Hardly anyone these days is a stranger to the notion that businesses need data to gain an edge over their competition. Businesses gather data on their products and services from ideation to implementation, with the purpose of being better at what they do than their competition. With so much quantifiable information at hand, it is hardly surprising that the modern workplace necessitates data-driven decisions. This data, also known as people analytics, workforce analytics, and HR analytics, is what allows HR departments to manage their workforce better than their competition. Read on for a look at what these analytics are and how they can help your business.
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The Growing Need for People Analytics
Like many other business functions, HR utilizes the data-gathering and analytics function. In fact, understanding the metrics and analytics that relate to any workforce is one of the most critical components in demonstrating business acumen to leadership or shareholders.
Gathering and analyzing -workforce analytics is a full-time task. Proactive HR managers need to build teams tasked with gathering, sorting, and analyzing important workforce metrics. The challenge is to build a team that leverages multi-disciplinary expertise in order to develop and execute a long-term plan that comprehensively “datafies” the broader HR function. Certainly, one might argue that the traditional Human Resources function is one of the most data-intensive competencies in any structured organization. That assumption is correct. However, the problem lies in how this data has been applied to modern business settings.
For the most part, traditional hiring managers use common metrics to create descriptive reports. However, most businesses have lagged behind in strategically leveraging this workforce data and using it to align themselves with larger business goals such as reducing costs and increasing revenues. This represents a huge opportunity on which business might immediately capitalize.
What Are People Analytics?
In the simplest terms, workforce analytics involves using data and analytical techniques to gain insights on and improve the human aspect of your business. These analytics aim to link workforce data to various kinds of business data and align the business’s larger objectives (such as earning revenues and reducing costs) across the organization.
There are three important factors that make workforce analytics a potent tool for businesses. The first is a significant advancement in data gathering and analysis science over recent years. The second is a growing trend to base modern business decisions on accurate data. The third and final factor is the vast quantities of workforce data that HR functions accumulate. For example, a manufacturing concern will likely have a large volume of information that reflects their manufacturing staffing efforts.
The goal of workforce analytics is to sort and analyze the huge volumes of data that the recruiting process generates when hiring, retaining or losing employees and process it into actionable information for decision-makers. In most cases, there are three broad categories of workforce data on which analytics should focus:
- The workforce demographics, engagement, and skills data, also known as people data.
- Workforce training, development, and leadership development data, also called program data.
- The workforce performance and appraisal information, also known as performance data.
Why Use Workforce Analytics?
One of the most important outcomes of HR analytics is improving and optimizing an organization’s talent acquisition ability. For example, an organization may use workforce analytics to ascertain the qualifications required for a certain role and set up a logarithmic framework to measure the potential of every candidate applying for that role. This will allow more ease when it comes to screening and shortlisting candidates for the job. Measurable benefits of accurate workforce analytics on talent acquisition are:
- Reduced hiring time on the basis of fewer manual processes.
- Improved hiring quality through the elimination of biases in the process.
- Better collection of workforce data for applications towards broader business goals.
There is no shortage of workforce management software that allows hiring managers to gather, accumulate, and analyze HR data. When this data is linked correctly to the right business data, it can empower your talent acquisition function to become a critical component of your business strategy.
The Challenges Analytics Strategies Face in The Workplace
Gathering data and successfully applying it to improve business functions can be a challenging task. One of the biggest obstacles you are bound to face along the way to using is a lack of accuracy, consistency, or access to workforce data. Another problem could be that your HR team lacks the necessary expertise to undertake an ongoing analytics exercise.
The biggest problem of all lies in perception. In the modern business world, there is still a stubborn acceptance of decisions based on “expertise” and not, as it turns out, analytical decisions prompted by non-human software. This aversion to algorithms and data presents the biggest challenge when it comes to creating a strategy that works effectively.
There may be an underlying fear among HR professionals that an algorithm will be able to replace their years of expertise and knowledge. This is something individual hiring managers need to work on mitigating. You need to be able to convince your workforce analytics team that their critical thinking skills and expertise are among the most crucial components of accurately assessing data and making sound judgment calls.
Implementing a Winning People Analytics Strategy
When looking to implement an analytics function within your larger workplace management, there is one principal truth you must consider. The adoption of workforce analytics is still in its infancy. While many industry leaders and tech giants recognize the value of an analytical function, very few others have the capability or the inclination to implement it.
A gap exists between the need to utilize workforce analytics and the actual, practical implementation of that data. This represents a unique opportunity for progressive workforce managers hoping to enable their organization to gain a significant competitive advantage. These four steps give a simplified outline to help hiring managers implement workforce analytics in their HR function:
Step #1: Encourage Data-Driven Decision-Making
This is a significant change, especially under more traditional leadership, but it has to potential to yield a multitude of benefits. One of the first steps to encourage data-based decision-making is to create a company culture. A culture that encourages the collection, analysis, and testing of verifiable data. But how does one create such an environment?
The specifics may vary based on the cultural and organizational norms within your business. However, small, gradual changes can help expedite the shift. Progressive HR leaders should encourage innovation among their workforce, tolerate mistakes for the greater goal, and emphasize ongoing knowledge and learning. This will shift your company culture from one that relies on the business expertise and gut instinct to one that encourages decisions based on insights from data analytics.
Step #2: Identify the Pain Points Analytics Should Address
The next step involves an objective look at the biggest challenges faced by the business. To implement data-based decision-making, you need to assess and identify your current pain points. Don’t make the mistake of setting lofty subjective targets like “improving topline revenue” or “curtailing costs”. Instead, you should start out with a reasonable and specific goal.
An exercise that helps in such situations is to create a hypothetical situation based on the actual problems you face. Consider how workforce data may help you solve this hypothesis. Then progress to determining the metrics you need and the specific data needed to measure them. Once you have that in order, you can move on to the next step.
Step #3: Data Collection
In the last step, you created a hypothesis based on an actual problem you wish to tackle. The logical next step is to decide what data you need and how to collect it. One of the benefits of living in the modern age is the easy access to a variety of data management and measurement software. These tools help make sure your data gathering standards are consistent. The same (or different) software can help you use this data, identify patterns, and extract actionable HR data analytics to find a solution to your hypothesis.
Step #4: Data-Driven Decisions
The efforts of the previous three steps come to fruition in the fourth and final step. Once you have collected and analyzed the data you need, identify what your analysis tells you. Based on this analysis, you’re free to make an informed decision aimed at the resolution of the pain points you defined in your hypothesis. After choosing the most suitable course of action, you not only need to implement it but also be prepared to track the outcomes that result. From beginning to end, this is a fairly simplified (but accurate) outline of how to implement a workforce analytics strategy.
The Potential of Workforce Analytics in Modern Recruiting
Based on how things have unfolded in other aspects of your business, workforce analytics has the potential to completely transform your human resources function. There are several areas that directly stand to benefit from an increased focus on workplace analytics, including:
Talent Acquisition
One of the biggest challenges for a hiring manager is to source the right talent for the job. By investing in new technology and prioritizing analytics, many of the hurdles in this challenge can be mitigated. In fact, most traditional means of sourcing talent will inevitably become obsolete. Talent acquisition will take on functions that overlap with relationship management, marketing, and branding to attract the best talent possible.
Analytics will play a bigger role in helping recruiters reach out to and engage with candidates. Using the power of data-based profiling and predictive HR analytics, recruiters will become more adept at screening and shortlisting candidates, working with niche specialist staffing partners and improving the quality of talent acquired.
Managing Workforce Performance
It is likely that your top-performing talent adds a disproportionately larger value to your business than your average employee. It logically follows that their compensation packages should reflect the value they add. Automation and the use of analytics can help HR professionals track and profile top performing talent, and reward them accordingly.
On the flip side, the same framework also allows you to identify the managers, teams, and departments that perform below par. This proactively allows HR personnel to focus on these employees and take appropriate action to bring performance up to acceptable levels. Data-based management also helps to measure and track employee engagement against the effectiveness of training and development programs.
Reducing Employee Turnover
Keeping the employee turnover rate to a minimum is at the core of any HR function. Workforce analytics can help HR identify and predict employee behavior. That includes identifying flight risks and predicting which employees need intensive retention efforts. With data tools helping HR managers identify trends in employee turnover, the ability to take timely remedial measures increases significantly.
In a simplified setting, analytics empowers HR to take the right decisions. when it comes to reducing employee turnover or sourcing the right talent for an open role. From a broader perspective, analytics can help you recruit and nurture talent to help with future business growth, increased market share, and increased revenue. Workforce analytics can be a powerful tool when used correctly.
Frequently Asked Questions
We get many questions from both proactive HR professionals as well as staffing agencies. when it comes to the right approach towards workforce analytics. Some of the most common ones follow below along with their answers to help answer any queries you may have:
What are the common data sources for HR analytics?
The people, program, and performance data gathered by HR.
What is the effectiveness of using HR analytics?
Improved decision-making based on accurate data and analytics.
Is your company ready for HR analytics?
Yes, if you have a willingness to use data and the desire to implement it in business decisions.
What is the scope of HR analytics?
This vast field aims to empower decision-makers with actionable information to achieve larger business goals.
What is the use of analytics?
Empowering decision-makers with accurate and actionable information to make the right choices.
What is predictive HR Analytics?
The ability to make evidence-focused decisions based on existing data from a previous period.
