HR is all about people.
It’s right there in the name: human resources. And humans are at the heart of every HR process. From helping to recruit and onboard the right talent, to mediating relationships between employees, to maintaining a safe working environment (and beyond), HR professionals dedicate their time and energies to the humans that play such an essential role in the company. So, when Karl decides to help himself to Maria’s lunch from the breakroom fridge, it typically falls to HR to address the situation. And this focus on people means there’s no use for numbers, right?
There’s always a use for numbers.
The truth is that numbers are an important part of business — every part of business. And even if HR is among the most people-centric of departments, it still has to be capable of measuring success, identifying weak points, and gathering the right data to inform strategy and decisions. And that takes analytics.
What Are HR Analytics?
If you know what HR is and you’re even passingly familiar with the concept of analytics, then you already have at least a general idea of what “HR analytics” means. Still, just so we’re all on the same page, here’s a good definition from Gartner:
HR analytics (also known as people analytics) is the collection and application of talent data to improve critical talent and business outcomes. HR analytics leaders enable HR leaders to develop data-driven insights to inform talent decisions, improve workforce processes and promote positive employee experience.
Put another way, it’s a form of data analysis that evaluates the performance of an organization through human resource data.
And HR analytics isn't a standalone process: it's integrative. It requires collaboration across various departments and a holistic understanding of the organization's goals and strategies. By leveraging data from multiple sources – including employee surveys, performance metrics, and even social media interactions – HR analytics provides a comprehensive view of the human element in your business.
What Metrics Are Included in HR Analytics?
Setting goals and tracking progress can’t be accomplished in a vacuum – it depends on knowing what numbers are the most relevant and worth keeping an eye on. And while different businesses in different industries may want to personalize this list to better fit their needs, common examples of HR analytics metrics include:
- Absenteeism rate
- Employee engagement
- Employee retention rate
- Human capital risk
- Involuntary turnover rate
- Voluntary turnover rate
- Offer acceptance rate
- Revenue per employee
- Time to fill
- Time to hire
- Training efficiency
- Training expenses per employee
You may have noticed that most of these metrics are directly related to measuring either the processes associated with recruitment and onboarding or those having to do with productivity and engagement. That’s because these categories cover a significant portion of HR analytics. So, any other KPIs or data sources that can provide more clarity into these areas are likely also worth tracking.
How You Can Use HR Analytics
HR data isn’t new. For as long as there have been professionals dedicated to supporting and managing the employee lifecycle, there’s been a need to quantify the success of those responsibilities. But where traditional HR data focused more exclusively on operational, day-to-day processes, modern HR analytics takes a more strategic stance. HR analytics can answer the big questions, such as the costs associated with and causes of employee attrition, onboarding efficiency, and new-hire productivity and costs.
This provides you with the opportunity to have a major impact on your organization (beyond just keeping Maria’s lunch safe from break-room burglars). Given the global HR analytics market is expected to reach $10 billion within the next ten years, you can bet that there are some good reasons top players are investing so heavily. Specifically, here are some areas where HR analytics may be put to best use.
Finding Inefficiencies in HR Workflows
There are a lot of processes involved in managing people, and not all of them are as efficient or streamlined as they could be. Unfortunately HR inefficiencies — whether it’s a bottleneck in employee onboarding or an overly convoluted chain of hiring approvals — can really add up. HR analytics puts these processes under a microscope, applying data analysis techniques to uncover where workflow could be improved.
Optimizing the Hiring Process
How much of hiring is based on gut instinct? Too much. There’s often so much information that hiring managers have to review and metabolize (and so little time in which to do it) that the final decision often depends more on feelings than facts. This creates all sorts of problems — top candidates are unintentionally overlooked, unconscious biases creep in, or the need for diversity is ignored. HR analytics bring data to the forefront of hiring, allowing employers to shortlist the best potential employees based on the most relevant details. And once they’ve joined the team, analytics further optimizes the onboarding process.
Improving Employee Experience
Getting accustomed to a new position is stressful enough, and even established workers may be facing difficult times or unresolved issues within their jobs. Well, HR analytics are also called people analytics for a reason — correctly applied, they can help eliminate many of the day-to-day stresses your people are facing. It can also go further: Metrics like employee engagement and offer acceptance rate can help you in quantifying, tracking, and gaining insight into employee satisfaction and the factors that may be affecting it.
Increasing Employee Retention
Some people stick around. Some people leave. So what’s the determining factor? Well, usually it’s not just one factor. There’s a lot that can impact employee retention, and unfortunately, those issues that make the biggest difference may not always be obvious. But with the right approach to people analytics, you gain deeper, clearer insights into all of the elements that influence your people’s choice to go or stay. You can then make changes where necessary to help sway their decision.
What Is the HR Analytics Process?
HR analytics puts data in the copilot seat. It supports HR decision-makers in identifying what to measure and which key performance indicators (KPIs) need to be tracked, and then analyzing results to make data-informed decisions. These four steps will help you implement analytics in your HR department:
The first step in gathering data is defining what you’re trying to measure, which, in this case, will relate to your business objectives. Once you’ve decided what you’re measuring, like employee engagement, you can select the metrics to track that represent it, such as absenteeism and voluntary turnover rate.
As you begin gathering your data, recognize that you’re going to be dealing with a lot of information from a variety of sources. Start by working within the systems and tools you already use — most digital solutions are designed with data analytics in mind, and can be a major resource for HR data, such as employee performance, demographic information, retention, turnover, absenteeism, etc. The data will need to be aggregated and organized as it comes in so that you’re not left dealing with an unsorted ‘pile’ of information when it comes time to analyze.
Dated data cannot give you a current view of your HR processes. As such, you need a constant and real-time data flow to support HR analytics. This information can then be compared against established organizational standards and historical trends to create a baseline, defining what kinds of results are worth celebrating, which ones may warrant concern, and so on.
Data in hand, the next step is to figure out what it all means. Data analysis is a larger topic than we have space to address here, but suffice it to say that there’s a big difference between having data and understanding it. Effective data analysis recognizes the patterns in the raw numbers, extracting actionable insights as it does so. Thankfully, no one expects you to manage this step by hand. There are data analysis tools designed to handle the ‘big’ that gives big data its name.
Data collected, measured, and analyzed. What’s left? Putting it to work! The final step in HR analytics is to apply any insights you’ve gained toward improving your processes and building your HR strategy. Of course, it’s not the final, final step, because the previous steps never actually end. HR analytics must be ongoing, so that your organization is always reviewing, revising, and optimizing how it supports its employees.
HR Analytics Examples: Data in Action
Ok. Data is good, and HR data — when properly analyzed and applied — is very good. But what does effective application of these analytics mean in real, everyday terms? Here are a few examples:
- Using turnover rate to predict the likelihood of newer employees quitting
- Automating the collection and analysis of candidate resume data
- Identifying key elements in job postings that lead to an increased number of high-quality applicants
- Using skills gap analysis to determine what trainings are needed
- Ensuring unbiased hiring decisions built on data
- Applying historical hiring data to develop more accurate long-term hiring strategies
- Identifying top performers from KPI data
- Recognizing patterns of employee engagement to better understand job satisfaction rates
- Analyzing workplace health and safety data to reduce employee risk
Improved data analysis and application is your chance to better the processes that impact your employees and your business. If that sounds like something worth pursuing, then HR analytics might be the answer.
Integrating HR Analytics with Other Business Functions
Integrating HR analytics with business functions provides your business with the opportunity to align your talent management with organizational goals. These figures can provide data on the workforce that could be valuable for other departments. For example, HR can collaborate with the finance department for budgeting and workforce planning. These two teams can work together to align the workforce with the company’s goals. Or HR analytics can also support sales and marketing by aligning incentives and talent recruitment with market needs.
Benefits for Integration
Integrating HR analytics provides your company with a few benefits:
- Improve performance. HR data can provide the entire company with valuable information that informs operations and policies. That integration of data can help improve the performance of the objectives departments put into place, including the policies in HR.
- Foster collaboration. Integrating HR analytics with other business functions helps departments collaborate with each other. Teams can work together to utilize HR data across the company. Encouraging the exchange of ideas, feedback, and best practices among employees and leaders from different functions can support a culture of collaboration.
- Tap into additional talent pools. When you spread HR analytics through the company, you also have the opportunity to tap into different perspectives, skills, and experiences of employees from different areas.
- Develop leaders. With integration, that HR data can be used to boost your leadership development. This helps create an environment that empowers your leaders to learn more about their people and how to manage them. The information from HR analytics provides leaders with information that can help them think strategically, not just tactically.
Overall, HR analytics provides your team with insights. When you integrate them throughout the business, they can be used to inform a wide variety of organizational strategies.
Supporting Employee Wellness with HR Analytics
HR analytics make it possible for HR to reach its fullest potential, streamlining processes, reducing employee turnover, promoting engagement, and improving returns across the board. Because, at the end of the day human resources really is all about people — even when it’s about the numbers.
Utilized effectively, HR analytics can provide valuable insights into overall employee wellness and can provide the information needed to elevate your organization to the next level. Investing in employee wellness is always a good idea — there’s a reason 100% of HR leaders say wellness programs are important to employee satisfaction!
Gympass’ subscription to thousands of in-person and digital wellbeing partners that can support any employee’s wellness journey. Speak with a wellbeing specialist today to get started!
The Gympass Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.