What is HR Analytics? Getting Started with People Analytics
HR departments collect an incredible amount of data. Countless job descriptions, start and end dates, compensation plans, benefits packages, and performance results are just waiting to be analysed. But the longer these datasets gather virtual dust, the more valuable insights organisations miss out on.
With the benefit of HR analytics, you can design and test evidence-based interventions and objectively evaluate key recruiting, learning and development, employee engagement, and diversity initiatives.
What is HR Analytics?
Analytics may not be top of mind when people think of HR, but it should be. HR analytics — otherwise known as people analytics, talent analytics, or workforce analytics — refers to the practice of gathering, analysing, and acting on workplace data to improve efficiency and performance. Unsurprisingly, organisations employing people analytics in decision-making are over three times more effective than their peers.
Let’s say that HR notices a certain department has significantly worse employee churn than the others. They do some digging in their HR analytics platform and find that several ex-employees complained to HR that they felt ill-equipped to handle the tasks their manager assigned to them. They also discover that this department had a pattern of exit interview results noting difficulty working with the department head.
HR now has sufficient data to initiate change in that department. They can update job descriptions to include necessary skills, administer aptitude tests during interviews, and have a frank discussion with the department head about the culture within his or her group. HR can then measure the impact of these changes on employee churn within that group over time.
The Value of People Analytics
People analytics is getting a lot of buzz. In a survey of over 1500 senior executives, Harvard Business Review found that 89% said their HR function has become “highly skilled at using data to determine future workforce plans.” Deloitte’s Human Capital Trends survey showed that 35% of respondents considered new HR technology one of the most important steps in transforming their organisation next year. LinkedIn even spotlighted people analytics as one of four major talent trends in 2020. So why is HR analytics so popular?
For one, it highlights gaps in your recruitment strategy. Based on last year’s numbers, you can calculate whether you have enough candidates in your funnel, if you’ll fall short on diversity and inclusion key performance indicators (KPIs), and if your offer acceptance rate is high or low. You can also analyse candidate feedback during the application and interview process. Are your company’s open roles compelling? Are the benefits packages competitive? Are you offering appropriate compensation?
But the power of analytics isn’t limited to recruiting. After candidates join your organisation, it can help you answer important questions like the following:
- How long does it take new hires to get up to speed?
- How much training do they require, and how much does that cost?
- Which new hires are likely to leave within the next year?
- How many will churn in 5 years?
- Are they engaged and performing well?
- Are you meeting your diversity goals within departments and the organisation as a whole?
Understanding where your company has room to improve is the first step to bringing about necessary change in your organisation. With the insights you gain from HR analytics, you’ll be able to improve the quality of your hires, reduce turnover, and chart a course for future success.
Examples of HR Metrics
At a high level, HR analytics identifies patterns in employee data through measuring KPIs you’ve identified. Here are a few examples of metrics you may want to prioritise.
Recruiting is expensive, so companies want to make sure they get a return on their investment. See whether your recruiting and onboarding strategy is sound by measuring the time it takes for a new hire to become competent at her job — otherwise known as ramp time. Continuously tracking this metric can determine whether adjustments to recruiting and onboarding approaches are working.
Time to Hire
Time to hire is the number of days it takes from the time a role is posted to the time a candidate is finalised. Time to hire can vary dramatically depending on role type, seniority, and the job market. However, most companies aim to hit a particular time frame to keep their recruiting strategy nimble.
Employee Satisfaction Score
Unhappy employees can negatively affect every aspect of your organisation. Employee satisfaction scores — numerical averages produced based on survey responses — are a way to quantify happiness at work. Survey your organisation frequently to see how seasonality, fun events, recognition and rewards, leadership changes, and other factors impact employee satisfaction score.
Diversity and inclusion is paramount at any company. Employees may choose to voluntarily disclose relevant information like ethnicity and race, educational attainment, or sexual orientation in response to employer questionnaires. These metrics can indicate how well your organisation is meeting its diversity objectives. You must ensure that the information is kept anonymous, secure, and confidential, and that it is not used as a basis for discrimination within your organisation.
Absenteeism rate is the frequency employees are away from their jobs. The company loses money when employees aren’t working, so you should watch this number closely, especially within certain departments or role levels.
Churn rate refers to the number of employees who quit their jobs after a given year of employment. Turnover is costly in terms of time and revenue, so churn rate should be measured against an established goal. Reviewing exit interviews or past employee surveys can help HR teams ascertain why churn rate may be going up or down.
How to Start Using HR Analytics
Before you embark on your HR analytics journey, you need to know where you’re heading. Follow these four simple practices, and you’ll be realising the benefits of people analytics in no time.
Identify Your Goals and Metrics
Defining your criteria for success is the most vital piece of the HR analytics puzzle. It’s hard to know whether you’re making the right changes without goals to guide your actions. To set your main objectives, start by asking high-level questions. Is your company struggling to keep up with recruitment as it grows? Does your business have an issue with turnover? Are your employees satisfied?
Once you’ve identified your priorities, figure out how you’re going to move the needle. Will you track voluntary turnover rate? Revenue per employee? Training efficiency? Match each goal to a specific KPI so you can assess and share your progress over time.
Get Backing from Key Stakeholders
Persuading your leadership team to go all in on people analytics is easier said than done. HR analytics tools can be expensive and require an organisational shift towards data-driven decisions. Not everyone will be excited about these changes, but the key is finding people who will assist you in building the business case for using analytics.
The good news is that there are likely data advocates within your company already. Find managers in other departments that have recently invested in new technologies. Ask them for feedback on your pitch and incorporate them into your proposal. Next, try to calculate the return on investment. How much money can your company expect to generate or save with people analytics in place? Use these data points to convince finance folks that the upfront cost of a new tool will be worth it. With powerful metrics and other forward-thinking team members on your side, you’ll be able to build a strong foundation for your HR analytics initiatives.
Collect the Data
As the old adage says, “garbage in, garbage out.” HR analytics depends on high-quality, accurate data. This data could come from talent management software, mobile devices, wearable technology, learning and development systems, rewards and recognition programs, and payroll systems. More specifically, it may include mean salary and promotion history, training records, performance data, retention metrics, org chart changes, and demographic data. The HR analytics tool you choose should be able to aggregate, sort, and format this data for meaningful analysis.
Analyse and Act
None of the great work you’ve done up to this point matters if you don’t act on what you find. Start by systematically examining KPIs for the goals you set out to accomplish. For example, if you set out to boost your recruiting efforts, start by looking at relevant metrics like your baseline time to hire and ramp time. If your HR analytics platform has predictive capabilities, use those statistical models to forecast future risks or opportunities.
Based on these results, set targets for next quarter or next year, and develop a plan to get there. Consider going back to the original contacts you made earlier in the process and ask for their help executing on your plan. And remember not to delay taking action. Not only does waiting let problems linger and potentially grow, but implementing a plan based on old data isn’t likely to address your oganisation’s evolving needs.
Tools for People Analytics
To gain insights from your HR data, you need a people analytics tool. Here are a few characteristics you should look for in your HR analytics solution:
- Real-time analysis
- Configurable dashboards and reports
- An easy-to-use UI
- Built-in sharing and feedback features
- Workforce planning and forecasting capabilities
- Access to educational materials and workshops
While not every company has an in-house HR analyst, the benefits of HR analytics are now available to every organisation, no matter its size, provided you choose a user-friendly platform. HR teams, managers, and even the C-suite should all be able to access, visualise, and interpret data. By democratising access to data, companies can recognise and address problems quickly, saving money and enhancing productivity.
Make HR Analytics Easy with Acendre
HR data is more readily available than ever before, and it has the potential to dramatically improve your organisation and work environment. HR analytics software makes it easy to gather data and find actionable insights — without the help of a data scientist.
Acendre is a talent management solution with the people analytics capabilities you need, including configurable dashboards and reports, out-of-the-box integrations, and comprehensive workforce planning features. It can connect to and analyse all the pillars of your talent management strategy, allowing you to quantify the effect of new HR initiatives. And Acendre also provides support through its People Analytics Center of Excellence, offering workshops, access to experts, and more to help you address your organisation’s unique challenges.
Become an invaluable partner to your company’s leadership team by requesting a demo of Acendre today.