HR Analytics: how data and metrics can drive better decision making in HR19.10.2023

HR Analytics: how data and metrics can drive better decision making in HR

As an expert in human resources, you know the rules, the different methods, and how to deal with people. But in your day-to-day work, have you ever considered the power of the data you collect? Welcome to the world of HR analytics.

HR analytics aims to analyze the data accumulated in the human resources area to understand better and thus improve the management of the organization's greatest asset - its people.

In this article, you will learn what HR analytics is, its role, and how to use it effectively in your own company's decision-making. If you're unfamiliar with this area, we'll give you a detailed overview of the most important things to know.

What is HR analytics?

So, what is HR analytics? It is the practice of collecting and analyzing HR data used to improve the overall performance of employees. It is a method that uses statistical models and algorithms to analyze employee data, leading to actionable insights.

HR analytics, or human resource analytics, is not just measuring general HR indicators such as turnover rates or employee engagement. It aims to turn raw HR data into useful information that helps strategic decision-making and corporate policy-making.

Imagine if you could predict who would leave the company in the next year. Which training program would result in the best employee performance? It is the power of HR analytics.

The role of data in HR

Each HR process, from recruitment and onboarding to employee performance and retention, generates enormous amounts of data. This HR data provides unparalleled insight into how to attract, manage, train, and retain employees.

You can discover different patterns and trends in employee data by analyzing HR data. For example, employees participating in a particular training program are likelier to be promoted. Or that employees who use all their vacation time are more likely to stay in the company.

However, analysis is not the only role of data. Data can also inform HR strategies and decision-making processes.

The benefits of HR analytics

There are many benefits to implementing HR analytics in your company. For example, it makes it easier for HR to produce annual reports, but also:

  • First and foremost, it enables fact-based decision-making. Instead of relying on hunches or outdated practices, you can make decisions based on concrete data. It not only leads to better results but also increases the credibility of the HR role.
  • Secondly, HR analytics allows you to predict and manage employee trends. For example, by analyzing your HR data, you can identify the factors contributing to high turnover and take appropriate action to address them.
  • Finally, HR analytics can result in significant cost savings by optimizing HR processes and strategies and identifying and reducing inefficiencies.

The HR data analysis process

HR data analysis is a multi-step process.

  • First, you collect HR information from various sources, including the Human Resource Management System (HRMS), employee surveys, and performance appraisals. You then clean and pre-process the information to ensure its quality and relevance.
  • You then analyze the data using statistical and other methods. It can be exploratory data evaluation, predictive modeling, or sample frequency analysis. The analysis aims to reveal patterns and trends in HR data.
  • Finally, interpret the results and translate them into findings that can form the basis of an action plan. You can represent HR data analysis visually through diagrams or summarize the results in a document. The crucial aspect is communicating the findings in a way that decision-makers can easily understand and benefit from.

How HR analytics helps effective decision-making

HR analytics helps effective decision-making by providing a data-driven basis for developing HR methods and tasks. For example, by analyzing recruitment data, you can identify the characteristics of successful employees and use this information to refine hiring requirements.

In addition, HR analytics allows you to compare the effectiveness of HR policies and interventions. For example, you can measure the impact of a new training program on employee performance and then modify the program based on the results.

Finally, HR analytics allows you to make proactive, informed decisions that align with the organization's strategic goals rather than reactive, ad-hoc decisions.

Successful use of HR analytics in companies

Many companies have successfully used HR analytics to improve their selection process. Google, for example, created a statistically driven hiring process. It has dramatically improved the quality of new hires.

Microsoft has used HR analytics to identify factors that affect employee engagement and productivity. The data enables them to take targeted action, resulting in a more engaged and productive workforce. In addition, these "giants" have launched their data analytics training programs.

Understanding how employees are developing, or how new employees are training is also essential. Who is up to date with the curriculum, where are they getting stuck, when are they getting stuck, what tools are they using etc.

Some specific examples and exciting data from Games for Business HR and learning projects:

  • At Generali Austria, 56% of users spent 9 hours using the learning system and answered 75% of the questions correctly.
  • Deutsche Telekom IT Solutions’ MovingInTogether platform allowed staff to get to know their new headquarters before they moved in, resulting in 2500 registrations.

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Tools and software for analyzing HR data

There are many tools and software available to analyze HR data. Some of the most prominent solutions include Tableau , Power BI Visualization , and SAS , which have potent data visualization and analysis features.

HR-specific solutions like Workday , Oracle HCM , and SAP SuccessFactors provide integrated analytics functionality. These tools help you analyze HR data and integrate it with existing HR systems, making it easier to collect and manage data.

Knowing whether the system can link to other data analysis software or in-house developed HR systems may also be essential. For instance, importing data from the Games for Business - The Learning Experience learning system into Power BI is easy, but it can be integrated with any other HR system as well.

How do you introduce HR analytics in your company?

Introducing HR analytics into your organization involves several essential steps. First, you need solid support from management. They need to understand the value of HR analytics and be willing to invest in the necessary resources.

Then, you need to find the sources of HR data and make them accessible and linkable. This may involve investing in tools for analyzing HR records or modernizing HR systems.

The next step is to build or specifically train your HR analytics team. To effectively exploit the potential of HR analytics, the team must also have the necessary information and the information analysis skills to process it.

Finally, prepare an HR analytics action plan in which you define key objectives, milestones, and metrics. These will keep your efforts on track and help you measure progress.

The future of HR analytics

The future of HR analytics is auspicious. With the advances in artificial intelligence and machine learning, HR analytics will become even more sophisticated and powerful. We will see more predictive and concrete suggestion analytics that will allow HR to predict specific employee trends and thus help take appropriate actions.

In addition, as companies become more data-driven, HR analytics will become a standard practice in HR. It will be a good-to-have add-on and an essential tool that will transform how companies manage their human resources.

In summary, HR analytics is a powerful tool to understand better and thus improve the management of an organization's greatest asset - its people.

By using HR information analytics, certain employee trends can be predicted and thus managed, increasing the efficiency and effectiveness of the HR function.

What do you think about HR analytics? Do you use it in your company?

Consult with us for free if you want to get ahead in the world of analytics!

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