HR Analytics

Data is the new gold, it is often said. Without sound data, it is extremely difficult to make business decisions, or as W. Edwards Deming once said: "Without data you're just another person with an opinion.

For a long time, HR management was considered one of the areas of a company that received little analytical attention. However, this has changed with increasing digitization. Data and thus also HR analytics are becoming increasingly important and now have a high priority in many companies. For this reason, our current blog post deals with the topic of HR analytics.

What is HR Analytics?

Meaningful data and analyses make a valuable contribution to increasing the profitability of companies. Determining the right KPIs and evaluating them provides a valuable basis for decision-making. These key performance indicators enable HR to make an optimal contribution to the successful development of the company by incorporating targeted measures.

Employees leave behind groundbreaking data traces. HR analytics refers to the process of collecting, analyzing and organizing data from HR with the aim of improving employee and company performance and, for example, reducing the fluctuation rate.

HR Analytics is often also called People Analytics or Workforce Analytics. However, there are slight differences between the three terms, which we would like to briefly discuss:

HR Analytics: HR Analytics deals specifically with Human Resources Management metrics such as time to hire, training effort per employee, and time to promotion. All these metrics are managed exclusively by HR for HR.

People Analytics: People analytics basically refers to people in general. This means that in addition to employees, people analytics can also be applied to groups of people outside the company's own organization. For example, this could also mean customer or applicant data.

Workforce Analytics: Workforce analytics is an all-encompassing term that refers specifically to employees. It includes on-site employees, remote workers, gig workers, freelancers, consultants, and anyone else who works for an organization in various capacities. In the HR context, some workforce analytics metrics and HR analytics metrics can overlap, which is why the two terms are often used as synonyms. The goal of the two can also be the same. For example, data on employee productivity and performance feeds into both HR and workforce analytics. The goal here is to improve employee retention and enhance the employee experience.

What metrics can HR Analytics measure?

Below you will find some key figures that can be elicited with the help of HR Analytics:

• Voluntary fluctuation
• Involuntary fluctuation
• Absenteeism
• Time spent per recruitment (number of days between the publication of the job offer to the successful filling)
• Time to hire (number of days between candidate approach and final commitment)
• Training costs per employee
• Sales per employee
• Offer acceptance rate
• Efficiency of continuing education

Why HR Analytics?

The targeted use of analytical methods can improve the company's performance in various employee-related areas. This concerns, for example:

• Employee satisfaction increases as data-based decisions lead to more transparency and traceability.
• The risk of wrong decisions is reduced by data-driven determination of corporate strategy and optimization of decision-making processes.
• HR Analytics reveals areas in need of action and thus enables continuous process optimization.
• Competitiveness is ensured by the forward-looking analyses
• HR Analytics enables qualified personnel development, because employee potential is discovered and can be promoted in a targeted manner.
• Employees' sense of security increases when they know that the employer knows where they currently stand and where they want to go in the future.

What tools are available?

There are many different software providers for HR Analytics. Probably the best known provider is SAP. Other examples are Sage and Oracle. Often, analytics tools are already included in HR management programs.

Conclusion

Digitalization means that data is becoming increasingly important. Many companies are aware of this fact and therefore invest in good analysis software. Employees also leave valuable data traces that enable the company to measure important key figures such as absenteeism, fluctuation or training costs per employee. HR analytics should therefore be given high priority, because it shows the company critical values, among other things. With the help of this knowledge, the company can intervene in time and thus improve its own performance.