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HR Analytics

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HR Analytics

Before we understand HR Analytics, we have to understand what is Data Analytics. Data is everywhere, we do data analytics to get insight from the data to make the right decision.

 

“Data will talk to you if you are willing to listen to it.” – Jim Bergeson.

 

Types of Analytics

There are four types of data analytics:

  • Descriptive analytics

Descriptive analytics is the most basic form of data analytics. It analyses the past data and tries to find out the answer to what has happened.

  • Diagnostic Analytics

Diagnostic Analytics tries to explore further and try to find out the answer to why it happened?

  • Predictive Analytics

Prescriptive analytics tries to find out what can happen in the future

  • Prescriptive Analytic

Prescriptive analytics tries to answer for what should be done for the best result.

 

Most organizations are limited to Descriptive and Diagnostic Analytics. Predictive and Prescriptive analytics are a more advanced form of analytics that requires a level of skill, technology, and investment that many organizations do not yet have. Organizations need to build capabilities and expertise to get the real benefit from HR Analytics.

With the advent of technological advancement, new economy businesses (like e-commerce, large retail stores), increasing internet usage, and IoT devices are generating a huge amount of data continuously. If these data are used in the right manner, it can generate valuable insights.

 

What is HR Analytics?

When the concept of data analytics is used in the HR field it is called HR Analytics. HR Analytics is also referred to as People Analytics, Workforce Analytics.

HR Analytics is a process of collecting, monitoring, and analysing human resource data to generate actionable insights to improve workforce performance, better talent management, optimize the productivity and efficiency of the organization.

 

Why is HR Analytics needed?

“The goal is to turn data into information, and information into insight.” – Carly Fiorina

HR Analytics removes any ambiguity in the decision-making process. It enables HR professionals to make data-driven decisions. HR Analytics can answer questions like:

  • Which of the new hires are most likely to leave your company in the first year?
  • How long does it take to hire employees?
  • Which of the new employees will become best performers within 1 year.
  • Are learning and development programs having an impact on employee performance?
  • What are the reasons behind employee turnover?

HR Analytics provides data-driven insight on what is working well and what is not so that organizations can take corrective measures and plan more effectively for the future.

 

Benefits of HR Analytics

  • Better Decision Making
  • Reduction in Cost
  • Process Improvement
  • Improved Employee Productivity
  • Performance Management
  • Improved Recruitment planning/process
  • Better communication
  • Better promotional policies
  • Reducing turnover
  • Understanding the employee in a better way
  • Better Reward and Recognition programs.
  • Understanding the right business competencies.

 

What are the Key metrics for measurement?

HR analytics will be more effective when you select the right metrics which can define the problems you want to solve.

How to select right Metrics

It entirely depends on what problem you want to solve. The first step is to define the problem and then carefully evaluate Key Metrics which can solve the problem.

Few important HR Metrics

  • Revenue per employee
  • Profit per employee
  • Turnover rate
  • Absence rate
  • Engagement rating
  • Training expense per employee
  • Training efficiency
  • Cost of turnover
  • Promotion rate
  • Average distance from home
  • Satisfaction rate
  • Cost per hire
  • Time to hire
  • Offer acceptance rate
  • Time since the last promotion

 

Is it difficult to implement HR Analytics in the organization?

The first piece of advice is, if you are new in this field start small. Don’t try to solve all the problems in one day. HR Analytics is a long-term process. Before implementing the HR analytics process you should have robust data capturing system in place.

Everything thing depends on the quality of data. It works on the basic concept of garbage in; garbage out. If your input data is not good, you cannot expect a good result.

The majority of the organizations are collecting a lot of data but either it is not organized or they don’t know how to utilize it. Most of the time collected data are in a raw form they cannot give any meaningful insight. Only when data is organized, refined, analyzed then only it can give meaningful insights.

 

How to implement HR Analytics in your organization

As I mentioned earlier start small. Pick up one problem which is very important for your organization. Before implementing HR Analytics few things to consider:

  • Define your problem: If you don’t know what problem you want to solve, you cannot solve any problem.
  • Set your Goal
  • Create robust data capturing system.
  • Define the most important metrics concerning your problem.
  • Research what are the resources required to implement your plan i.e. expertise, technology, budget, etc.
  • Create an analytics team.
  • Include people who have basic statistical knowledge.
  • Although knowing programming languages like python, R will be added advantage it is not mandatory. You can begin with Microsoft Excel which has excellent analytical capabilities.
  • Explain everything to management and get their approval. Support of management is very important for long-term success. Because HR analytics is a long-term process, it takes time to get the result.
  • Simplify the process: Simple and goal-oriented processes would give a better result.
  • Create/Define Data policy for your organization: As people are becoming more aware of their data rights organizations must have a transparent data policy. Every employee has the right to know how and what personal data are collected and the manner it is going to be used. Transparent data policies can save the organization from any legal disputes and noncompliance issues.
  • Put a plan in place to establish how you will prepare your organization for change.

 

Why do HR Analytics Fail?

Low-Quality Data: As I mentioned earlier most important raw material for HR Analytics is quality data. If you are not collecting quality and accurate data, you won’t get the desired result.

Most of the organizations are sitting on the pile of data. But it is in highly raw form, which cannot give any meaningful insights. Therefore, the first step is to do data cleaning and other pre-processing before analyzing the data.

No Expertise: Lack of statistical and analytical skillset to work with large datasets.

Not Consistent: Data analytics should be part of the main activity, not a part-time activity. HR Analytics should be included in the main strategic initiative of the organization.

Continuous improvement: The success of HR Analytics depends on a lot of factors. Initially, if you are not getting the desired result, look for problem areas and improve them continuously.

Coordination and Cooperation: Coordination and cooperation between departments are very important for the success of HR Analytics. The analytics team should take all the stakeholders in confidence before implementing HR Analytics.

Not having a separate analytics team: Because those involved in the initial face may lose interest after some time and it will lead to failure of the system.

 

Future of HR Analytics

“Without data, you’re just another person with an opinion”. – W. Edwards Deming.

Analytics is going to play a very important role in the future. It will be one of the main factors which will define the success of the organization. It helps you take right, quick, and unbiased decisions. As organizations are moving towards digital transformation, everything will be digitally connected, no organization can avoid the implementation of HR analytics. You can delay it but can’t deny it.

In the future, most of the data will be captured through electronic devices. Organizing, analyzing, correlating, and getting insights are going to play a very important role in the success of the organization.

Covid 19 pandemic disrupted many business models. During the pandemic, we have seen that many businesses struggled to survive and they realized that old ways of doing business will not help them. Organizations are trying different ways to survive and grow their business. 

Work from is one of the main concepts adopted by the most organization. It is convenient but same time it has brought many challenges also. Human Resource management, monitoring, performance management, training, etc. are a few challenges that need immediate attention.

HR analytics capabilities are still under-developed in many companies and there is a long way to go before we can fully realize the potential of HR analytics.

Every organization needs to adopt an analytics-driven human resources approach to be competitive, relevant, effective, and successful in the future.