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HR Analytics: Why It Matters to Your Business Now More Than Ever

HR Analytics: Why It Matters to Your Business Now More Than Ever

The importance of HR to any business is clear: Employees have the capacity to make or break any company. They are often its biggest expense, meaning that it is absolutely critical to have a broad, in-depth understanding of the human element of your business. To ensure future success and growth of the company, adequate time and resources must be given to identifying strengths and weaknesses in recruitment, retention and professional development.

This is where HR analytics come in — using data to gain a better insight into how to best manage human capital to reach business goals faster.

Never before has there been quite so much HR data available. For years, companies have collated data in terms of employee demographics, level of education and training, and performance. Now that social media has infiltrated the business world, there are even greater opportunities for data collection. Advances in IT have also allowed better management of this data.

Why HR Data Should Be Used

Workforce data must be analyzed in an in depth manner and not just collated in order to actually take advantage of the resources available. From these analyses, employers can then correctly identify strategies to recruit, retain and develop the very best human talent to drive their business forward and get ahead of potential competitors.

With better HR analytics software now available, the savviest HR departments are already making data analysis central to their practice in order, for example, to identify the most fertile recruitment sources, to drive performance, and to improve talent retention. This, of course, has a human element to it: The correct staff must be employed and/or trained to use the software and accurately perform these analyses, while correctly interpreting the findings.

A recent collaborative study between MIT and IBM found that the “top performing organizations were twice as likely to use analytics to guide day-to-day operations and future strategies as lower performers are.” HR analytics has a clear impact on profits.

Within the industry, there is a feeling now that perhaps strategies for providing staff incentives, hiring and promotion, and onboarding practices (all of which have often historically been done on gut feeling, professional instinct or company tradition), should now be revisited with findings from HR analytics.

However, profitability is not the only reason for analyzing workforce data. Regulatory and compliance laws mean that employers have needed to become increasingly transparent in recruitment processes and need to be able to prove that they are guarding against discrimination and bias. HR analytics makes this newer challenge increasingly more manageable as it becomes easier to identify trends and patterns within the recruitment of a large workforce.

It is not necessarily an exaggeration to say that performing the right analytics could revolutionize a business. However, the current challenge for businesses is to understand which analytics it needs to use to hone its business practices and performance, in order to capture the right data and then use best practice to model and predict capabilities.

4 examples of how HR analytics can be used to improve your business performance

Recruitment Channel Analytics

Aim: Identify the best sources of successful employees to hone future recruitment drives.

How it works: Entry survey data is used, alongside a measure of performance such as return per employee or human capital value added to calculate where the best employees were recruited from.

Turnover Analytics

Aim: Forecast staff turnover and identify types of employees most likely to leave in order to develop strategies to reduce recruitment costs and improve staff satisfaction rates.

How it works: Analysis is performed on KPIs such as staff satisfaction and performance indexes, as well as entry and exit surveys. Findings are used to identify strengths and weaknesses in these areas, and to make forecasts regarding employee turnover rates.

Talent/Capability Analytics

Aim: Identify competencies and capabilities within a workforce, and pinpoint gaps.

How it works: Educational and training levels are analyzed, alongside more informal measures such as empathy or rapport. Findings are used to identify training and recruitment needs.

Capacity Analytics

Aim: Improve profitability by identifying trends in employee efficiency.

How it works: Use data to identify how employees are spending their time and how burdened they are by unprofitable admin. As a consequence, put necessary strategies in place to improve return per employee rates. Accurate forecasts of business growth and capacity to grow can also be achieved.

The Future of HR Analytics

There is no doubt that analytics will increasingly shape best practice in HR and that businesses will need to adopt its use in order to get ahead of competitors and secure the best human talent. Steps need to be taken in order to secure the best HR analytics software and to ensure that the right people are acquired and trained to use it. This way, a business can fully draw on its greatest strength and asset: its workforce.


A passionate recruiter with more than 12 years in the executive search industry, Robbert Murray heads Robbert Murray & Associates as an international headhunter and business partner in the MENA region, specializing in the FMCG, retail, telecom and engineering sectors.


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Tresha D. Moreland, MBA, MS, FACHE, SPHR, SSBBP, founder of HR C-Suite, is an HR thought leader in Human Resource Strategic Management. She has held key human resource leadership roles for over 20 years in multiple industries most recently a senior vice president in the healthcare industry. Tresha is the founder and publisher of HR C-Suite ( HR C-Suite is a game changer results-based HR strategy website. It is a first-of-it's-kind site that organizes HR strategy based on desired business result. She has developed a business philosophy of integrating human resources with business strategy, thus creating a hybrid HR leadership approach. This approach enables the leveraging human resources to achieve business results.

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