What is HR analytics?

What is HR analytics, why should HR use it, and how can it make the business grow.

HR analytics is the application of analytic processes by the human resources department to help improve employee performance. It uses data gathered by the company to help HR practitioners gain an insight into the different aspects of employee performances to help create a strategy on how to improve the processes already in place.

By using HR analytics, companies can increase their employees’ overall productivity and efficiency especially in a field where the human factor is not only a game-changer, but also an ever-changing landscape that HR professionals have to adapt to.

HR analytics helps you evaluate your system in HR to see where you can improve in hiring and retaining employees. Without the data to analyze why they’re leaving, you will be left scrambling to look for new talent over and over, and lag in industry competitiveness.

How HR analytics works

One of the things that HR professionals should remember is that HR analytics is not the same as people and workforce analytics. HR analytics focuses on the functions of HR relative to all the people that are part of the organization; it covers a broader scope than people analytics (which focuses on people outside the organization) and workforce analytics (refers to all employees in an organization).

Using the data gathered by HR practitioners, talent acquisition and management decisions could be put under the microscope for scrutiny in their effectiveness and efficiency. With the right data, HR can reallocate resources and investments for people development to support business operations and value.

There are 10 common points that can be measured in HR analytics:

1. Revenue per employee – Indicates the average revenue that each employee brings to the business, thereby helping it grow.
2. Offer acceptance rate – Measures the company’s talent acquisition strategy. HR Technologist says that an 85% acceptance ratio of job offers is considered a good ratio.
3. Training expense per employee – This measures how much in dollar amounts are spent per employee on training.
4. Training efficiency – Focusing on the quality of training, this measures how effective the company’s training program is.
5. Voluntary turnover rate – This can help companies identify what employee experiences should be better managed to decrease voluntary attrition.
6. Involuntary turnover rate – Measuring this helps companies see where they need to improve in terms of recruitment strategy to reduce the number of employees getting fired due to recruitment of poor quality talent.
7. Time to fill – HR practitioners need to know how long they are able to recruit talent from the time they advertise an open position. This can help them see where they spend the most time on and restrategize.
8. Time to hire – This metric focuses on candidate experience to see how practitioners can make the process smoother from the time they reach out to the candidate, to the time they are hired.
9. Absenteeism – Measuring how much time employees skip their working days gives an insight into employee health and happiness.
10. Human capital risk – This measures a broad spectrum regarding employee-related risks including lack of skill, lack of qualified employees, potential to leave the company, etc.

Advantages of HR analytics

These metrics are important to help companies understand where their HR department stands and where they could improve based on the strategies they have in place. With the right application of HR analytics, companies could reap the following benefits:

• Decision-making efficiency in all levels – The information formed from the data gathered can help decision-makers boost planning and their employee-based strategies.
• Better succession planning – With hard data about the workforce, the company can then identify potential high-flyers and reduce the risk of vacancies.
• Identify candidate sources – No longer will HR practitioners advertise and hope for the best in various recruitment points. Past data can help identify where recruitment was effective and where the best talent comes from.
• Improved employee retention – By combining turnover and exit interview data, companies can identify factors that affect workforce retention.
• Better reward strategies – Link rewards to the right performance factors to encourage employees more.
• Increased employee engagement – Use data from staff opinions to improve workforce management policies and procedures for better workforce engagement.

HR analytics is an investment worth having in an age where the competition for top talent is becoming stiffer. Your company cannot afford to lose out on the best talent just because another company has better policies and strategies. See where you can up your game to beat out the competition. Let your data help you get and retain the best people by using HR analytics.