HR Analytics: What It Is, How It Works, and How It Helps Your Business
In the past, human resource management has always been one of the least analytical areas in most organizations. The main focus of an HR manager or the human resources department of a company is namely on people, before numbers.
However, in an increasingly competitive work environment characterized by numerous changes (such as the expansion of remote work), decisions based on real data are becoming increasingly important. For this reason, HR analytics and big data are playing an increasingly important role in all companies today.
In this article, you will learn what HR analytics is, how it works, and how it can help your company make more informed HR management decisions.
What is HR Analytics?
HR Analytics is the process of collecting, analyzing and organizing data from the HR department with the aim of improving the performance of the company’s employees and reducing their turnover rate.
HR Analytics takes into account all the data that is regularly collected by a company’s HR department and relates it to the company’s goals. In this way it is possible to get a concrete idea of how the initiatives of the HR managers contribute to the achievement of the company’s goals.
For example, if a company has a high turnover rate (unless motivated by the nature of the company itself), it is likely to overlook key factors in its people organization. This is certainly not an easy process. It takes time and investment to achieve maximum employee satisfaction and productivity. HR Analytics helps to understand what works and what doesn’t, so that companies can improve in the future and grow in the right direction.
HR Analytics: How It Can Help Your Business
Very often there are doubts when it comes to HR analytics. Some companies already collect their employee data on a regular basis. So what is the real benefit of a particular analysis? Can’t managers and HR departments just see the data they already have?
Without organization and guidance, the data actually seems confusing and meaningless. HR Analytics helps with the analysis, organization, contextualization and comparison of the collected raw data and offers a useful strategic vision from which the right ideas for action can be derived.
An HR analytics system can help a company to answer important questions for its development, e.g.
- Which trends or situations lead to a high turnover?
- How long will it take my company to hire an employee?
- What financial investments are required to ensure that employees achieve optimal levels of productivity and satisfaction?
- How many and which of my employees are most likely to quit their jobs in the next 12 months?
- Have the personnel training and development measures had a specific effect on the performance of my employees?
With real, clear, and contextualized data available, organizations can focus on any changes that need to be implemented to improve.
Examples of HR Analytics: How to Use Big Data
Let us now come to the specific aspect. How can I use HR Analytics to improve human resource management in my company? In which specific critical aspects can I intervene thanks to correct data acquisition and analysis?
Here are a few examples of using Big Data and HR Analytics that you can take inspiration from.
Replacement of staff
When employees leave, most companies don’t really understand why. And very often this happens because the right questions are not asked, or you are not really investigating and recording the reasons for quitting.
In some cases, written reports or data on individual situations may be collected, but in the vast majority of cases it cannot be determined whether there is a specific reason and whether this is a general trend that could explain, for example, high employee turnover.
Since a high turnover rate is expensive for a company, both in terms of time and revenue, it is essential to understand the reasons why employees leave the company, identify trends and take the necessary steps to avoid them.
Recruiting
Companies that really make a difference today are looking for candidates who not only have the right skills, but also the right soft skills and the right attitude. You are looking for candidates who complement both the company culture and the manufacturing needs of the company itself. The cultural fit has to be right.
Reviewing hundreds of thousands of resumes and basing your recruiting strategy on basic information is limiting and counterproductive. This is because many potential candidates can be overlooked simply because they lack a certain skill. The truth is, skills can be acquired, but soft skills cannot.
Thanks to HR analytics, for example, a company could use the available data to recognize that the ability to work in a team and creativity are a better indicator of success and performance than professional experience. And that way you look at candidates that you would have previously excluded.
Analysis of corporate culture
The corporate culture of an organization is not only extremely important at all levels, it is also very difficult to change. Very often unwritten customs, procedures and behavior models that have become consolidated over time and are characterized by poor transparency or communication have a strong influence on the culture of a company, even more than the organization or the type of business.
Analyzing corporate culture through HR Analytics is a fundamental process that must be carried out in order to better understand what kind of culture characterizes your workplace. With a deep knowledge (also from an analytical point of view) about your own corporate culture, it is possible to evaluate and follow the observable trends.
This culture tracking helps identify the first signs that the company culture is in some way negative or toxic. This is one of the first factors of dissatisfaction for any employee.
Leadership management
Low-level management is perhaps worse than no management at all. Bad managers cost money, time, and can literally drive people away, especially the best. Employee retention becomes extremely difficult for a company in such a scenario and prevents it from achieving its full potential.
With HR Analytics, you can analyze different aspects of your executives’ performance in the workplace to find out who is actually a good leader and who is not. The data can be collected in several ways: through qualitative (opinion) and quantitative (vote) questionnaires, using a mixture of both methods, or through surveys, focus groups, or specific research.
How does HR Analytics work?
How does HR Analytics work in practice? To begin with, it is important to remember that you are not simplifying anything by putting everything together, but rather separating the various elements that make up the process.
An HR analytics process consists of four main parts:
Data collection: It goes without saying that data must be collected on the topic to be analyzed in order to reach a conclusion
Monitoring and measuring data: Once collected, the data must be observed, measured, and contextualized in order to achieve correct results
Data analysis: The analysis phase allows final conclusions to be drawn and trends or problems to be identified
Turn conclusions into actions: The final step is to meet the requirements resulting from the analysis and apply the necessary actions
