Understanding Human Resources (HR) Analytics Systems
What is Human Resources Analytics?
Human resources analytics is where extensive data about an organization is collected and analyzed in an attempt to improve employee performance and meet that organization’s goals.
You also might hear it referred to as “people analytics” or “workforce analytics,” but its purpose is the same: Get a return on your investment in human capital.
Most organizations already have a wealth of data at their fingertips. The trick though, is pulling it together and determining what’s useful and what’s not. Different tools offer different solutions, and choosing one that’s right for you comes down to your strategic objectives. There’s no limit to what you can analyze, though—from employee turnover to job performance.
What Can Be Measured
There are infinite combinations of metrics you can track with an HR analytics tool. Here are some examples of what HR departments are measuring today:
- Job performance
- Motivation and morale
- Manager feedback
- Employee engagement
- Company culture
- Candidate sourcing
- Employee retention
- Performance goals
The list goes on. You can even leverage external data, like information from social media platforms, online job boards and national demographic information. The wealth of data available makes these tools more powerful than ever.
For example, a Silicon Valley tech company can learn why their engineers are quitting and make better decisions on how they reward employees to encourage them to stay. By using an appropriate HR analytics platform you can learn which top performers are at risk for leaving or whether your company culture is being appropriately represented by leadership.
These challenges, while technically considered HR, are business problems and should be treated as such. The data you collect—from an employee’s work history to their family status—can help support business decisions at every level.
How HR Analytics Can Help Your Business
While most human resource departments try to justify spending in order to determine which of their programs have added value, the real key to HR analytics is where and how your people are adding value to the organization.
It all boils down to what corporate leaders primarily care about:
- Hiring the right people,
- Keeping those people productive and happy…
- So the business can attract more customers and drive more revenue.
This is where human resource analytics has incredible power.
In the study High-Impact Talent Analytics by Bersin by Deloitte, researchers found companies that examined people-related data made better strategic decisions about who to hire, who to promote and how much to pay.
Another survey by MIT and IBM found that companies with comprehensive HR analytics also had:
- 8% higher sales growth
- 24% higher net operating income
- 58% higher sales per employee
The bottom line is that taking advantage of workforce analytics sets your organization up for long-term success. The right platform will give you access to entirely new insights, whether you’re exploring how happy employees impact sales or how team engagement affects customer retention. Armed with this data, your organization can make smarter decisions about your people and your business.
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Integrating Analytics Into Your Current HR Department
To integrate an analytics platform into any HR department, you’ll first need to ensure you’re clear on the end goal—not just for the department, but the organization as a whole.
For decades, HR has existed in a bubble, one often seen as “separate” from everyone else in the company. However, for people analytics to actually work, HR must be tightly aligned with the overall business strategy. This gives the team a solid understanding of the business’ long-term goals, which will in turn give help HR best serve the organization.
As with any new piece of software, it’s easy to fall into an “excitement trap.” With so many new features and ideas to play with, you could spend months tinkering away without making any real progress.
The best way to integrate HR analytics is to look first into the past. Perhaps last year’s exit interviews hold more insights than you originally thought. Many platforms incorporate predictive analytics, which can help human resources uncover trends and make smarter choices based on historical data. So instead of waiting for the next resignation letter, why not compile data from last year’s interviews and look for trends? Maybe exits were higher among MBA graduates or young parents. That discovery could help HR make important changes.
Education is another factor to consider when integrating new software. Encourage your team to attend conferences, network with peers, read papers and take trainings.
To more quickly get up to speed, you may want to hire specialty staff to work alongside your current team. Human resources professionals are often ill-equipped to suddenly start acting as statisticians. While the next generation of pros are being trained in the necessary analytical skills, a great “happy medium” is to hire someone to help transition the team to a new way to thinking. Another option is to partner with your new software, as many providers include a strategic element alongside their product, in an attempt to help you be successful right out of the gate.
Who Should Use Analytics
A formal analytics tool can benefit nearly every organization, big or small.
In a 2015 report by Deloitte, 35% of companies said they were actively developing data-analysis capabilities for HR and 77% of executives rated people analytics as a key priority. Respondents came from nearly every industry, from financial services to manufacturing.
While many in the survey stated they were replacing a clunky legacy system of some kind, if you’re starting from scratch, you first need to identify what you want to get out of this software. Some tools can be overkill, so let’s talk a bit about who should use what.
If you have a specific problem to solve, e.g. retention, you’ll want to look at a wide range of data. Monitoring your turnover rate isn’t enough. To get at the heart of the problem, you’ll need to segment: Are you losing Millennials? Managers? Context is key here. To truly solve those bigger organizational problems, you’ll need a more robust platform.
HR analytics tools are also appropriate for those looking to get a comprehensive understanding of their organizational culture. So if you’re hoping to increase engagement and guide your culture, culture software may be ideal.
For smaller companies with fewer resources, a simple pulse survey can help you stay tuned into employee morale and collect feedback on new programs.
Most importantly, remember that simple data collection data is never enough to inspire change. HR analytics tools are ideal for companies who are ready to embrace technology and take action, regardless of size or industry.
How CultureIQ Can Help
CultureIQ is the key to improving company culture. Our software measures the qualities most important to your organization using a custom framework that combines “Operational” and “Strategic” culture.
After analyzing research from top consulting firms and universities, we identified 10 qualities common to high-performance cultures like collaboration, innovation and communication. Your Operational culture is a measurement of these qualities, inspired by the traditional employee engagement survey. Through our core survey, you can collect feedback on these qualities, plus your Employee Net Promoter Score (eNPS). This survey is fully benchmarked so you can measure and interpret your results over time and see how you stack up next to similar organizations.
Strategic culture, on the other hand, measures subjective qualities specific to your organization. For example, a bank may want employees to be risk averse and process oriented, while a fast-growing startup may want employees to feel comfortable taking risks and developing their own processes. Strategic Culture is unique to you, with no right or wrong answers.
We calculate a cohesive CultureIQ Score by combining your survey results and eNPS scores.
We combine our surveys with one-on-one guidance via our culture strategy team—your expert partner throughout the survey design, analysis and follow-up process, providing year-round support as you implement new culture programs
Your personal account manager and strategic consultant will give you clarity and support to help shape your culture long-term and guide your cultural change.
Interested in reading more about people analytics software to get actionable insights? Learn more about People Analytics software and tools here.
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