If you are not an expert on Analytics then you must be curious about how one can use analytics for better optimization, forecasting and reporting. Or how HR can benefit by investing for stronger analytics?
But before understanding further, it is very important to know what HR analytics is!
HR analytics, also called talent analytics, is the application of considerable data mining and business analytics techniques to human resources data. The goal of human resources analytics is to provide an organization with insights for effectively managing employees so that business goals can be reached quickly and efficiently. The challenge of human resources analytics is to identify what data should be captured and how to use the data to model and predict capabilities so the organization gets an optimal return on investment on its human capital.
HR analytics does not only deal with gathering data on employee efficiency. Instead, it aims to provide insight into each process by gathering data and then using it to make relevant decisions about how to improve the processes.
So how can companies use HR data analytics to make strategic personnel decisions? First, they’ll need software, which isn’t hard to find. Huge vendors such as Oracle, IBM and SAP compete with many smaller vendors to deliver the best HR analytics software as a service in the market.
But buying only HR analytics software won’t help at all if nobody in HR knows how to mine and interpret data. Some larger companies are addressing this HR analytics talent shortage by hiring Big Data Architect/Analyst or data scientists to work in human resources.
I think we have come across many times overthe term “Big Data”, which always sounds bigger to me, but what is it? In 2012, Gartner updated its definition as follows: ‘Big data is high volume, high velocity, and/or high variety information assets that require new forms of processing to enable enhanced decision making, insight discovery and process optimization.’ i.e. we need new tools and technology because it is so big, fast changing and potentially unstructured.
Analytics is always an important topic and trend in every part of business and HR is also not far behind. Today many organizations are looking for metrics or analytics in HR which are not just related to people but also on processes such as recruitment, retention, compensation, succession planning, benefits, training & development, performance and appraisal and many others. In short Talent analytics is becoming more popular these days as companies are doing lot of efforts to cultivate and align HCM with core business objectives in order to achieve a competitive fringe.
HR analytics does not only gather data on employees; instead it aims to provide insights into each process by using data to make relevant decisions, improve the processes and operational performance. HR collects enough data on employee’s personal information, compensation, benefits, retirements, attrition, performance, succession time to time so it is important to use it properly to interpret the outcome and spot the trends.
Some typical benefits and use cases of analytics are:
- Improve organizational performance through high quality talent related decisions.
- Forecast workforce requirements and utilization for improved business performance.
- Optimization of talents through development and planning.
- Identify the primary reasons for attrition and identify high-value employees for leaving.
- Provide the source of competitive platform for the organizations
- Manages applicants in a better way on the basis of qualification for a specific position.
- Recognize the factors which turn the employee satisfaction and productivity.
- To determine the individuals KPIs on the business.
- Enabling HR to demonstrate its benefaction to achieving corporate goals.
Analytics also used in HR to prepare cost and investment on their talent pool like cost per hire, cost per participation on training, revenue and expense per employee. It provides opportunity for defining strategy for retention and hire plan. It can also give complete picture of an organizational head counts based on demographics – age, gender, geographical, departmental, qualifications etc.
The facts are also not different on HR analytics. A survey by MIT and IBM reported that companies with a high level of HR analytics had:
- 8% higher sales growth
- 24% higher net operating income
- 58% higher sales per employee
As mentioned before, there are currently many analytics options in HR but few of them are really becoming popular these days.
One such is talent analytics; which is more qualitative and is basically for processes from talent management like personal development, recruitment, succession planning, retention etc. It can help organizations to better analyze turnover, identifying top performers,identifying the gaps and develop the proper training for them. It can also find out reasons for attrition and provide options to take strategic decision for retention as well.
Remember analytics is a journey not a goal…