HR Analytics and How to Get Started

As a role that traditionally relies on intuition and your “gut instinct” to make decisions about people, human resources is undergoing a major transformation. The rapid adoption of multiple HR technologies has given organizations easy access to valuable employee data for decision-making. With a wealth of trusted data, HR leaders and senior executives can now expect to understand the impact of their human capital strategies on business performance.

What is Human Resource Analysis?

Human Resource Analysis is the application of statistical modeling and quantitative science to employee data to deliver better business results. Analysis helps HR leaders understand the key issues affecting people in organizations. How do you start HR analytics?

  • Step 1: Centralize all employee data

The first step on your HR analytics journey is to combine multiple sources of employee data into one central repository. Employee data can often be found in multiple HR systems, Excel spreadsheets, and paper documents. Accessing data on separate systems is inefficient and time-consuming. To ensure data accuracy and consistency, it is essential to have a single source of truth (centralized data storage). After consolidating all employee data, you can now identify key performance indicators that will help you understand how their performance correlates with business results.

  • Step 2: Create an HR Dashboard

Data visualization is critical to your analytics initiative. An HR dashboard acts as a one-stop-shop for all internal and external HR data. A graphical/visual representation of all this data allows you to track and compare the data to understand the HR metrics that determine success. You can easily get real-time information on key HR metrics such as the number of employees, cost per FTE, expiration rates, response time, and hiring costs.

  • Step 3: Develop analytical skills

Most HR teams are still new to the concept of analytics and lack the skills to lead successful analytics implementation initiatives. Therefore, it is essential to develop the analytical capacity of the HR team through training with the organization’s business intelligence team. Once you’ve built a solid set of analytics skills across your organization, you can create a broader business context for your human capital decisions.

  • Step 4: Apply Human Resources Analysis

The next step is to identify a business issue that needs to be resolved. This could be to improve retention, identify high-performing companies or reduce costs per hire. The key here is to link analysis to clear business results. You can prioritize your business problem based on two basic criteria: the impact of the activity and the effort required. The impact/engagement matrix should be the starting point of your analytical journey. Start with high-impact, low-effort ideas.

  • Step 5: Encourage continuous improvement

Once you begin using HR analytics to resolve business issues, you need to continually monitor your process to analyze inefficiencies, errors, and risks, identify recurring issues and make structural changes to address them. Once you’ve set up the process to eliminate any inconsistencies, you can move on to the next step: predictive HR analytics.

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