how people analytics can add monetary value to the business mission of the organization. A great example of this is Google’s ‘Project Oxygen’, an internal effort at Google where HR policies were analyzed for the direct dollar value they would add to the bottom line. In this era, a proliferation of models and frameworks for people analytics are tested and refined.
The Age of Value
This era ranges from 2020 to 2025. In this current age of people analytics, the field steps up into its leading position. In the advent of the 2020s, HR data analytics is called upon analyze the bottom-line effects of COVID 19 infection, remote work, and employee well-being.
The Age of Excellence
This is the future of people analytics. A recent Accenture study estimates that there is a value of $3.1 BN to be realized by investing in people analytics practice and technology, due to enhancing the quality of life for employees and enabling work to take place in a more rational and effective manner for everyone. Employee happiness adds to the bottom line.
Why HR data analytics is important for your organization
In order to keep a business afloat, it is essential to have HR data analytics. The reason being is that this type of analytics allows businesses to see where they need to allocate their resources in order to be successful. Not only does it help with analyzing the workforce, but HR data analytics can also help save on company costs.
How HR data analytics are used today
HR data analytics are used for a variety of reasons. The most common uses are:
To help identify and assess workforce risks
An example of workforce risks is labor expenditure on low-margin products, as well as operations that challenge worker morale. This information can help retool business processes so that low-margin processes can be made more profitable by increasing labor efficiency. An example of this can be retooling how a sales team functions, switching from older sales models to modern sales approaches, such as account-based marketing.
To help make better decisions about where to allocate resources
This isn’t just always about trying to cut labor costs. HR data can reveal trends as to what initiatives and teams are showing promise and need investment. It can also show where weaknesses exist in an organization’s talent pool and where hiring should be enhanced, as a measure versus a return on investment basis.
To help improve communication and collaboration between employees
Employee collaboration can help de-silo labor functions and create opportunities to reduce costs, create new products, and flatten the management structure. This also helps employees become more engaged and feel invested in their work.
To help create a more effective and efficient workforce
This is one of the primary drivers for the use of HR data analytics. Like everything in business, increasing ROI on labor expenditures and human resources expenses means greater bottom-line profit.
To help reduce company costs
A corollary to the preceding point, expense reduction helps everyone in the organization for obvious reasons. Specifically, the ability to pinpoint cost savings in an organization can help preserve jobs. By gaining a better picture of how people behave in an organization, employee value can be enhanced and the organization as a whole becomes more competitive and profitable.
How HR Data Analytics Works
Gathering Your HR Data
The first step to using HR data analytics is gathering all of your HR data. This data can come from a variety of sources, including:
-Time and attendance records
This should include labor hours spent on freelancers and consultants and anyone who works with your companies in other capacities, such as volunteers. Anyone who contributes labor to your organization should be counted and their behavior measured.
-Employee performance reviews
An obviously vital metric. Employee performance reviews can be a direct snapshot of the company’s culture. HR data is not just simply numerical data that can appear on a graph, but also the written reports that are submitted in reviews. Keywords that appear often in reviews can be tracked and subject to data analysis.
-Hiring and termination records
Another vital metric. Close attention will need to be paid to exit interviews and reporting created so as to identify why employees are moving on. Understanding why employees quit or need to be terminated can point to a money-wasting weakness in the organization. It costs money when employees aren’t retained, and why they do are must be terminated is a vital data point.
Hearing directly from your own employees is yet another critical way of gaining insights into how your company runs. Contrary to some views, employees generally want to succeed and develop within the organization. Employee insights can reveal new opportunities for product development, client service, or opportunities to eliminate unnecessary expenses. A business that seriously listens to employees has a powerful tool at its disposal.
All of this data should be present in your HR data analytics platform. Working with tools like Tableau, this data should be handed over to your data science team or consultant for analysis. From here, once you identify trends, you can start making plans. We talk more about who should be on your HR data analysis team, below.
Who In Your Organization Should Provide HR data analytics?
Ideally, the HR data analytics team should be composed of individuals with a mix of skills, including:
Data scientists are essential in tracking long-term trends in your HR data and seeing developments and patterns that might otherwise not be visible.
These professionals deal with your workforce every day and have an intimate understanding of the culture of the organization. Their insights will be absolutely necessary for analyzing your people trends.
Business analysts are necessary to match your business’s processes with your current HR trends. For example, a business analyst can see that an upsurge in requests to work from home may correspond with opportunities to reduce real estate exposure in your organization, realizing cost savings from facility overhead while increasing employee satisfaction with work-at-home arrangements.
-Information technology specialists
Your IT staff is essential in implementing your IT stack, including various HR systems, and in gathering HR data. They will also be vital in helping you enact policies that you create based on your people analytics data, working with the business analysis team to modify the IT stack so that better HR data gathering and functionality is enabled.
But what if I don’t have an in-house people analytics team?
If your organization does not have the resources to create a dedicated HR data analytics team, you can still use HR data analytics to improve your business. You can do this by working with an external consultant or by using self-service HR data analytics tools. Quentelle has a wide suite of tools and expertise to help get you started.
What trends in your HR data can show you
There are a number of different trends that your HR data can show you. Some of the most common trends include:
-Changes in employee turnover rates
Turnover, training, and onboarding are huge headaches for many organizations, and an important HR metric is retention. Whether or not turnover is accelerating or decelerating, and how it compares with competitor organizations, is an important metric.
-Changes in the types of employees being hired
If your organization makes use of work opportunity tax credits, this is a vitally important number. Hiring employees from various WOTC categories can have a huge impact on a company’s taxes, and the benefits of WOTC deductions are not to be overlooked.
-Changes in employee productivity levels
Matching employee productivity levels with revenue metrics can help increase profits while adjusting internal procedures so as to reduce employee stress, and increase the quality of goods and services delivered to customers.
-Changes in the way employees are using company resources
This can be largely innocuous. Business strategists can make great use of this data to change procedures so that there’s less waste and make more efficient use of time. This can make employee life easier, as this can eliminate busy work and enable employees to focus on quality and customer satisfaction.
What benefits can HR data analytics provide?
Visibility is vital in management. A great HR workforce analytics platform can provide you with visibility and insights that can help you increase your bottom line. Below we discuss benefits that can help you in the day-to-day running of your organization.
There are a number of benefits that HR analytics metrics can provide, including:
-Improved decision making
Workforce analytics can be the bird in the coal mine, and help you avoid costly mistakes or find new opportunities for your company to grow and profit by identifying various trends.
-Improved workforce planning
This not only includes traditional labor allocation but also tracking the long-term development of members of your organization. This includes training, worker support via ERP programs, employee tuition and training programs, and other incentives to challenge the growing problem of increasing labor costs due to workforce competition. If your organization can offer more to talent while keeping control of costs, your organization will benefit in the long term.
-Improved resource allocation
This includes assigning employees to projects and maintaining staffing levels, and working to make employees’ jobs easier in challenging positions, while also making sure that areas and projects get the talent support they need. HR metrics are vital for project planning and budget projections.
-Improved cost savings
Finding opportunities to lower costs while maintaining employee work satisfaction and organizational profitability is the road to business success.
-Improved compliance with regulations
The entire space of WOTC work credit and unemployment insurance claims is a case for data analytics platforms. Investment in maintaining HR compliance reduces compliance risk and lowers costs.
The future of HR data analytics
The future of workforce analytics is very bright. With the continued advancement of technology, HR analytics will enable company leadership to make better decisions and tie workplace satisfaction to bottom-line profitability. This is great for company executives, investors, employees, and business partners.
HR analytics enables organizations to:
- To help make better hiring decisions
- To help improve employee retention rates
- To help create more effective training programs
- To help analyze the impact of changes in HR policies on the workforce
This data can be used with data from other aspects of the organization to capture opportunities, spot problems, and respond in an agile way to the challenges of the marketplace.
These are some current trends that business leaders should be aware of in the coming years:
The use of machine learning to automate HR analytics
This is a huge development that will change the way businesses operate. Machine learning can help identify talent, assess employee engagement, and predict turnover. This technology is still in its early stages, but it has great potential to revolutionize how businesses manage their human resources. Machine learning and data analytics for hr are essential sides of the same practice.
A machine learning strategy needs to be devised for HR data and management of employees throughout their journey through your organization, from initial recruitment to separation or retirement. Much of this data gets lost in traditional models of HR management, but a robust machine learning-based strategy can capture vital data that can help your organization save money and time. Machine learning strategies can help integrate your HR data with other data in your organization and help you capitalize on not only HR trends but other developments in both your organization and in the greater marketplace. Data is integrated and interrelated.
Development of predictive analytics for use in HR data
This is another area where machine learning can be used to great effect. Predictive analytics can help identify which employees are at risk of leaving the company, as well as which employees are most likely to be successful in their roles. This information can be used to improve retention rates and save on recruiting costs. This is also a great aid in budget planning and in crafting medium to long-term strategies for upcoming projects. For example, if a particularly large scale IT initiative may need hundreds of new workers, then the use of predictive HR data can help to reduce labor and onboarding costs
The use of social media data in HR analytics
Social media data can be used to assess an employee’s engagement with their work, as well as their satisfaction with their employer. This information can be used to improve the workplace and make it more attractive to potential employees. This goes for both internal and external social media analytics. Internal data is derived from tools such as slack and the conversations that occur across project management platforms, while external social media information is determined from conversations the company may have via platforms such as Facebook and Twitter with prospective candidates. Both can be subject to extensive keyword and text analysis and tied into the larger analytics schema used by data scientists within the organization.
Language Analytics in HR data
The use of chatbots and language analytics is already happening – the same vendors that offer the website chatbots we are familiar with also offer packages that are used with pre-existing HR service delivery. This aspect of language analytics can reveal trends and concerns among your talent base besides the obvious, and give your company’s leadership a heads up in regards to trends among employees.
Human capital management – Bringing It All Together
The ultimate goal of HR data analytics is to improve human capital management.
This can be done in a number of ways, including:
Assessing the impact of changes in HR policies on the workforce
This is vital since many HR initiatives can represent huge investments in time, money, and other resources. Being able to measure the impacts of programs is vital to saving time and money on HR program investments.
Improving the effectiveness of training programs
Talent development is a vital part of talent retention. Using HR data analytics to measure the impact of internal and vendor-driven training programs is essential to long-term corporate talent development strategy. A firm can only deliver what its labor force is capable of.
Reducing turnover and improving retention rates
As discussed before, onboarding is a huge cost impact. Longer retention means lower labor costs, better service and delivery of products to customers and a better corporate culture.
Improving the quality of hires
The impact of hire quality can’t be overstated. Predictive analytics can be used to to seek out both green and red lights for candidates and make the hiring process faster and easier for both sides. Instead of gut feelings, hiring managers can work in tandem with HR to identify outstanding candidates that match the profiles of prior successful talent.
These are just some of the benefits that comprehensive HR data analytics can bring to a firm. In the long run, a strong HR data analytics segment in your firm’s technology stack will save your company time and money.
Your HR Data Analytics Platform
HR data analytics platform integration with your current technology stack
In order to get the most out of your HR data analytics, it is important to integrate it with your current technology stack. This will allow you to take advantage of all the features and benefits that your HR data analytics platform has to offer.
Some of the most common ways to integrate your HR data analytics platform include:
-Using an API
APIs are application programming interfaces and are a way for applications to talk to each other. Most leading HR data analytics platforms have API options that let these platforms talk to other systems in the business stack, such as finance
-Using a webhook
A type of API that is event-driven. For example, your HR system can send notifications for onboarding and preparation for a new employee to finance and operational systems to establish user accounts when the right kind of webhook is activated within your HR platform.
-Installing a plugin
Many sales and advertising platforms have cross-function abilities that are represented by plugins. Plugins are modules that can expand functionality within your HR technology stack. For example, your HR platform provider may have plugins that talk directly to your finance system when you onboard a WOTC qualifying employee.
No matter how you choose to integrate your HR data analytics platform, doing so will allow you to get the most out of your investment and improve your business.
What Features Are Right For Your Organization
There are a number of different features that you should look for when choosing an HR data analytics platform. Some of the most important features include:
These modules are essential to produce reports that are fit for presentation to senior leadership or various partners that can parse HR trends in a visual manner, making the data easier to understand.
Working hand in hand with data visualization, reporting functionality, and the ability to build custom reports is essential to understanding HR data trends.
Custom dashboards are an essential feature for ad hoc reporting and day-to-day functions of all areas that work with HR data.
An issue of integration with project management and related systems, use of webhooks, and other API calls can open up projects that help workers do their job better. For example, if the HR system sends information to the HR data analytics platform. the HR data platform can in turn trigger processes for onboarding, offboarding, setting up of accounts for things like health insurance or travel expenses, and so on. The HR data analytics platform can be a great aid in workplace automation, which can drive down costs.
Your platform should be compatible via API integrations with HR, finance, project management, and other systems. HR touches all aspects of a business, and an HR data management platform shouldn’t be restricted to just talking to other human resources platforms.
HR data analytics is just as vulnerable to bad actors and fraud as any other system or platform in a business. An HR data analytics platform should be able to integrate easily into the cybersecurity strategy of the firm. Systems that contain employment data are prime targets for criminals and so should have robust security.
The ability to determine which employees fail or succeed and why they do so can save your organization money by reducing turnover costs, labor expenses, and benefits expenditures. Helping set up employees for success means greater success for your organization
Talent management is an ongoing process in organizations. Your company wants to get as much value from its talent as possible. The ability to place employees where they can be the most productive increases overall talent ROI.
Get Your HR Data Analytics Questions Answered
An HR data analytics platform can help you capture tax credits, verify employment trends, and help you plan for the future. These are just a few of the ways that a HR data analytics platform can help your business.
This is a big conversation. Quentelle has been helping companies with HR technology for years. Would you like to learn more? Contact us and we’ll be happy to help you learn how you can leverage the power of HR data analytics for your organization.