Since 2015, there has been a 242% increase in HR and hiring professionals listing data analysis among their skills on LinkedIn. But while 73% of companies say it will be a priority over the next 5 years, more than half of companies still require help with even basic HR analytics, starting with understanding exactly what it means.
People Analytics, Workforce Analytics and HR Analytics have become buzzwords in HR and they all refer to the same thing—but what is that exactly and how does it differ from regular HR reporting? Here’s what all HR professionals need to know.
The problem with buzzwords is that they are easily misused. All too often traditional HR reporting is described as analytics just because it sounds more exciting. While reporting is about keeping track of metrics, analytics focuses on the bigger picture, making sense of complex patterns and helping drive better business decisions. Reporting is about the what; analytics is about the why.
Reporting is still important, but analytics provides the opportunity to do more with your data. Not too much though—successful use of analytics means picking out the signals that matter, rather than having to wade through the noise.
Analytics is Dynamic
The limitation of human resource reporting is that it only provides a summary of what has already happened or what is currently happening but not what will happen in the future. Reporting tells you what you know you need to know, but not what you didn’t know you needed to know.
That’s what makes human capital analytics special: you can spot trends, capture complex patterns and identify unexpected correlations. This allows you to see how different elements of HR strategy intersect, discover what really drives high employee performance and to not only spot problems but to identify possible causes and immediately seek solutions.
Essentially, it provides you with the necessary tools to make better business decisions.
The Uses of HR Analytics Are Endless
Analytics can be applied to any sector of a business, but in HR it’s particularly useful because there’s so much that traditional reporting just doesn’t spot. As any HR professional knows, people (and how companies treat their people) affect business success in many ways that metrics miss.
With HR Analytics you can:
- Truly understand what drives employee retention, predict the risk of voluntary exits and take steps to lower turnover rates
- Find the winning characteristics powering your fastest-rising employees and discover the hidden dynamics holding back employees from certain backgrounds
- Monitor the engagement and pay rates of different employee groups to establish whether all minorities are being treated fairly
- Correlate rewards with performance to assess the effectiveness of your compensation strategy
- Analyze employee movement between departments to prevent against brain drain and ensure adequate succession coverage
- Evaluate HR staffing levels and how efficiently they contribute to positive employee outcomes
It’s All About Where the Data Comes From
Often the most challenging part of HR analytics is just getting to the stage where it’s possible at all. Here’s the issue: traditional reporting means collecting information from systems designed for other purposes. Payroll reports come from your payroll system, while new hire reports may come from your LMS system, and so on. You run lots of different reports all from information stored in different places.
HR Analytics requires a system designed for analysis, combining all relevant HR information about employees. To achieve this, data from these various sources may need to be manipulated and transformed into compatible metrics. Uniting all these different information sources provides the potential for unlimited new insights into how your business actually operates.
HR Analytics is Getting Easier All the Time
Powerful analytics requires a lot of data but also a lot of computing power—this isn’t something that can be done on a simple spreadsheet. And until recently it would’ve required a team of experienced data analysts and definitely been beyond HR “teams of one”.
So, companies have been sitting on a goldmine of HR data, without the tools to make the most of it. Now, with increased cloud computing power and analytics software—designed specifically to unite disparate data sources into to one accessible package—it’s possible for all companies to engage in HR analytics even if they can’t afford a dedicated HR analyst.
This gives even the smallest HR team the knowledge required to understand their business more fully than ever before and the confidence to drive better-informed strategies which improve employee experience, productivity and business success.
Paycor Analytics Can Help
Paycor provides HR leaders with the HCM technology and expertise to get out of the weeds, solve problems and grow their businesses. With Paycor Analytics, HR leaders are empowered to make better decisions that drive growth. To learn more, check out the features and functionality of our analytics software.