How HR analytics improve people management

Do your HR analytics have a positive impact on your business? After all, having a fully-functioning HRMS, complete with sophisticated deep-dive analysis and reports is all very impressive at board meetings but if you’re not actually using those reports and other data outputs then, really, what’s the point?

So, given that your HRMS is all about automating your people management processes, it’s to the sometimes nebulous area of ‘people management’ that we should be looking for such positive impacts.

What are HR analytics and why are they important?

The term “HR analytics” is generally used to describe a set of data-crunching functionalities within your HRMS. While it may not qualify for the label “Big Data”, a typical HRMS contains large quantities of information relating to your employees; including their recruitment and onboarding, training records, attendance and time-off information, and job performance during their time with the company. This data can be combined, cross-referenced and compared to create fresh insights into workforce behavior and trends, allowing you to predict future performance.

Most HRMS with analytics capabilities offer up to four basic types of report:

• Basic operational – these are usually simple quantitative reports, providing information (How many? How much? etc.) rather than insight.
• Broader operational – still quantitative, these reports draw on wider sources of data and are often useful for benchmarking performance.
• Strategic – this level of report can model your human resource use and performance, using statistical analysis and segmentation to offer outputs useful for longer-term decision-making.
• Predictive – this is about anticipating the future, drawing on multiple data sources for detailed scenario planning.

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As systems increase in subtlety and sophistication, the latter two types of report are increasingly available to business strategists.

What benefits do HR analytics have for people management?

With the application and continued use of HR analytics, you can leverage some or all of the following benefits in your organization:

• More efficient decision-making at all levels – Whether it’s a first-level supervisor looking at absence patterns in their team, or a C-suite member looking to cross-reference the expense and benefits of the latest recruitment campaign, HR analytics offer a boost to planning and decision-making.
• Better succession planning – Looking ahead to divine which key posts may become vacant, and what current options you have for filling or covering them, has often been a process of doubtful accuracy. However, HR analytics brings hard data to the task, including workforce demographics, training and skills records, and performance information to identify your future potential high-flyers and therefore reduce the risk of ongoing vacancies.
• Identification of candidate sources – By examining the records and data from past recruitment drives, you can often clearly see where your best candidates have come from. You can also highlight potential candidate sources that have been underutilized, allowing you to tap into fresh sources of talent.
• Improved employee retention – It’s frustrating to spend time and money on the hiring process, find an excellent candidate, only to have them leave before you start seeing a return on that investment. Similarly, a business can suddenly find itself losing more long-established workers. By combining data from metrics such as turnover and resignations, plus information gathered from exit interviews, you can identify the factors that may be undermining the retention of your workforce.
• More appropriate reward strategies – Performance-related pay is common but are you linking rewards to the right performance factors? Are you really rewarding those efforts that contribute most to business success? Use your HRMS analytics functions to find out.
• More engaged employees – Staff engagement is directly linked to job performance and if you’re in the habit of conducting employee satisfaction surveys and the like, you have large reserves of data related to staff opinion. Use that information to fine-tune your people management policies and procedures and better engage with your workforce.
• Credible human resources management – As long as there are those who persist in perceiving HR as ‘fluffy’ or otherwise less than hard-edged, your HRMS analytics and reports provide a solid foundation of fact and figure on which to build a better reputation.

Key areas of improvement from analytics

So, which areas of your people management should you expect the greatest improvements? Naturally, the easy answer is, it depends, but there are some key areas associated with potential improvement.

1. The hiring process – Automated posting of vacancies, parsing of resumes and even pre-screening allow you to focus your human resources on the parts of the process where they are most needed, such as interviews and assessments. One survey, by recruitment platform Ideal, found that the time needed to fill a post manually (40+ hours) can be more than halved (to 17 hours) by using predictive analytics.
2. Retention – Plug your ‘leaks’ by using HR analytics to identify the most common reasons or routes for staff leaving your workforce. Not all factors can be addressed but those related to performance (or more accurately, performance management) can be identified and addressed using information accessible via your HRMS.
3. Workforce management – The foundation of good daily performance lies in matching the resources to the needs of your business. The time and attendance and skills data contained in your HRMS allows you to deploy your human resources effectively, and applying predictive analytics to those datasets allows you to work with trends and patterns for a longer-term workforce management strategy.

Having accurate data can be a critical success factor for any business and for people management data you can rely on your HRMS. However, if you fail to use that data for practical purposes, your HRMS becomes a limited-use vanity project. To get the full benefit of your cutting-edge technology, use your HR analytics to predict and plan for future workforce trends, recruit and retain the best people, and all the while, enhance the reputation of your HR function by presenting an evidence-based, strategic front to the rest of the organization.