Essential HR Analytics for you

What is HR analytics?

Human Resource analytics (HR analytics) is about analyzing an organizations’ people problems. For example, can you answer the following questions about your organization?

*How high is your annual employee turnover?

How much of your employee turnover consists of regretted loss?

Do you know which employees will be the most likely to leave your company within a year?*

You can only answer these questions when you use HR data. Most HR professionals can easily answer the first question. However, answering the second question is harder.

To answer the second question, you’d need to combine two different data sources. To answer the third one, you’d need to analyze your HR data.

HR departments have long been collecting vast amounts of HR data. Unfortunately, this data often remains unused. As soon as organizations start to analyze their people problems by using this data, they are engaged in HR analytics.

The scientific definition of HR analytics

What is the scientific definition of HR analytics?

HR analytics is the systematic identification and quantification of the people drivers of business outcomes (Heuvel & Bondarouk, 2016).

In other words, it is a data-driven approach towards HR.

Over the past 100 years, Human Resource Management has changed. It has moved from an operational discipline towards a more strategic discipline. The popularity of the term Strategic Human Resource Management (SHRM) exemplifies this. The data-driven approach that characterizes HR analytics is in line with this development.

By using HR analytics you don’t have to rely on gut feeling anymore. Analytics enables HR professionals to make data-driven decisions. Furthermore, analytics helps to test the effectiveness of HR policies and different interventions.

By the way, HR analytics is very similar to people analytics but there are some subtle differences in how the terms are used.

How HR analytics helps Human Resource Management

Like marketing analytics has changed the field of marketing, HR analytics is changing HR. It enables HR to:

Make better decisions using data

Create a business case for HR interventions

Test the effectiveness of these interventions

Move from an operational partner to a tactical, or even strategic partner

Today, the majority of HR departments focus on reporting employee data. This doesn’t suffice in today’s data-driven economy.

Just keeping records is often insufficient to add strategic value. In the words of Carly Fiorina: “The goal is to turn data into information and information into insight”. This also applies to HR.

Doing this enables HR to become more involved in decision-making on a strategic level. The picture below shows how this works in practice.

A few examples

To get started with HR analytics, you need to combine data from different HR systems. Say you want to measure the impact of employee engagement on financial performance. To measure this relationship, you need to combine your annual engagement survey with your performance data. This way you can calculate the impact of engagement on the financial performance of different stores and departments.

Key HR areas will change based on the insights gained from HR analytics. Functions like recruitment, performance management, and learning & development will change.