Professionals like financial advisors and marketing managers track key analytics and data to make informed business decisions with the goal of moving their organizations forward.
While the use of analytics is common for such roles, it has only been in recent years that HR professionals have been encouraged to harness analytics for themselves, yet HR teams haven’t been ignoring this growing trend. Leading companies have been investing resources and time into data management for years; the insights simply haven’t been used or applied by HR to their full potential. Today, there is a wealth of insights HR professionals can use to better understand crucial business operations and steps forward for organizational success.
Surprisingly, though, not every organization’s HR department will use analytics to help transform their workplace and achieve their objectives. In fact, as Deloitte found, only 26% of HR professionals report actually using analytics and data. The breadth of data and the challenges associated with implementing it means most HR teams won’t take advantage of key insights.
What can HR professionals do to ensure they don’t miss out on the benefits of analytics? And, further, how can HR teams better determine which analytics matter and how they can approach harnessing these insights?
Understanding common analytics types
When we think of HR data, what likely first comes to mind is people analytics. In its simplest form, people analytics refers to the application of employee insights and data to people management and decision making. With people analytics, insights can be both broad and specific, such as looking at demographics, skills, education, etc.
These analytics allow HR professionals to identify trends in their workforce behaviour and performance, then make informed decisions in relation to their organization. These and other analytics types all fall under the umbrella of HR analytics, which revolves around data like people, programme, and performance analytics. Let’s break these types down further.
These analytics look at data involving elements such as demographics, skills, and engagement.
With programme analytics, data can include absenteeism, participation in training and development initiatives, talent management, leadership programmes, etc.
Performance analytics look towards data such as talent assessment, achievements and goal attainment, onboarding programmes, and more.
Now that we understand the common analytics types, what’s next?
Determining which analytics matter most
Companies use analytics to extract in-depth insights into the health of their businesses, in turn enabling HR teams to grow more adaptive, agile and proactive. For example, 69% of companies either already have or are implementing a people analytics approach, while studies have revealed that 69% of companies with 10,000 or more employees have a proactive people analytics team.
That’s not all.
LinkedIn’s research discovered that 45% of large companies and 51% of mid-size companies are increasing their spending on HR technology and analytics.
But how are these companies determining which analytics they need to focus on in order to drive success?
The first step is to identify your organizational objectives, then outline the questions that need to be answered in order to meet those objectives
Consider your existing objectives and pain points, for instance. You may have questions like…
- Which areas of our organization’s practices or operations could use improvement?
- What’s hurting our company the most right now (internally or externally)?
- Which teams or departments require assistance?
- Which of our top talent is at risk of leaving, and why?
- How does our compensation model relate to our employees’ engagement and performance levels?
The next step involves collecting the data
This step is often where HR teams stumble, as collecting data and assessing it is made difficult by all of the tools and applications HR has to juggle in order to actually see and understand the data!
You may feel compelled to create a ‘warehouse’ or ‘database’ for all of the data and information you gather from your analytics, but such warehouses can become difficult to organize, costly to maintain, and overly time-consuming to analyze.
A better investment of time and resources would be to implement focused solutions with information that is valuable and actionable.
Within the Kudos application, for example, we developed an in-depth yet simple analytics dashboard that provides HR teams access to the insights they need without having to build out custom reporting or data warehouses.
Now, you can begin answering your most pressing questions
By using the data and applying it to your questions, you are better equipped to formulate solutions. The objective is to get specific - use the data you capture through analytics to answer your questions in detail.
Then, share the results (answers) with leadership and fellow HR professionals on your team
Leadership has to be made aware of where improvements can be made and how they can make better decisions for their company and people.
On that note...
Don’t forget to get leadership involved
More organizations are using analytics and insights to develop better approaches for talent recruitment and retention, developing deeper understandings as to what draws prospective employees to companies and what keeps them invested in their organization.
That’s probably why 71% of companies see analytics and data management as a high priority. Insights and analytics can and will continue to provide HR with valuable information they need to make strategic decisions.
Without leadership buy-in, however, employing analytics is virtually fruitless. That’s because HR teams can’t implement the benefits of analytics alone. Leadership has to support and advocate for the employment of analytics, just as they do for engagement or recognition!
In a recent study, Deloitte found that 21% of HR executives felt HR technology and analytics was one of the top three challenges their organizations faced when moving into 2019. What’s interesting about that stat is that, while analytics is one of the most prominent skills HR professionals want to learn and deploy, only 7% of companies feel their organization has ‘strong’ or sufficient people analytics and data capabilities.
It’s evident that HR professionals want to learn how to harness analytics and, moreover, want to proactively use analytics to improve decision making; they simply need the support and tools in order to do so.
Those tools and support in using them are crucial for the future of HR. The landscape of both HR and the global workforce has changed drastically, where four generations are in the workplace at the same time and remote plus contract work is beginning to dominate the mainstream workforce. By bridging the gap between analytics and HR, organizations may just see a significant turnaround.
The benefits of analytics are there, you may just be missing out!
One of the main responsibilities (and challenges) HR teams have is recruitment and retention.
When you consider the importance of retaining top talent, HR professionals have quite the weight on their shoulders. Take, for example, salaries. Employee compensation typically represents up to 80% of an organization’s budget, which means high attrition and turnover rates present a key problem and significant cost, two elements HR is often left to solve.
Analytics may just be a significant solution to mitigating such challenges.
McKinsey found that, by harnessing analytics as part of key decision making, organizations can experience up to an 80% increase in recruiting efficiency, paired with a 25% rise in business productivity and a 50% decrease in attrition rates.
Clearly, analytics is key for any retention strategy, and HR teams aren't ignorant of this fact. 17% of HR professionals who use analytics and data to address retention, culture, and diversity in the workplace also have backgrounds in market research and analytics!
Organizations that have an advanced capability in people analytics not only benefit from 30% higher stock prices, 56% higher profit margins, and a 79% higher return on equity but also financially outperform their peers.
It’s fair to say that analytics can be both a driver of retention and growth, as well as a tool critical to the success of HR teams. Indeed, those same teams can use data collected from analytics to discern whether their existing strategies are effective, and look for patterns that either negatively or positively impact their organization’s business processes! Analytics as a tool isn’t going anywhere, anytime soon. It is, in fact, only growing and continuing to evolve as HR further embraces the benefits of analytics.