Meaning and Role of HR Analytics

HR analytics, also known as people analytics, involves the application of data analysis methods and statistics to human resources data to improve employee performance and retention, enhance hiring processes, and optimize the overall workforce contribution to business outcomes. By systematically analyzing data on recruitment, performance, employee satisfaction, and other HR-related metrics, organizations can identify trends, predict future HR needs, and make evidence-based decisions. HR analytics helps in uncovering insights that can lead to better decision-making, strategic HR planning, and a more efficient and effective workforce, ultimately contributing to the achievement of organizational goals.

This method of data analysis takes data that is routinely collected by HR and correlates it to HR and organizational objectives. Doing so provides measured evidence of how HR initiatives are contributing to the organization’s goals and strategies.

Common examples of HR Analytics:

• Employee Churn:

Overall turnover in an organization from existing employees leave to new joiners hired.

• Time:

Time consumed in recruitment, training sessions, building team, engaging employees, etc.

• Capability:

Core competencies of the workforce are measured to assign roles and responsibilities.

• Culture:

Organisational culture is considered for actionable insights and metrics

• Capacity:

Determine operational efficiency of employees on basis of evaluation factors

• Leadership:

Know the leadership style of managers and other seniors for HR Analytics.

Benefits of HR Analytics for Human Resource Management

HR analytics offer many benefits for human resource management, including:

• Better hiring decisions

With more data to drive hiring decisions, companies can potentially choose better candidates and reduce their employee turnover rates. Companies with low turnover rates can create a rich, positive company culture, reduce workplace errors and make assimilation into the business easier for new candidates. With an abundance of accurate, informative data, companies can choose the best candidates for every position and minimize the expenses of high turnover rates.

• Improved training

By compiling HR data, the company can revisit its training process to learn what methods work well to provide better support for new employees and determine what practices or methods it can discard. The initial training process is a critical time period for a new employee because it details their work responsibilities and their role in the business. With a more comprehensive training program based on positive historical trends, the company can create a better training process to better prepare new employees to succeed in their positions.

• More efficient hiring process

Efficiency in the hiring process helps save the business time and money and simplifies onboarding for both HR and new employees. The company uses historical data that it compiles over time to identify positive trends in the hiring process in order to focus resources on those trends and minimize challenges. For example, a company using HR analytics might determine that the application portal on its website is a challenge for new candidates because it needs an update. Resolving this issue can make the hiring process easier and simpler in order to attract the right people to the company.

• Better employee insights

HR analytics also help companies gain better, more informative insights from employees within the business. Often, employees have a good understanding of how the internal structures of the business operate and may offer better insight into challenges and positive aspects of the business. By focusing resources on HR analytics, companies can extract important insights from the people who know the work environment best, which may drive future company policies and innovation and impact company culture.

• More positive company culture

Better hiring and training can help new employees develop a positive mindset about the company and its culture. New employees might feel more welcome or confident in their abilities, which can increase their willingness to involve themselves in the company culture and help them find their place within the organization. A positive, supportive company culture can have the added benefits of increased collaboration and teamwork in employees, which can drive innovation in products and services.

• Increased Workplace production

With more data driving better hiring decisions and a positive company culture, businesses might benefit from an increase in workplace production. Happy, fulfilled employees might have a better attitude about contributing work and ideas to the organization, therefore increasing their motivation and driving production. Higher production can result in an overall increase in revenue for the company.

Types of HR Analytics

• Advanced Reporting

Advanced reporting differs from operational reporting in that it occurs more frequently, and the company may automate the process with analytics software or other AI tools. Advanced reporting examines the relationships between certain variables to determine possible outcomes or explain current outcomes for company actions or trends. This helps the company identify new trends and overcome the challenges of historical trends with new sets of data.

• Predictive analytics

Predictive analysis is the most advanced level of HR analysis, but can produce beneficial results and even reduce costs and time commitments for common personnel challenges. Predictive analyses use historical trends to produce predictions for the future and create strategies to address them. This analytics process typically pairs with strategic analysis to create a stronger system for predicting, addressing and measuring HR data and trends.

• Operational reporting

Operational reporting is the foundational level of HR analytics. At this level, the company studies events from the past that might have influenced the company’s current position or policies. The company compiles historical data about personnel, production, company culture and other aspects of human resources to determine if current policies meet the company’s needs or if changes are necessary to keep the company aligned with its objectives.

• Strategic analytics

Strategic HR analytics help the company develop better strategies for addressing specific challenges. It can use this data to identify and eliminate negative trends before they develop into larger, more complex challenges.

For example, if the HR department is measuring employee turnover rates, they can learn what might affect the suddenly increasing rate of turnover. Once they identify potential causes, they can form strategies based on accurate data to address the turnover rate and prevent it from rising again.