What Is HR Analytics and Why Is It Important?

Human Resources (HR) analytics is an effective tool in the field of human resources management. HR analytics uses employee data to help businesses make better decisions, specifically by attracting, hiring, and retaining talented employees. It allows HR professionals and management to use a data-driven approach to make better business decisions that improve companies’ performance.

HR analytics is still relatively new,  but many industries already see it as a methodology that will help companies in times of crisis as well as in the current situation as companies are adapting to a new way of working by shifting to remote work and hybrid work models. It not only helps management make better business decisions but also maximizes productivity while helping HR improve the work environment.

How Do Companies Use HR Analytics?

Businesses need to evolve and grow to stay competitive, which means that HR departments also need to up their game. Companies that use HR analytics can create a plan that will improve their recruitment, hiring, training, and management of employees.

If used properly, data mined through HR analytics can help an organization understand the challenges of their HR department and provide a solution to pain points in managing and retaining employees. Most often HR professionals use analytics for the following:

Establishing Standards

Your HR department can review current staff performance and identify the proper metrics. They can then create performance metrics that employees and managers can use as a benchmark to see how well they’re doing.

Monitoring Employee Performance

Performance standards are important because they allow you to make observations and propose solutions that can address certain issues and challenges.

Implementing Changes

Once you have an idea of what needs to be improved and how certain problems can be tackled, you can implement changes and see if they help morale, productivity, and output.

Checking Results

You can then review the effects of the changes and gather relevant data to see if the changes accomplished what you set out to do and if they need to be tweaked for better results.

The Value of HR Analytics to Any Business

Finding a skilled value-adding employee all starts with HR analytics. HR professionals who use it can make informed decisions that could affect a company’s overall performance.

Here are three areas in which HR analytics can help HR professionals:

1. Efficiency and Performance

HR analytics uses metrics to measure the success of employees, engagement activities, and any new strategy that is meant to improve the overall performance and efficiency of staff.

Metrics can also include acceptance rates, employee satisfaction rates, and the quality of applications that organizations receive. You can measure how well your plans are going and revise them if you need to deploy resources in a more efficient manner.

For example, the pandemic made work from home policies a requirement around the world. More and more companies need to evaluate the performance of remote employees and relate them to their organizational performance. HR analytics can provide a way to review how remote work affects everyone.

2. Improve Employee Experience

The employee experience has become very important in the past few years. Many companies are responding by trying out different kinds of strategies to improve retention and reduce turnover. But how do you measure employee satisfaction and improve your staff’s overall experience at work?

HR analytics helps your HR department monitor employee satisfaction and experience with tools that monitor collaboration and engagement. It can help your HR team review policies, benefits, and compensation to see what needs to improve and which strategies might work.

In addition, you can combine subjective employee surveys with objective analytics to better understand the full picture of employee satisfaction. Doing so will give your HR team and managers a better understanding of what your staff responds to and what you can do to increase their overall work experience and productivity.

Sometimes, the change can be as simple as an office redesign. Improving your work environment has a massive effect on productivity and engagement, and data on how your employees work best can help you determine ways to improve office space planning.

You can do the same thing to optimize your compensation, policies, recruitment processes and ultimately improve employee retention with insights gained from HR analytics.

3. Improve Employee Retention

Understanding when employees and teams begin to disengage through less collaboration and other indicators is key to understanding when employees are more likely to consider leaving. Other indicators may include changes in behavior, significant life status changes such as a change in marital status or a move to a new home requiring a longer commute, an increase in the number of sick days taken, poor performance reviews, and similar variables.

With this data, HR teams can take steps to prevent turnover when a valued employee is at risk of churn. HR analytics can also be used to make proactive changes to improve employee retention. For example, if analysis reveals that employees are more likely to leave because they have interacted less with management level mentors, or not receiving a promotion after a certain period, leadership can implement changes such as optimizing the right time to offer promotions and establishing more management interactions to meet employees’ expectations.

What HR Analytics Can Do For You

Talent is the resource that all businesses need to succeed. You can only have the right people if you know how to attract them, hire them, and keep them. Having the right HR data is therefore essential and helps to maintain a competitive edge, with up to 77% of CEOs agreeing that analytics is a key priority.

HR analytics can help your HR team put valuable data into context and recommend strategies that can help you attract, hire, and keep the best talent.

While HR analytics is only the beginning, it provides you with an insightful way to gather and use employee data more strategically and effectively.

Last Updated 11 April 2022