Human resources has evolved greatly over time, and continues to do so with each passing day. Moving beyond just the human aspect, HR is over time working more and more with data and technology, something that came about over the past decade.
The important role of data and its influence over all aspects of HR is what gave rise to HR analytics. According to Heuvel & Bondarouk, 2016, this refers to “the systematic identification and quantification of the people drivers of business outcomes.” It looks at the different ways of capturing, measuring, and organizing people information to unearth insights valuable for the HR strategies of an organization.
How does an organization use human resource analytics?
People analytics plays a critical role in facilitating the contribution of HR to better strategic decision-making for the organization. It is normally used to address specific challenges, such as:
- Low-quality incoming job applications received by HR professionals
- A spike in attrition of employees hired over the past year
- Declining productivity of specific teams
What specific uses does HR have for analytics?
The particular challenge may vary, but the leveraging of HR analytics typically is among one of a few options. The idea is to use data to:
- Benchmark performance of the organization with established standards of metrics
- Observe and conclude the possible solutions to the challenges faced
- Change processes to solve challenges as per the solution hypothesized
- Monitor results of the change to understand how it has worked, and tweak it, roll it out to other processes (if it has been successful here) or roll it back (if it has failed to achieve the objectives)
How has analytics impacted the work of HR?
As the economy and the work of the HR team evolves in accordance with what is required in the digital era, those looking to become HR professionals and create a future career in HR will need to be able to work well with data, among the many hats they wear in their jobs. They must be able to use people analytics to sift through the data and draw valuable insights that could provide strategic direction to the organization.
The specific areas of the work of HR that have been most impacted by analytics are enumerated below:
- Performance and efficiency: These are the most common indicators monitored to judge the success of HR activities and processes. For example, tracking the retention rate by source might reveal that, say, internal hiring shows significantly higher retention rates than LinkedIn postings. HR professionals could then reorganize their workflows to prioritize internal hiring over other sources and thus improve efficiency of HR work. Using data in similar ways to track the performance and efficiency of workflows enables a critical choice of resource deployment, allowing focus on the areas of maximum impact.
- Recruitment and hiring: Be it in terms of time or of money, these are among the most expensive activities handled by the HR team. HR analytics could play an important role in generating savings by improving these important processes.
For instance, the HR could compare the data for people successfully employed with the organization and those not so successfully employed with prospective hires. This could help to better judge the fit of the person with the current role as well as with the culture of the organization, both critical factors. Getting a hire right the first time itself can save valuable efforts in rehiring and could instead facilitate more effort on retaining the existing employees through lesser friction and better benefits, among other measures.
- Employee experience: The work of HR goes beyond hiring to fill current positions. An important part of their work is creating a great employee experience and working to improve it, as happy employees are always better engaged. This engagement can help by:
- Improving productivity
- Boosting retention
- Achieving higher overall success
Employee attendance, engagement, and productivity are just some of the metrics that people analytics can track to get a more nuanced look at the employee experience. This can suggest where HR needs to improve, and can lead to optimized benefits, vacation policies, and training and development opportunities.
“It’s not just about recruiting, but about retaining, motivating, and developing strong employees as well,” says Tom Penque, lecturer for the Master of Science in Human Resources Management program at Northeastern University. “What HR analytics comes down to is being able to…use all of this information to improve the organization and its people.”