What is HR Analytics?

HR Analytics is also introduced as people analytics, workforce analytics, or talent analytics. Human Resource analytics is roughly about analyzing a companies’ people problems using data. It allows you to answer essential questions about your company.

For example:

How significant is your annual employee turnover?

How whole of your employee turnover mainly consists of regretted loss?

Do you know which of the employees will be likely to leave your organization within a year?

These questions can only be clarified using data. Most HR professionals can readily answer the first question. However, responding to the second issue is more laborious.

To answer this second question, you would need to connect two majorily different data sources: your Human Resources Information System (HRIS) and your Performance Management software.

To answer the third question, you would want even more data and significantly analyze it as well.

HR functions have long been accumulating vast amounts of HR data. Sadly, this data often resides unused. As soon as companies start to analyze their people problems by using this data, they are involved in HR analytics.

HR Analytics in literature

Because people analytics is a reasonably different topic, it is still often unexplored in the experimental literature. The best known scientific explanation of HR analytics is by Heuvel & Bondarouk. According to them, HR analytics is the precise identification and quantification of the people drivers of market outcomes (Heuvel & Bondarouk, 2016).

In other words, it is an entirely data-driven approach to Human Resources Management.

Over the past 50 years, Human Resource Management has changed. It has shifted from an operational method towards a more critical discipline. The prevalence of the term Strategic Human Resource Management (SHRM) explains this. The data-driven path that describes HR analytics is in line with this growth.

By using people analytics, you don’t have to rely on gut feeling anymore. Analytics allows HR professionals to make data-driven decisions — furthermore, analytics aids to test the effectiveness of HR systems and different interruptions.

How HR analytics helps Human Resource Management

Like marketing analytics has transformed into the field of marketing, HR analytics is revolutionizing HR. It enables HR to:

  • Make strategic decisions using data
  • Create a custom case for HR interventions
  • Test the effectiveness of these interruptions
  • Move from an operational ally to a tactical, or even important partner.

Today, the bulk of HR departments focus on recording employee data. This doesn’t answer today’s data-driven market.

Doing this allows HR to become more engaged in decision-making on a diplomatic level. The picture below shows how this works in practice.

To get commenced with HR analytics, you need to connect data from different HR software. If you want to include the impact of employee engagement on financial performance. To estimate this relationship, you need to connect your annual compact employee survey with your performance data. This way you can limit the impact of engagement on the economic performance of various stores and departments.

Key HR areas will increase based on the insights obtained from HR analytics. Functions like recruitment management, performance management, and learning & development will improve.

Think that you can measure the business result of your learning and development budget! Or think that you can foretell which new hires will become your greatest performers in two years. Or that you can predict which new hires will leave your organization in the first year. Having this data will change your hiring & selection plans and decisions.

How to get started with people analytics

Companies usually begin by asking easy questions. An example is: “Which employees are my perfect potentials?” You can answer this problem by using quite modest statistics. Doing this serves to quantify the links between people’s abilities and the company’s results. This way analytics helps organizations track absenteeism, turnover, burnout, production and much more.

Read more about how to adjust metrics to create strategic value, or obtain out how HR analytics works in application.