Data Analytics for Human Resources

Posted by on Nov 5, 2013 | 0 comments

Data Analytics for Human ResourcesFor many organizations, labor is their single greatest tool for generating revenue — and their biggest cost.  With that kind of opportunity and money on the line, and because personnel decisions can be difficult to reverse, managers spend lots of time thinking about which employees to hire and how to keep them productive. Unfortunately, real measures of hiring success and productivity can be difficult to come by.  Even the best managers frequently must make personnel selection and management decisions based incomplete information, faulty assumptions and instinct.

This week, I’d like to spend a little time zeroing in on the questions organizations tend to have about their workforces – and how data analytics for human resources can help answer them.

Data Analytics for Human Resources Starts With Questions

Last week, I wrote that almost all analytics initiatives begin with good questions and human resources may be the area where this is most true.

Hiring employees is expensive. Paying them is more expensive. When employees leave unexpectedly, we want to know why. When they do well, we want to know how to repeat our success with others.

As a human resources leader, here are a few questions that may be on your mind:

  • What does it really cost us to hire an employee?
  • How much money do we really earn for each salary dollar we spend?
  • What is our attrition rate, and is it consistent across all parts of our organization?
  • What is causing our employees to leave?
  • Are our managers rating our employees consistently and fairly?
  • Are any positions or departments unprepared for succession?

The Answers Lie in HR Data You Probably Already Track

The good news is that the information required to answer those questions is often already recorded somewhere within your organization and managed by someone.

Even small organizations, at the very least, maintain lists of their employees and salaries within their accounting systems or in spreadsheets. Larger organizations often utilize specialized human resources software packages to manage their workforces, including recruitment, payroll and benefits administration. Mature organizations may formally track employee performance and satisfaction, sometimes using sophisticated surveys developed by personnel experts.

Here’s a quick list of the major types of human resources data organizations often collect:

  • Employees, demographics and tenure.
  • Jobs, skill requirements and salaries.
  • Job openings, applicants and hiring criteria.
  • Employee performance ratings.
  • Employee satisfaction surveys.
  • Employee benefits data.
  • Sales, revenue and profitability per employee.

Find Those Answers With the Right Analytics  Techniques

Once you’ve found the right questions and the data required to answer them,  it’s up to a good analyst to employ the right analytics techniques to find some actionable answers. Some of the techniques listed below can be executed by organizations staffed with curious managers who know how to create a basic spreadsheet.  Others require specialized skills.

All of can reduce uncertainty if applied properly:

  • Basic reports to track metrics such as employee headcount and benefits usage.
  • Dashboards that monitor key metrics such as attrition rate and detect when things are getting out of hand.
  • Cross system analysis combining accounting and workforce data to allow for calculations like profitability by employee.
  • Scientifically constructed studies and surveys to gauge employee satisfaction, performance and hiring criteria.
  • Advanced statistical analysis to determine what factors really drive important metrics such as profit.

Use Those Answers to Make Better HR Decisions

And as with most areas of your business, data analytics for human resources are most useful if they reduce management’s uncertainty to the point where the right course of action is clear.  Perhaps your bench depth is shallow in some job categories and you need to focus our hiring toward specific skill areas. Perhaps employees are consistently underrated – and forced to leave – by specific managers who should be replaced or retrained.

Smart use of analytics can help managers make the best use of limited resources and avoid over-investing in the wrong talent and under-supporting the workers delivering the most value to the organization.

Learn more about data analytics for human resources and other areas of your business from our new guide. Download it today:

Get the NEW Guide - What Can Data Analytics Do For Us?

DataClear is a Baton Rouge-based data analytics consulting firm. Contact us for a free 30-minute consultation and discover how your company can profit from data-driven decision making using tools that won’t break your budget.

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