In the present day and across the future, analytics in HR is and will be increasingly driven by data. Analytics is a hot commodity in today’s marketplace, and plays a decisive role for HR teams to make informed decisions about recruitment, workforce organisation and competitive advantages.
But the data itself is not where its value stands – in fact, value is only given by how they are used and transformed into insights to achieve workforce and organisational objectives and meet challenges. This is precisely where HR analytics comes to shine, where HR professionals can utilise the practice of data analytics to tackle the inevitable hurdles that come with the field, as well as harness the profound impacts data has on human capital management.
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What is HR Analytics?
You may already know about human resources (HR), but you might still be unfamiliar when it is combined with data analytics.
Simply, HR analytics, which can also be known as people analytics, refers to when HR professionals collect, analyse and apply HR data to extract important insights on workforce trends, and make evidence-based decisions to refine critical talent and business outcomes while bolstering the organisation’s overall HR strategies.
HR analytics naturally involves various processes and data metrics, such as turnover rates, employee engagement, business performance data, and the patterns and correlations between them. They all play a crucial role in coordinating and informing HR initiatives, to improve recruitment and have a more effective addressing of workplace issues. But HR professionals need to understand how to effectively harness the capabilities and potential of data analytics to effectively realise these grand goals.
Steps Towards Data Success: Harnessing It
In navigating businesses across the current digital age, HR professionals must develop a skill commonly known as data literacy.
In summary, data literacy refers to the ability to read, write and communicate data in context, with a thorough understanding of data sources, constructs, methodologies, and in more recent years, AI techniques. As such, it is an essential component for all HR professionals to become data literate to leverage HR analytics effectively, which includes identifying, understanding, interpreting and actioning these metrics within the business context to create a positive influence on organisational value and outcomes.
Let’s get into some, but not all, of the steps HR professionals can take into consideration to practice harnessing and maximising their capacities.
1. Goals and Insights
Gathering relevant data and setting targeted goals concerning them is the first step in incorporating the transformative HR analytics into the broader HR processes. By collecting both external information, such as marketing recruitment trends and benchmarking, and international information, such as employee performance, turnover rates, absenteeism and training and development data, HRs already have a plethora of resources to identify patterns and coordinate goals for improvement in areas across the business.
2. Quality over Quantity
With any data collection, there must be an emphasis on ensuring data quality over quantity. It is the decisive factor for the future success of any modern organisation, and poor data quality can take a significant toll and cause consequences for employee satisfaction and resource allocation. Not to mention, using inaccurate or incomplete datasets can often lead to misguided hiring decisions and even legal compliance issues. In contrast, using a precise quality over quantity approach will significantly improve the quality of hires overall.
Additionally, quality-based HR analytics can lead to better predictive models and business forecasting; contrarily, if, for example, performance assessments are subjective or biased, then they can lead to completely wrong interventions. Key ways to ensure that HR data is high quality, up-to-date and accurate are through means such as: centralising and synchronising HR data across different sources, constantly reviewing HR processes and using standardised data approaches across the organisation, leveraging real-time HR analytics, using collaborative HR tools to optimise decision-making on organisational policies, and priotising data privacy and security to prevent unauthorised changes and security breaches.
3. Investing and Integrating the Right Tools
Of course, HR professionals need the robust technology and tools to engage with data collection, processing, visualisation and analysis. There is a wide range of software and models available for companies to use, but they should always be chosen based on whether it is aligned with the company’s industry and objectives.
One might think the latest development can be the most effective and efficient, but new does not always mean better – suitability, stability, familiarity, and accessibility should be considered as well. After this, HR professionals need to have a constant integration of the chosen tools into the HR process. Departments should provide any necessary training and reinforce HR objectives and align them towards any HR analytical goals or aspirations.
4. Actioning Insights
Once you have already started collecting HR data, have cleaned it, that is, removing any duplicates and incorrectly formatted sets, and formed a cohesive yet conclusive analysis on patterns, trends and correlations, it is time to take the work into a course of action. For these insights to be actionable, it can be through indirect actions, such as offering recommendations to higher management for improvements based on the evaluations made, or direct actions, such as actively making decisions to enact change following the analysis.
According to a survey conducted by Oracle in 2020 on HR executives and the level of sophistication their organisations are using HR analytics, around 32% were reported to be using it for predictive needs; 26% for diagnostics; 19% for prescriptive purposes; 17% for descriptive analysis; and 6% were novices, i.e. being able to simply determine what questions to ask about organisational issues from the data. Obviously, diagnostic, predictive and perspective HR analytics are complex uses of data, and organisations reach this level by placing a greater priority on data analytics.
5. Identifying and Overcoming Challenges
Finally, while HR data analytics presents innumerable opportunities, there is inevitably an array of challenges HR professionals need to be able to navigate and surmount. Some of them include data diversity, integration problems and security and ethical practice. All of these need to be effectively addressed by HR departments, and strategically at that. A culture of continuous learning and training is a crucial practice that should be employed by HR departments and companies overall to ensure that the common challenges posed by data are being met and that growth opportunities continue to expand.
Data is not going away any time soon, so HR professionals should be bold and creative to harness it, and ensure their companies are keeping their competitive advantage and vitality in the market.
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