Why is everyone talking about HR analytics?

Making data-driven decisions to strengthen your employee base.

Nov 28, 2023

Key takeaways

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Monitor metrics linked to a
future course of action

Identify the core competencies
of your business 

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Data alone will not revolutionize
a company

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Acquisition and management of
talent is critical 

Business strategy
Labor and workforce Human capital Management consulting Data analytics

Interest in human resources (HR) analytics has been steadily rising for the past 10 years, which is no surprise considering how harnessed analytics-driven data can help sculpt corporate strategy and impact the bottom line.

Would the ability to make data-supported decisions to attract, manage and retain key talent be helpful?

How about boosting employee collaboration and maximizing employee productivity?

Strategic leaders are increasingly aware that optimizing talent can advance return on investment (ROI) like no other single internal business factor, which explains the rush to get ahead using the power of analytics.

What is HR analytics anyway?

HR analytics, also known as people, talent or workforce analytics, is the process of collecting key data about employees—preferences, pay, performance, churn—to apply statistics, modeling and analysis of critical factors to identify opportunities and elevate business outcomes. Analyzing data from HR systems can reveal insight to help companies improve the hiring process, increase performance, predict future staffing needs and implement more effective training. In other words, you can leverage key data from your HR service provider to maximize your workplace efficiency, the productivity of your employees, the quality of your onboarding process and so much more!

How can analytics improve ROI?

Leveraging data to improve hiring practices, increase retention rates and engagement, identify learning and development opportunities, and streamline task automation and processes can directly affect employee happiness. As expressed in an equation:

Happy talent = More productive talent

When company leaders apply analytics in identifying barriers to achieving a business strategy, hiring can become more targeted, skills and pay gaps filled, goals met more effectively, employees feel more successful, productivity can increase and value added to the bottom line.

How do metrics-driven dashboards and reports work?

Most of the data needed to provide this incredible insight into your organization is collected organically through your normal day-to-day HR and payroll operation. Employee surveys or external market data may supplement some data, but it is not necessary to get started. Most human capital management (HCM) solutions provide basic analytics and dashboarding capabilities within their solutions. Other add-on systems are focused specifically on digesting core data and rendering predeveloped HCM-specific dashboards with nearly the ease of a push of a button.  

The metrics collected populate a dashboard customized to display reports and key performance indicators in the form of charts, graphs and other visuals designed to be easily evaluated. Accessibility is important to help users monitor everything at a glance, spotting trends before drilling down into the guts of objectives that are top priority. The process by which a company decides what to measure and track on the dashboard is important. Too much data dilutes the ability to follow actionable items effectively.

What are companies measuring?

While we can’t speak for every company out there, and organizations have a wide spectrum of goals and strategic objectives, there are five major categories widely examined:

  1. Employee churn analytics (also known as ‘turnover’)
  2. Capability analytics
  3. Organizational culture analytics
  4. Capacity analytics
  5. Leadership analytics

The amount of data that can be collected and analyzed on a dashboard and the number of reports produced are dizzying.

What can go wrong?

Outcomes forecasting based on analytics is only as sound as the quality of data collected. Absorbing too much data to sift through or failing to recognize which data is important can lead to inconclusive or useless reports. Also, like your laundry, data needs to be cleaned periodically. Inaccuracies within a data set can negatively affect your data integrity, which leads us to the next challenge: finding people with the right skill set to gather, manage, report on and clean the data. If you don’t have someone on staff who can do this, it might make sense to hire a consultant who can provide expert data management. Data privacy and compliance is another area to be aware of. Rules and regulations are changing as employee data collection and leveraging social media applications as an HR tool are becoming more common.  

RSM contributors

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