What is HR Analytics?

In the simplest sense of the term, HR Analytics, also known as people analytics or workforce analytics, is the process of using data to understand a workforce and improve how a business manages its employees. Examples of HR data analytics are ubiquitous, and they can help you enhance the quality of talent being hired, optimize post-hire training, boost overall organizational satisfaction, and reduce turnover.

The Different Types of Analytics

HR analytics can offer unparalleled insight into how you can improve your business by revealing exactly what works and what doesn’t as it relates to talent decisions. Let’s unpack what HR analytics is by looking at the different approaches it can take:

  • Descriptive analytics: This type of analytics involves collecting and analyzing data that tells you what is happening in your business right now, such as how many employees you have, how satisfied they are, and how much they cost. Descriptive analytics helps report and monitor key HR metrics and trends, such as employee turnover, performance, and satisfaction. The core idea here is to get an in-depth look at the current state of your workforce by evaluating its strengths and weaknesses.
  • Predictive analytics: Predictive HR analytics is what businesses rely on to guess what might happen in the future, powered by data and extensive modeling. This type of analytics can help you make valuable workforce predictions, such as who is likely to quit and who is expected to be a good fit for a position.

    Popular examples of HR data analytics usually mention some form of predictive analytics, a testament to its importance. Anticipating future HR challenges and opportunities allows businesses to optimize their talent acquisition and build a better employee lifecycle, all while cutting costs and improving ROI.
  • Prescriptive analytics: This is when you use data and suggestions to decide how to achieve a desired outcome. If you’re not sure what HR analytics is yet, remember that predictive and prescriptive analytics go hand-in-hand, and they each have their unique role to play. Some use cases include: how to improve your hiring process, how to increase employee engagement, and how to reduce turnover. Getting actionable insight into these core issues is why HR analytics is so important today.
  • Causal analytics: Causal analytics involves using data and experiments to test the impact of your actions and policies on your business outcomes. Examples of this form of HR data analytics are: studying how your training program affects your revenue, how your compensation plan affects your retention, and how your diversity initiatives affect your innovation.

Which Type of Analytics Is Right For You?

Many businesses learning what HR analytics is do not realize that there is no easy answer here. Think of these as various tools that each accomplish a unique goal. The right analytics solution will be agile enough to adapt to your requirements and tailor itself accordingly. Generally, descriptive analytics is seen as the foundation, with predictive analytics offering a deeper level of insight.

HR Analytics Services

Organizations can choose from a wide range of useful HR analytics services. Let’s explore why HR analytics is important through a few of the most valuable services:

HR Dashboards 

An HR dashboard offers professionals a bird’s eye view of their entire workforce, collating updated information that covers every aspect of the employee lifecycle—from hiring and training to attrition. HR analytics is what gives organizations real-time data on the metrics that matter the most, allowing managers to make effective decisions empowered by the facts.

The best examples of HR data analytics dashboards will feature a customized solution built from the ground up to suit the client. Customized dashboards allow organizations to focus on the metrics that are most important to them.

Employee Surveys

Employee surveys are an invaluable tool for understanding the condition of your workforce, including the critical challenges employees face. The right surveying service is what enables HR analytics to provide vital feedback on the organization while ensuring complete privacy.

You can use custom surveys to align them with your business goals, allowing them to produce actionable insight for fast results. Additionally, the best employee surveying services will also provide post-survey support in the form of executive presentations.

People Analytics Advisory and Consulting

These HR advisory and consulting services offer a comprehensive end-to-end solution for the entire talent lifecycle. Here’s a brief look at what HR analytics’ application is here:

  • Custom Solutions: Struggling to contain managerial attrition or tamp down on training costs? Tailored consulting services work with you to uncover the root causes of your organizational challenges and provide unique solutions.
  • Proactive HR: HR advisory services allow businesses to move from descriptive to predictive analytics, understanding the challenges of today to predict the challenges of tomorrow.
  • HR Analytics Roadmap: Build and leverage a data infrastructure that powers a long-term and scalable people analytics roadmap.

Compensation & Pay Equity Analysis

Pay equity often flies under the radar as a significant example of HR data analytics in action. That said, the incredible value of compensation & pay equity analysis as an HR analytics service makes it a must-have for any organization targeting long-term success.

Wondering what HR analytics’ role is in equity? In one word: Fairness. Compensation & equity analysis services allow you to efficiently build a workplace culture of fairness and equity by plugging glaring pay equity gaps. As a result, this can alleviate employee demoralization and boost employee productivity.

These are just a few examples of why HR analytics is so important for businesses. We can now explore the detailed benefits of these services.

The Benefits of HR Analytics

  • Improved Decision Making: Organizations can make better decisions based on data available on their workforce. By analyzing critical aspects like employee performance, recruiting, training, and turnover, companies gain insights that help optimize HR processes and contribute to strategic business objectives.
  • Reduced Employee Turnover: HR analytics is what allows organizations to collect and analyze data on employee turnover. By identifying patterns and trends, companies can reduce turnover rates and improve employee retention efforts.
  • Equitable Compensation and Benefits Packages: Through HR analytics, companies can build fair compensation and benefits packages by analyzing data related to employee performance and market benchmarks. By reducing and eventually eliminating gaps in pay equity, organizations can boost overall workforce satisfaction and even reduce the attrition of valuable senior employees. There are, of course, many more examples of the benefits of HR data analytics.
  • Effective Workforce Planning: HR analytics is what helps organizations plan for future workforce needs by analyzing workforce trends, skills gaps, and succession planning. This form of analytics can be particularly useful in a time of global economic uncertainty, as it can help businesses be precise with their hiring and circumvent needless spending. 
  • Learning and Development: Companies can boost learning and development initiatives by identifying skill gaps through data analysis. Upskilling and reskilling programs become more effective when informed by HR analytics.
  • Talent Acquisition Optimization: Learning what HR analytics is can help improve recruitment processes by identifying the most effective channels for sourcing candidates and evaluating the success of recruitment campaigns.
  • Enhanced Communication Skills: Understanding workforce trends allows HR professionals to tailor communication strategies effectively. This has a multitude of other branching benefits. Professionals can be much more sensitive to the problems experienced by the workforce and find better, more frictionless ways to communicate about those challenges and even find solutions. 
  • Increased Employee Satisfaction: Most examples of HR data analytics in action point to accurate compensation and rewards based on data analysis, contributing to higher employee satisfaction. Improving employee satisfaction is one of the hardest objectives for mid/large-sized organizations, and it can lead to lower attrition, higher productivity, and loyalty.
  • Strategic Business Impact: The strategic use of HR analytics is what directly affects risk management, profit, and planning. For instance, organizations can use prescriptive analytics to determine the best way to lower hiring costs or slow down attrition. 

What To Watch Out For

We know why HR analytics is important, but there are a few limitations to keep in mind so you can maximize your results.

  • Data Quality and Accuracy: HR analytics relies on data from various sources, such as payroll, benefits, recruitment, surveys, and performance reviews. Ensuring the data is reliable, consistent, and up-to-date is important. Otherwise, the analysis may be misleading or inaccurate. Data quality and accuracy can be improved by using standardized definitions, formats, and methods, and by validating and cleaning the data regularly.
  • Privacy and Security: If you understand what HR analytics is, you know it requires collecting and storing sensitive information about employees, such as personal details, salaries, health records, and feedback. Protecting this data from unauthorized access, misuse, or breach is essential. Data privacy and security can be enhanced by following ethical and legal guidelines, such as obtaining consent, anonymizing data, encrypting data, and limiting access.
  • Communication: As we’ve seen in our examples of HR data analytics, it can generate valuable insights and recommendations, but they must be interpreted and communicated effectively to the relevant stakeholders. It is crucial to avoid bias, confusion, or misunderstanding when presenting the results of HR analytics. Professional analytics services take care of this with their presentation methodology.
  • Data Alignment and Integration: Understanding what HR analytics is means aligning it with the strategic goals and objectives of the organization, as well as integrating it with other business functions and processes. It is important to avoid silos, duplication, or conflicts when using HR analytics. Data alignment and integration can be achieved by involving key stakeholders, establishing common metrics and standards, and creating feedback loops.