For those of you who had thought Human Resource (HR) activities confines only to hiring, extending offer letters, etc. then you are wrong. There are various functions associated with an HR job role and today we will be discussing the topic ‘HR Analytics’. By going through this article here, you will get a proper understanding of the process followed in HR Analytics, how it is beneficial for the organization, and also the challenges faced during implementation.
Also, if you are interested in starting a career in the human resource domain, do check the Executive PG Program in Management that offers human resources as one of the specializations.
What is HR Analytics? HR Analytics refers to interpreting the data to make business decisions that improve the business performance, hiring, and retention rates. It is a more data-driven approach towards management that revolves around gathering and analyzing data. The analysis is then leveraged to check the impact of HR management and metrics on the organization and the overall business performance.
What impact does HR Analytics have on an organization? HR Analytics helps in providing valuable insights as to how human resource contributes to the organization’s growth that including:
Executing strategic plans
Why is HR Analytics required? Organizations own enormous amounts of raw data that do not provide any value in their form but do have immense potential if utilized the right way. The data, if organized, can be used for comparison and analysis to provide insights to the organization. And this is what HR analytics is all about.
Some of the processed data can be used to figure out the following:
The employee turnover and its pattern
Expected time to fill a vacancy
Impact of learning and development on employees
The data-backed evidence obtained from this activity helps organizations plan on future initiatives and necessary improvements.
How does HR analytics work? The process of HR analytics is made up of 4 primary tasks that are performed one after the other.
Step 1: Data Collection Collecting and grouping high-quality data is the first and the most vital component of HR Analytics.
Type of Data collected for HR Analytics process: There are two kinds of data required for the process.
Organization-wide financial data
Employee Training Records
Passive data from employees right from recruitment stage
Data on high and low performers
Core offerings of the organization
Salary and promotion history
Step 2: Monitoring the data and comparing with past performance At this stage, there is a continuous assessment and comparison of the data obtained. This is the stage where the HR metrics are calculated.
If you don’t know about HR metrics, here is a small outline for you.
HR Metrics is nothing but the statistics that helps an organization to measure and track their human capital. It is also used to measure the effectiveness of their human resource initiatives. The key HR metrics taken into account for the HR Analytics process are tabulated below.
Cost per Hire
Time to Hire
Time to Productivity
Engagement & Retention
Total Turnover Rate
Voluntary Turnover Rate
Talent Turnover Rate
Retention Rate per Manager
Absence Rate per Manager
Employee Value and Performance
Revenue per Employee
Performance and Potential
Training and Development
Training Completion Rate
Training Expense per Employee
Time to Completion
Step 3: Analysis The metrics thus obtained from the previous steps can now be used to identify the organizational impact brought about by the work of human resources.
The analytical methods that are commonly used in this process are:
Prescriptive analysis: Predicts future consequences for forecasted outcomes Predictive analysis: Analyze historical data to forecast future opportunities/ risks Descriptive analysis: Understanding historical data to identify areas for improvement
Step 4: Utilize the obtained data to bring in remedial measures Once the HR metrics are analyzed, the analysis is used to make important decisions for the organization’s progress. These actionable insights can be leveraged to make valuable improvements in the HR metrics.
Let me lay out a few examples for easy reference.
Cost Per Hire: This metric usually shows how much it costs to hire new employees. Based on the analysis, if this metric crosses the standard fixed cost per hire, the organization might have to closely audit the process and assess where the extra money is being spent. Turnover: This metric indicates the rate at which employees leave the company. If it exceeds the standard values, the organization needs to pay more attention to where they are struggling with employee retention and steps to counteract this situation. Time to Hire: Time to Hire measures the number of days between when a candidate has applied for the job and when they are accepting it. If this rate dwindles, the organization can take a closer look at the recruiting efficiency and interview experience of the candidates and improve them.
I hope these examples have given you a clear understanding of how HR Analytics can be useful for an organization. While this process sounds very promising, it has its challenges too.
Latest Trends in HR Analytics With technology progressing at an unprecedented phase, even the human resource process is undergoing a transition to Artificial Intelligence and Machine Learning technologies. Let us take a look at the latest trends in human resource analytics.
Use of Chatbots
AI-Enabled New Hire Selection
While these 4 are the primary ones that caught my attention, there are more trends in HR analytics which we will be discussing in our forthcoming blogs.
Conclusion: Now that you know how organizations are leveraging data to make informed decisions, do you want to know the scope of an MBA in HR and become an HR professional that can bring positive results? If yes, check out the MBA programme offered at Mantissa College. The program imparts knowledge about various tools and software that can help you in your work as a human resource professional.
Mantissa College’s MBA program boasts a dynamic global network of more than 80,000 alumni. One recent alumnus, Harrison Jub, says, “I took the 15-month Master of Business Administration course and in the first week, I was discussing the Real Case Study with groups of working professionals from different fields. And so I was learning from real people with real problems. Thanks to the case study based learning approach I am now capable of taking up more projects because I had been exposed to a wider perspective on handling matters from my learning experience.”
Certainly, evidence attests to the tremendous value of case studies in business education. Between its focus on this learning style and many other desirable attributes, Mantissa College’s Master of Business Administration offers an invaluable inside edge for aspiring business leaders.