HR analytics are tools which help a business better understand its human capital and make decisions that strengthen the company in the long run. In business, data is the name of the game, and proper analysis of data provides you with a map which you can use to make strategic decisions that make the most of your employees’ talents.
What is HR analytics?
HR analytics involves gathering, examining, and explaining HR-related data. This data concerns anything related to the human resources. For example, you can analyse payroll disparity, employee engagement or employee turnover. HR analytics are divided into four types — descriptive, predictive, prescriptive and diagnostic.
- Descriptive analytics reviews past HR data to assess trends and connections. Descriptive analytics is not used to forecast; it is used simply to outline what happened.
- Diagnostic analytics attempts to provide the “why?” of a data point. It reveals the reason behind the data.
- Predictive analytics uses gathered historical data to make predictions about the future. It provides HR leaders with information to make better decisions regarding recruitment, skills training and talent retention.
- Prescriptive analytics provides recommendations for which actions to take based on data furnished by predictive analytics.
Organisations use descriptive analytics more often than predictive and prescriptive analytics.
Why is HR Analytics Important
Arguably, one of the most important factors driving a company’s performance is the employees who make up the workforce. HR analytics provides quantifiable data that HR leaders can use to make the best decisions regarding recruitment, the onboarding process, payroll, employee motivation and engagement, promotions and retention.
Being able to pinpoint and chart out identifiable trends and patterns provides HR leaders with a solid base to make decisions. Analytics helps them know that the decisions they’re taking have a positive influence on the company and helps them avoid potential loss-making decisions.
Dedicated data analysis employees with at least a master’s degree in data analytics can help the company make decisions around hiring, firing or promoting employees based on data trends. This inevitably improves the quality of the company’s talent pool.
It helps to pinpoint which employees are underperforming so that HR can either direct resources to upskill employees or decide to let them go. Analytics makes it so that such decisions can be based on rock-solid data rather than subjective feelings.
What HR Analytics Is Used for and How to Use It
HR analytics can be used for various uses, such as:
- Identify Ideal Candidate Profiles: Past hiring data can be analyzed to determine the characteristics of successful hires.
- Measure Training Effectiveness: Use analytics to track employee performance before and after training programs to determine their impact.
- Measure Employee Satisfaction: Create surveys and analyze the feedback using HR analytics tools to identify areas for improvement.
- Optimise Workforce Allocation: Use data to identify skill gaps and allocate resources effectively.
How to Use HR Analytics
- Define SMART (specific, measurable, achievable, relevant, and time-bound.) goals.
- Collect accurate data relevant to your goals.
- Choose an HR analytics tool that works well with your systems and expedites the analysis process.
- Pick the type of analytics (predictive, prescriptive, descriptive or diagnostic) best suited to your goals.
- Incorporate the data into all HR decision-making processes.
Key HR metrics
The following are some examples of HR metrics that can be measured using HR analytics:
- Employee Turnover is the percentage rate of employees who leave the company. We have to make a distinction here between voluntary (the percentage of employees who willingly left the company) and involuntary turnover (the percentage of employees who were fired).
- Absenteeism is the frequent absence of an employee without a proper reason or notification.
- Revenue per employee measures the average amount of revenue generated by each employee of a company.
- The compensation ratio compares the average salary of employees to industry standards.
- Workforce diversity measures employee diversity in terms of gender, ethnicity, age, etc.
- Employee productivity calculates the output per employee.
——
If you want to bring real changes to employee performance and improve company culture, then look no further than HR analytics.
A data-driven approach to your human resources may sound counter-intuitive, but the unbiased data that analytics provides helps HR leaders make fair decisions that optimize performance while leveraging the strengths and building up the weaknesses of employees.
For more info visit Business Stylish