Today’s HR function has made great strides in shifting from purely administrative in nature, to a strategic business partner which is critical to the running of the organisation. Though one key component which is lagging behind, and which makes all the difference between being a reactive HR function or a proactive one, is the area of HR Analytics.
The power of data-led insight is transforming how organisations make decisions and optimise their resources, especially their workforce. Data analysis through the form of HR Analytics has become critical for today’s talent management, employee engagement, performance management, and productivity needs. HR Analytics can also be used to inform decision making and defining actions on how to recruit, engage, retain, and remunerate employees. HR Analytics allows organisations to separate fact from hearsay and get the full picture, understand what is working and what merits improvement - in a timely manner. When used strategically, analytics can transform how HR operates by equipping managers with insights and allowing HR to actively and meaningfully contribute to the organisation’s bottom line.
Data transpiring from HR Analytics can also bring inconsistencies or unfairness to light, such as gender inequality issues. Simply having access to data, exponentially increases the probability of having it analysed and actioned. The ability for HR to answer questions such as What is the gender split in senior management grade? Do we have a gender pay gap? Is there a correlation between length of stay, age and level of training received? - is key for HR to address such matters effectively.
Insights can also be used for improvement in pivotal HR processes such as recruitment. Data can influence the recruitment process by informing decisions taken in relation to potential candidate outreach initiatives, job advertising, increasing the efficiency of the hiring process, optimising the cost-per-hire, reducing probation turnover, and if used at an advanced level - also provide the organisation with the ability to identify future high performers at recruitment stage.
Among the most valuable outcomes of a strong HR Analytics function is the ability to forecast; where organisations can use historical data and trends to depict the most likely scenarios in the organisation's future. This can be leveraged to foresee the impact of people centric policies on their employee engagement levels or anticipate and mitigate against employee turnover.
Despite the numerous advantages, most organisations still fall short of developing even the most essential forms of HR Analytics. This could be due to a number of critical obstacles being faced in the early stages of building these capabilities. Key examples include the lack of clean data available for reporting, overall poor data management, lack of HR technologies and gaps in capabilities to develop, administer and analyse the tools required.
By investing in HR Analytics, organisations are able to make the most of their human capital, increase efficiency and optimise employee performance. Businesses should gather data and use it to level up their decision-making and process improvement. While HR Analytics alone will not solve HR’s largest challenges, it can enable HR professionals and business leaders with powerful insights in order to develop plans and strategies to handle them to the best of their abilities.
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