The 5 Things You Need to Know about HR Analytics

Analytics is a hot topic and HR analytics is no different. New software products and visualisation tools are being launched. Talk of data is everywhere! It is all quite a buzz. But what does it mean? Why does it concern HR? Why is it really so valuable?

1. What does Analytics Mean?

As with most things nowadays, Wikipedia has a pretty nice definition of this one: “Analytics is the discovery and communication of meaningful patterns in data.” In other words, analytics is more than having data, or even insight from that data. Analytics sums up a journey, using data to drive action and improve decision making. It is about connecting pieces of data to create “meaningful patters.” It relies on a range of disciplines, including the application of statistics, computer programming, and operations research to quantify performance.

2. Is there value from analytics?

Analytics and technology are transforming organisational functions – just some faster than others. You only need to look as far as the marketing department to see the power of analytics. In Sanjay Dholakia [1], Marketo’s chief marketing officer’s opinion: “Marketing’s changed more in the past five years than in the past 500 years.” Gartner predicts that by 2017 the Chief Marketing Officer will spend more on IT than the Chief Information Officer [2]. Marketing is going digital. It’s moving from pre-planned campaigns to one-on-one targeted marketing. The question is whether that change is hitting HR as well.

3. Is analytics relevant to HR?

Absolutely! Analytics represents a great chance to push the people agenda, and connect people to business performance. A recent Gartner report showed that BI, analytics and performance management is the highest priority for businesses [3]. And that is being reflected in the recruitment focus for HR. Annapurna HR chief executive James Ballard says, “We have seen requests for analytical skills in HR BP positions increase from 10 percent six years ago to 30 percent today, and it is only going to increase. It’ll be 60-80 percent in five years. There’s just much more data to interpret now.”

4. What role does HR analytics play in the wider business?

It helps to drive performance and in better decision making; uncover issues, solve them and see the results. The more you can get to seemingly unconnected links, the better.

What sorts of recruitment channels provide the strongest performance with above average loyalty? If you know that, you can concentrate the focus and recruit more high performers.

Which managers have the most engaged, highest performing teams over a sustained period? If you know that, then getting to why is much easier.

Which projects have inexperienced/low performing teams? Are they the most critical projects? Do you, therefore, know the balance of staff by experience, tenure, performance? This could mean the difference between the most critical projects failing or driving results beyond your wildest expectations.

The list is endless!

5. Where is the data?

HR teams already have some great data at their fingertips. First, there is aggregated data: team level data on engagement; department-by-department data on sales or customer satisfaction. Then there is individual data: in the performance management system, in the payroll system, in the training database, the HRMIS.

The key is to start simple and build. Get the basics right – “Lay the Foundations.” How many people do you employ? What is the people cost by function? Once you’ve got these in place you can start asking the really interesting questions, like the ones above, by bringing HR data and wider business data together such as Sales or Finance data. Within HR analytics, there is just so much scope for interesting and meaningful analysis.

However, it is all very well having the data, the real question is how you drive outcomes and communicate its business value to the rest of your organisation.

In my next blog I will look at how you can impact your business using HR analytics.

[1] Source: VentureBeat.com, 2014