A successful company not only knows that its greatest asset is its human capital, it also realizes that understanding this key resource is the best way to gain a competitive edge. This is easier said than done. While many might knows the ‘What,’ only a few know the ‘How’ of leveraging human capital for business success.
This is where HR analytics comes to the rescue. It offers effective tools to not just gather human resource data but also to analyze it, such that the company can build initiatives to make the most of this valuable resource. And, this is irrespective of the size or nature of your business.
Evidence in Support of HR Analytics
And, who do you think understood the value of HR analytics before the rest of the world? Google, of course. It had launched Project Oxygen way back in 2008, in an “effort to determine what makes a manager great at Google.” The company has effectively used this initiative to analyze internal company data and identify eight behaviors that characterizes effective managers.
Microsoft, on the other hand, analyzed data to identify employees at the highest risk of leaving the company. Data analytics highlighted specific risk factors, which the company then used to create HR interventions that focused on these factors. They started with two business units that had witnessed high attrition. The good news is that the data-based interventions were able to cut down the attrition rate by more than half for each unit.
HR Analytics and HR tech are the new buzz words in the industry.. Businesses are increasingly accepting the need to not just better understand employees but to identify key initiatives that will enhance business outcomes.
What Areas of Business Performance can HR Analytics Impact?
Deloitte’s Global Human Capital Trends 2016 report revealed that 77% of executives give key priority to HR analytics, with companies “rapidly” replacing their legacy HR systems with analytics teams, converting HR into a “strategic function.” In addition, 44% of the organizations surveyed were already using people data to predict business performance. HR analytics offers the HR professional the means to optimize investments in talent within the organization while being able to monitor productivity, engagement, recruitment, accountability, retention and more.
Some of the key areas in which HR analytics proves immensely useful are:
- Recruitment Efficiency: Identifying the right candidate for a job.
- Succession Planning: Identifying employees who can be nurtured to take on larger, more important roles within the organization.
- Retention: Identifying top-performing employees at risk of leaving the company in the near future, as well as factors that increase risk and those that can help retain them.
- Staffing: Identifying under-staffed and over-staffed departments to optimize the use of human capital.
- Skill Gaps: Determining any gaps in talent, leadership or skills that are likely to arise in the near future.
- Evaluation of Initiatives: Incentive programs, training programs, etc. can be analyzed to see what worked and what needs tweaking for better results.
- Growth Plans: To expand into new territories, product/service categories or even adopting new tech solutions, businesses need to identify training needs and then formulate programs to address these needs.
The biggest contribution that HR analytics makes is to the area of acquisition and retention of talent. Replacing employees is the single most expensive task that any HR department has to focus on. If analytics can help identify factors that can lower the risk of attrition, increase engagement and, therefore, help retain talent, it will definitely reflect on the bottom line, sooner rather than later.
In fact, analytics can help identify the best areas in which to invest to enhance employee and business performance.
Future of HR Analytics
With companies all across the world recognizing the value of HR analytics, here’s what we can expect:
- In 2019 and beyond, businesses are expected to partner with both internal and external providers of HR analytics to enhance internal capabilities, fostering greater understanding of the applications of such analytics.
- Companies will also start to think beyond employee feedback and surveys as tools to evaluate employee sentiment. Contextual and targeted analytics will help bring greater focus to monitoring and tracking aspects such as engagement, retention, productivity, motivation and more.
- Businesses will also increase focus on continuous learning to ensure agile response to technological advancements. This is where artificial intelligence, machine learning and other technology solutions will help customize HR analytics to adapt to the rapidly changing business environment of today.
And, when it comes to driving skill growth, an AI-powered learning experience platform (LXP) can help offer a customized learning experience, based on the learner’s preferences, pace of learning and past qualifications. The content can be designed to suit the user’s expectations, aspirations and life patterns. This is much more useful than a static, closed training program that numerous corporations still use. An AI-powered LXP sustains employee interest, ensuring that they complete their training on time. LXPs also allow employees to create their own content and share it with others in the organization.
ConAgra Foods’ experience with HR analytics revealed that salary wasn’t among the top 10 factors that drove employee retention. Other factors, such as internal recognition and opportunities for growth, were much more valued.
In short, businesses that base their workforce decisions on HR analytics will not just see better outcomes, they are likely to gain an edge over the competition.
Author Byline:
Harish Agrawal is the Director and Global Head of Products at Magic EdTech. Harish is passionate about discussing the ways in which technological advances are revolutionizing how we work and live. This holds especially true for HR analytics, which has helped businesses connect with employees in a better way than ever before. The most recent tech solution that Harish has been a part of is KEA, a learning experience platform that uses machine learning and HR analytics to improve engagement.