What is HR Analytics? Metrics and Examples (+Infographic)

If you’re in HR, being data-driven is not an option, it’s a must. With the increased difficulty of finding top talent, the high cost of hiring and the abundance of hiring tools in the market, knowing what drives results and how much it costs is crucial.

This is where HR analytics comes in as the hiring manager’s ultimate tool. Today, we’re going to show you:

• How HR analytics works
• The steps you need to take to get started with HR analytics
• An infographic with the most common HR analytics pain points

What is HR analytics?

HR analytics (also called talent analytics, people analytics, or workforce analytics) is the process of gathering, analyzing and reporting on human resources data. Human resource teams and businesses use this data to analyze their current HR efforts, find places for improvement, and guide their decision-making.

With the massively growing amount of HR data that companies work with, HR analytics is becoming an indispensable part of business operations. From improving the employee experience to forecasting future hiring needs, it helps with a variety of problems.

By implementing HR analytics, you can not only analyze your current performance but also do predictive analytics. And thanks to data visualization as a part of the analytics process, the HR department can quickly see their most important KPIs and metrics in context and make decisions based on data - not gut feeling.

How does HR analytics work?

On the same principle as any data analytics, really. These are the steps typically involved in the HR analytics process.

1. The data is collected from a variety of HR tools. These can be ATS tools, skills assessment apps, talent management tools, employee performance tools and others.
2. The data from different data sources is put in one place in the form of different HR metrics. This can be a database, data lake, data warehouse or something similar.
3. The data is visualized in the tool of your choice so you can see the different metrics in context and drive new insights to influence your business decisions.

For example, you use an ATS for your new hiring campaign and pull the data on different candidates to your data warehouse. The metrics can include: the number of applicants, source of hire, time to fill, time to hire, offer acceptance rate, time in process step and others.

Once the data is visualized in a tool such as Luzmo, you can explore your data to find the following insights:

• Which sources produce the best candidates
• Which steps in your hiring process take the longest
• How long it takes you to fill a position on average

In short, HR analytics gives HR professionals important answers on questions that can guide future business outcomes.

Pros and cons of HR analytics

HR teams can benefit from having a more data-based approach to their day-to-day operations. However, it’s important to keep some of the downsides in mind too.

Pros:

• Allows for more data-driven hiring and HR operations, from existing employees to new hires
• Helps companies improve retention, employee engagement and employee productivity by having access to important data in real time
• Companies can reduce their hiring costs and important metrics such as time to fill a position, based on the data analysis of the hiring process
• Once companies collect data, they can use it for predictive analytics and better prepare for their future hiring needs and initiatives

Cons:

• Most companies don’t have the necessary data analytics experts on their team to see this process through from start to finish
• It can be difficult to collect data and aggregate it in one place, especially if you use a variety of different HR tools
• Visualizing HR data can be challenging if you don’t know what types of visualizations to choose and for what goal

Examples of HR analytics at use in human resource management

Here are some ways you can benefit from HR analytics and data automation in the workforce.

Improved quality of hire

You add the different hiring sources to your HR analytics tool, such as LinkedIn, job boards, Facebook ads, and others. The candidates then do a skills test so you can determine if they’re capable of doing the job. 

You put the data in one place and compare the source of candidates with their test scores. Within moments, you can find out which sources produce the best candidates. This can help you make better decisions around talent acquisition.

Reduced employee turnover

A major part of workforce planning is working on retention and reducing the turnover rate. This is one of the key metrics in human resources analytics. There are many aspects to turnover: poor onboarding, poor management, and so on.

You can set up regular employee surveys to determine who is engaged and satisfied in the workplace and rate their manager well. If you see these metrics dropping over time across data sets, you can fairly accurately predict who is likely to leave your team, and take action as you see fit.

Reduced absenteeism

By combining the data from your time tracking apps, payroll apps, project management and other tools, you can see who is clocking in the most hours and who is frequently absent. 

HR leaders can put all of this big data in one place correlate absenteeism and productivity and very quickly find out who the top performers are and who is just skating by. You can also determine who could upskill to become more productive and who is ready to move to another role.

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This allows your key stakeholders to improve business performance and add to the bottom line. You’ll also have a better idea of which type of employees not to hire in the future.

HR analytics adds value to any business

Staying on top of your HR analytics metrics does not mean just monitoring your human capital and better performance management. It can give you valuable insights that will affect your entire business. And if you’re looking to build HR analytics dashboards - we can help!

With Luzmo, build your next HR analytics dashboards in hours, not days or weeks. Grab your free trial and get started today!

HR analytics infographic

With this infographic, we wanted to show you that HR professionals need data analytics to drive more insights and make better decisions. If you have a SaaS product in the HR space, data analytics can add immense value to your end-users.

Interested to learn more about adding end-user analytics to your HR platform? Book a demo with one of our team members today!