What Can HR Analytics Do for Your Company

Human resource departments strive to be data-driven.

The goal is to understand the ins and outs of a company’s employees, including what’s really going on in their workforce and how to best utilize resources. Unfortunately, it can be challenging to know where to start or which data is most crucial to the success of your organization. For that, you’ll need to put HR analytics to the test.

These analytics can be collected from various sources, such as HR service delivery software, employee surveys, applicant tracking systems, and human resource management systems. It’s typical for human resource departments to use these metrics to:

• Understand the needs of the workforce
• Efficiently deploy resources to various departments
• Plan for what the future could hold
• Hire candidates that are an exceptional fit

These metrics can be especially beneficial at larger companies with thousands of employees and multiple office locations. Because HR analytics can help human resource professionals monitor employee performance, reduce turnover, and strive for exceptional workforce management, it can reveal incredibly helpful insights to build a solid and innovative organization filled with happy employees. 

Types of HR analytics

In a data-driven world, HR is shifting to strategically align with the company's long-term KPIs and business goals. The HR department must utilize the three types of data analytics that can help them evolve to do this effectively.

1. Descriptive analytics 

The most basic type of HR data analytics is descriptive analytics, which takes historical data and converts it into something easier to understand. 

An example of descriptive analytics at work in HR is creating a headcount report for all employees within an organization. Other reports centered around a company’s turnover rates and time-to-fill would apply here, too, because they utilize past data to explain why something is taking place. 

2. Predictive analytics

Unlike descriptive analytics that pull from the past, predictive analytics works to look ahead. This type of HR data uses statistical models and business forecasting to predict what could happen, so that the HR team can proactively work toward the changing needs of an organization.

An example of predictive analytics is how talent acquisition teams use it to determine if a candidate would fit in well with the organization's company culture before they’re hired. This method can also create an estimate for how long an individual will stay with the company.

3. Prescriptive analytics 

Once HR professionals use predictive analytics to forecast the future, prescriptive analytics helps them know what to do with that information. This data can provide the HR team with recommendations on what to do based on their predictive analytics.

Having this data can be especially helpful within companies that deal with peak or busy seasons. For instance, an eCommerce organization can use these HR  metrics to know how many staff members should be on the schedule during holidays. Additionally, prescriptive analytics can assist with onboarding new team members based on their strengths and skills. 

4. Diagnostic analytics

Diagnostic analytics are used by HR teams for a better understanding of the causes of the results from descriptive analytics. Knowing the cause provides an increased chance to solve a specific problem because you'll know where to focus the efforts. 

Essentially, diagnostic analytics answer the question “why did it happen?”. For example, if data is showing employees tend to resign in March and April, these analytics will uncover that this time period is right after they receive their yearly bonus.  

How does HR analytics assist a human resources team?

While most organizations already use analytics in some shape or form, HR analytics is different. 

Having data to backup these questions with real answers paired with hard evidence means it’s easier for HR departments to make decisions that can improve both the present and future. And because these answers eliminate guesswork, there’s a certain level of confidence in the decisions the team comes to, meaning there’s no longer a need to rely on someone’s “gut feeling”.

What does HR analytics measure?

HR analytics has the power to measure many functions of human resource management. From submitting an application to retirement, HR analytics offer insights into an employee’s entire work journey.

Recruitment

Any human resources professional’s goal is to accomplish the task of hiring the best candidate for a role in the shortest amount of time. To achieve this, recruiters in an organization's HR department turn to analytics to find and source candidates, as well as evaluate the overall recruiting process and quality of the candidates. 

As an example, when a hiring manager writes the job description for an open role, it’s common to use HR tech and skills data to write a description that will attract the right type of candidate. Without this data, it can be difficult to know what job title, required skills, and experience to include.

Additionally, HR metrics can help recruiters and hiring managers know where they should be looking in their recruitment efforts. Whether it’s which universities make the most sense for interns and entry-level roles or which job boards are best suited for web developers, HR tech can point you in the right direction.

Once a candidate becomes part of the team, HR analytics can evaluate the quality of those hires. For instance, this data can pinpoint where there were “quick quits”, known as employees who left within the first twelve months. 

Time-to-hire

Next up is time-to-hire, which is a metric HR teams use to measure how long it takes to get someone in a role. The overall process includes getting the job description approved by the department leader, posting the job, screening candidates who apply, interviewing, making an offer, running a background check, and finally getting the candidate to sign the final paperwork.

The longer a role goes unfilled, the more money a company loses - not to mention the lower productivity levels. It’s crucial that the HR team keeps the time-to-hire metric as minimal as possible, which is where HR analytics come into play. This data can be used to track the entire time-to-hire workflow, making it clear how long each step takes. This makes it easy for the HR team to pinpoint where backlogs happen and find a solution.

For instance, if recruiters find it challenging to schedule interviews with the busy team managers, this data will let the HR team know. The time-to-hire process can either start a candidate off on the right foot or leave them with uncertainties from the get-go. Workforce analytics can ensure it’s smooth sailing from the very start.

Employee onboarding

Once a candidate officially becomes an employee, the onboarding process begins. As they get settled at your organization, they’ll need to get their technology set up, complete various training sessions, meet their team, and get up to speed on the ins and outs of their new role. This cannot be done in one day as it can sometimes take months to fully complete. 

When utilizing the power of HR analytics software, onboarding becomes streamlined as managers can better keep track of the new hire’s progress in one unified dashboard. It can also help the HR team connect new hires with the go-to people in their department who can help make onboarding a more successful experience. 

Absenteeism

There are many employee productivity metrics organizations use, one being absenteeism. A manager will divide the number of days an employee has missed by the total number of scheduled workdays to measure absenteeism. Absenteeism metrics offer better insights into a department’s overall health while also checking the pulse on employee satisfaction and happiness. 

Having a number centered around absenteeism is a great tool to gain analytics into employee engagement, too. This metric should be monitored over time and compared to the organization’s acceptable rate or goal.

Performance and skill-building

If you want your organization to build, grow, and retain its top employees, performance development is a great way to start. Employees who feel like they’re not moving up in their career or working toward accomplishing their goals will eventually leave and seek these qualities elsewhere.

It’s common to have some performance review system already in place, and HR teams can use these reviews to track who is performing well and who needs help. It can also help pinpoint why certain employees aren’t succeeding in their current role.

HR analytics tools can also inform the human resources team about the goals of each employee and how the company can help ensure they reach them. They may even find that the organization isn’t offering the right employee development programs with the necessary resources.

Retention and turnover rates

How long are employees staying at your organization? And if it isn't very long, what’s the reason? HR analytics can help the human resources team take a deeper look into retention and turnover rates and create strategies for improving both.

Thanks to analytics tools, it’s possible for the HR department to track the movement of each employee within their organization with these actionable insights. From when they are hired, get promoted, or even move to a different department, you’ll be able to see how long they were in each role, their performance rating, and when they decided to part ways with the company. With HR analytics and exit interviews, it’s easier to examine turnover patterns.

Suppose employees are rapidly leaving the marketing team at alarmingly high rates. In that case, you may need to take a long, hard look at the Chief Marketing Officer and see if they’re not a good fit or if they’re expecting an unreasonably high workload from their team. Or, if marketers are leaving consistently at the one or two-year mark, HR analytics will tell you that it’s time to evaluate pay rates, work environment, and promotion opportunities. 

Revenue per employee

Another helpful metric HR analytics can provide is revenue per employee, which is the average revenue a person brings in, or generates, for the business. This is calculated by dividing the business revenue by the total number of employees within the company.

This metric is best used to determine how efficient a company really is in utilizing its employees to grow revenue.

Diversity and inclusion

Organizations of all shapes and sizes must build a team both diverse and inclusive of others. It’s common for companies to have diversity and inclusion (D&I) efforts to increase diversity in their workforce, especially in race and gender. HR analytics can help set goals and track the progress of these efforts. 

For example, these tools can track diversity data for a better understanding of how many women and minorities apply for open roles, get interviewed, and eventually hired. Once these individuals are hired, software can also tell the HR team how many have moved into management or executive leadership, how much they’re being paid, and how often they’ve been promoted or given a raise.

This data makes it possible for companies to hold themselves accountable, while the HR team can make sure that all processes and systems are as inclusive as possible. It’s common to start D&I efforts by setting benchmark goals based on the candidate demographics recruiters are looking for.  

How to implement HR analytics

When looking to implement HR analytics in an organization, there are specific steps to follow to ensure the process goes smoothly.  

• Understand business goals: Determine which goals within your organization are the most crucial for short and long-term success, and which apply to the most relevant KPIs that are set. It’s a good idea to rank these goals from most to least important.
• Create a plan: Once there’s a clear understanding of business goals, create a plan or a comprehensive list of the data that will best help accomplish these goals. This plan should consist of the HR functions that work to improve business functions. 
• Involve data experts: If your organization doesn’t have a data expert on staff, consider working with an external data expert who can assist in monitoring the quality and accuracy of the data collected. An expert can also set the HR team on the right foot to implement the data to their benefit. 
• Prepare the HR team: For HR to understand the data, make sure they know what the data is telling them and how these metrics can be utilized to take the organization to the next level.

HR analytics benefits

There’s no denying that HR analytics is fast becoming a desired addition to HR departments across various industries. Having this data offers a lot of value to the HR team and the organization as a whole. 

Some benefits of including HR analytics into a strategy include:

• Make better and more accurate decisions since the HR team will be using a data-driven approach to decision-making instead of relying on guess-work or intuition.
• Improve retention rates thanks to a better and more accurate understanding of why employees choose to stay or leave an organization.
• Provide a boost in employee engagement by analyzing data related to employee behavior and relationships across departments.
• Recruiting and hiring top talent is tailored to the actual needs of the company. Additionally, data regarding the skill set of current employees can be compared to potential candidates.
• Provide an easier time maintaining a productive workforce by analyzing trends and patterns with HR data.

Challenges of implementing HR analytics

On the flip side, HR analytics can also present various challenges. Some of these potential drawbacks include:

• Some organizations may not have an employee with the statistical or analytical skill set to read or work large data sets.
• Access to accurate data can be an issue for companies that lack up-to-date systems or tech stacks. 
• Software that doesn’t fit the company's needs can make it challenging to collect and understand data.

Choosing the right software can help solve some of these challenges and make implementing HR analytics easy across an entire organization.

Top 5 HR analytics software

HR analytics software provides the tools HR professionals need to collect and analyze data to identify important people metrics. They combine business data with people data to identify the HR department’s impact on the organization's overall performance. 

This type of software can pinpoint inefficiencies, predict productivity levels, and optimize workforce organization efforts. Additionally, they provide companies with the insights needed to manage human capital and improve their return on investment (ROI). 

In order to be included in the HR analytics software category, a software must:

• Measure employee performance
• Gather labor, time, and payroll data
• Evaluate risks, costs, and effects of the HR policy
• Oversee goals and workforce development
• Develop scenarios relevant to HR for planning and forecasting

*Below are the five leading HR analytics software from G2's Fall 2021 Grid® Report. Some reviews may be edited for clarity.

1. ADP Workforce Now

ADP Workforce Now is an all-in-one cloud-based service that provides users a comprehensive learning and analytics platform and dashboards related to human resource management, payroll, benefits, time and labor management, talent management, and more. ADP Workforce Now streamlines everything the HR team has to manage in their day-to-day work.

What users like:

“The functionality and ease of maneuvering through the system have been a timesaver for us. The newer features added over the past several years make processing payroll and entering data more straightforward. The audit trail provides a comprehensive way to determine who made an entry and ensure data integrity.

The Data Bridge integration with WorkDay has enabled us to automate a very manual process. The Field Grabber option in Custom Reporting helps to simplify creating reports and enables the payroll team to learn the system more quickly. I appreciate that the advanced options are still available for reports as it allows me to create more complex filters and pull data at a more granular level.”

- ADP Workforce Now Review, Christine C. 

What users dislike:

“The website design changed, and you no longer have your timecard on the homepage. I am not sure if that was a company change or an ADP change. It was easy to see your time when it was on the homepage, now you have to look for your timecard in the menu options. It’s easy to look for the timecard in the menu options, but it was more convenient to have it on the homepage.”

- ADP Workforce Now Review, Kristen Y.

2. Hibob HRIS

Hibob HRIS is a fully developed human resource management (HRM) solution that allows users to effortlessly improve the employee experience. With a focus on small and midsize businesses, this software solution makes it easy for companies to attract, retain, and engage their people while simplifying performance reviews, onboarding, attendance, and more.

What users like:

“Intuitive to use, easy to hide features you do not yet need. Highly customizable with onboarding workflows. It can serve as a central source of truth for all people's data. Reporting and data insights I can pipe into external datasets.”

- Hibob HRIS Review, Thomas F.

What users dislike:

“Post-launch support which is only available through chat/mail and takes much too long to receive a response versus other products.”

- Hibob HRIS Review, Phil A.

3. Visier

Companies looking to get answers to their most crucial questions about business strategy turn to Visier. This tool provides teams with clear and concise people data so decision-makers can confidently take action where it’s needed most.

What users like:

“Staff analysis using Visier has been easier for me. I like that I can process various data on the performance of workers to organize the information better and have everything necessary to carry out an auditor to attend any work meeting. Visier has been a tool that allows us to integrate multiple areas in order to carry out the appropriate management plans so that we can all have a better work environment.

With Visier, the personnel statistics are more exact, which has allowed me to observe the true potential of the personnel in whatever area they perform, with the help of the integration of information.”

- Visier Review, Kooi S.

What users dislike:

“There are certain parameters that could be included within the software that would surely be of great help, especially when analyzing the behavior or predicting data of the workers, in order to generate better and more detailed management reports by the staff, who work in the company.”

- Visier Review, Bardo K.

4. Sense

Modern staffing companies looking to accelerate their growth choose a tool like Sense. It boasts automated communication and engagement companies that make data analysis regarding recruiting top talent more accessible than ever for a top-notch candidate experience.

What users like:

“The workflows enable easy branding and customization across a variety of touchpoints. Our recruiters can also use their work numbers to text with candidates, so they don't have to worry about candidates using their personal number at all hours, and the company gets to keep a record of all exchanges if a recruiter leaves.”

- Sense Review, Jacquelyn M.

What users dislike:

“The only downside is because this tool is still fairly new, it doesn't have all the features we would hope for. However, the support team is extremely quick and helpful and usually can come up with a workaround if they don't have the feature we need. They are constantly improving and coming out with new updates for us. In the meantime, it has taken care of the majority of our needs.”

- Sense Review, Jennifer B.

5. intelliHR - Intelligent People Management

intelliHR - Intelligent People Management is an Analytics and People Management platform that makes it possible for HR teams to work strategically instead of administratively. This easy-to-use tool allows HR to manage all of their daily tasks in one dashboard, including performance management, employee engagement, core HR processes, and more.

What users like:

“Every individual I dealt with, from discovery to sales to implementation, has been incredible. Not only do they have a huge amount of product knowledge, but they took the time to really understand our requirements as a business and help us improve and adapt our existing processes to get the best results possible.

The dedicated onboarding process is one of the best I have ever experienced! This product has completely changed the way we manage our staff's personal development, and the analytics dashboard will provide us with a consistent insight into all staffing areas from onboarding to performance management, skill gaps, and compliance.”

- intelliHR - Intelligent People Management Review, Phillippa W. 

What users dislike:

“An area of opportunity (that is being worked on) would be collapsible groups when it comes to locations, as well as the tool needing more robust multi-language functions.” 

- intelliHR - Intelligent People Management Review, Hassan F. 

Insights for a brighter tomorrow

HR analytics help HR teams set goals, measure success, and optimize processes so the company can focus on driving revenue. When used responsibly and effectively, these metrics provide an inside look into how companies should tackle complex challenges holding them back. Data takes the guesswork out of many HR functions, allowing HR teams to become subject matter experts trusted by the C-suite.

Now that you have a comprehensive guide to HR analytics, make sure to use this data to give your company’s culture a boost in the right direction.