HR analytics. Everything can be measured: from churn rate to employee emotions 

The digitalization of work processes has led to an increase in the amount of data on existing and potential employees. The role of modern HR teams is to organize the systematic collection of this data and use it to the maximum advantage. In short, to set up an HR analytics tool in the company. Read the article to find out how to achieve this and what advantages and additional opportunities for business HR analytics creates. 

Role of analytics in HR 

Just as companies use consumer data to maximize sales, HR department can improve employee productivity and experience by capturing and analyzing actionable data. Working with analytics in HR also satisfies management’s demand for more information to make strategic decisions. 

Tasks that analytics in HR management solves include the following: 

 

Employee retention
Analytics can help identify red flags that precede employees leaving, compare employee turnover across departments, and identify where it is exceeding acceptable levels. With the data in place, you can take preventive action and improve the talent retention level in your company. 

Increased productivity 
With the data collected, team leaders and HRs can analyze and identify what motivates staff and what hinders them from achieving their maximum potential. This is where you go one step further than just a planned performance assessment. Analytics will help you identify patterns and develop a process optimization plan. 

Creating the optimal reward and incentive program 
HR analytics can reveal whether the benefits offered by the company translate into better performance or greater employee retention. It is also possible to determine whether certain groups of employees have been affected by salary increases or bonus awards. This can save a company a lot of money. 

Increased employee engagement 
With the help of analytics in HR, you can find out the emotional state of people in a company or a specific team. If necessary, it makes sense to adapt the working environment, creating comfortable conditions for employees who need it. 

Assistance in HR planning
Predictive HR analytics gives us fairly accurate predictions of HR changes. By knowing when key employees are planning to leave the company, we can prepare ahead of time and organize succession planning. The data also allows us to detect talent surpluses or shortages in certain areas. 

As for the recruiting process, HR analytics helps to understand what skills and qualities a candidate should have for a particular role and how not to waste time on specialists that are irrelevant to certain vacancies. 

Cost-efficiency
Objective information allows us to make better decisions and take practical actions to manage talent. And this, in turn, affects the costs of the company. 

Searching for solutions in crisis situations
HR analytics is a reliable tool in crisis situations like the one that happened in Ukraine. The key data and insights obtained from analytics help to understand whether the team can cope with the load in times of crisis and uncertainty, whether there is a need to reduce or, conversely, to attract new employees. Often, the search for people in key roles can be closed by effective internal recruiting, revealing the potential of one of the employees. The role of HR analytics is to help you find these talents while saving company resources.  

 

Key HR analytics metrics 

There are many valuable HR metrics, but the key question when measuring them is “What exactly does your business need?”. The answer to this question is best sought together with the founders and top management. Collaboration between management and HRs will help define the HR analytics strategy, adjusting it in line with the organization’s overall KPIs. And HR professionals will need to justify why tracking certain indicators is important and relevant. 

We suggest considering the main metrics that are quite often used in HR analytics: 

Churn rate: one of the main indicators by which you can determine the overall climate in a company or a specific team. It is calculated by dividing the number of employees who left by the average number of employees over a given period. It can be calculated both in the context of people who left voluntarily, and in the context of those who were dismissed.

Hiring time: calculates the time from the first contact with the candidate to entering the workplace. The HR metric also measures the effectiveness and responsiveness of the hiring team. 

Offer acceptance rate: the number of officially accepted job offers divided by the total number of offers made in a given period. A rate over 85% is considered a good result. If it is lower, it is suggested to revise the current strategy for attracting talents. 

Absence rate: one of the performance metrics calculated by dividing the number of missed days by the planned days. The HR metric can give an idea of the overall health of a particular employee and serves as an indicator of their happiness.

Income per employee: obtained by dividing the company’s income by the total number of employees, determining the average income per employee in the company. The indicator is a measure of how effectively a business makes a profit thanks to employees. 

Employee training costs: calculated by dividing the total training costs by the total number of trainees. The indicator allows you to determine the effectiveness of training costs and revise them if necessary.

Human capital risk: may include employee-related risks such as not having the right skills for a new position, being poorly qualified for promotion to management positions, being dismissed due to bad relationships with colleagues, being underpaid, or having no personal development plan. HR analytics can be used for all of these metrics. 

How to set up an HR analytics process? 

Here are some steps to consider in order to start using HR data to improve the performance of your organization: 

  1. Decide on goals and action plan

Identify the company’s challenges and business goals by matching them to HR functions. To achieve the desired results, it is important to identify only those indicators that can provide you with valuable information. 

  1. Engage an analyst 

Data scientists have the necessary experience to help set up the analytics process. They will be able to assess the quality and accuracy of the data and help HR professionals use it more effectively. In addition, specialists are able to provide training for key persons so that they better understand the process. 

  1. Take care of data protection 

Make sure that the collected data does not violate data protection laws and does not violate the privacy of your employees. This applies to both the collection and use of information. If necessary, to ensure maximum transparency of the process, consult with lawyers. 

  1. Use software 

The best way to systematize HR analytics is to use software that can simplify, consolidate, and automate processes, because the tasks of collecting and processing data should not overload the HR team. To do this, HR systems are introduced that contain automated tools for collecting and processing data, turning them into understandable reporting in a convenient format. 

Benefits of using HR data analysis systems 

In addition to the fact that HR systems automate the collection and processing of data in accordance with the metrics described above, they also provide for generating reporting that will serve as a tool for dialogue with management. For example, SMART HCM & LMS has built-in Power BI Pro-based analytics to provide a unified view of data: 

The tool allows you to see data in real time and filter it directly on the dashboard. There are also ample opportunities for data connection: Payroll (ERP), Excel, MS SQL, PostgreSQL, Oracle BD and other databases. 

A weighty argument in favor of implementing HR systems is the constant updating of tools for working with analytics. In addition, users of our SMART HCM & LMS system can initiate the necessary changes. In SMART business, we listen to the experience of our customers and improve solutions based on their needs. For example, in the latest releases of the system, a significant share of analytical capabilities was added at the request of users: tools for hiring analytics, improved measurement of employee goals, and others. 

Should you invest in the HR analytics solution? 

Trends in the global labor market and comments from leading HR professionals incline to give a positive answer. Recently, our team managed to attend one of the main international HR events, the Unleash 2022 conference in Paris. The topic of HR analytics has become one of the hottest and most discussed at the event. Read our material to learn more about this and other global trends in staff management, which were discussed at the conference. 

All in all, HR analytics offers undeniable business benefits and takes the HR function to the next level. Automating this process guarantees its systematization and flexibility, while a manual approach is time consuming and drains the energy of the HR team. 

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