The CIPD describes Human Resources Analytics as “the use of people-data in analytical processes to solve business problems”. But what does this mean?
HR analytics, in simple terms, is a way of collecting a bunch of information, and converting it in to a report which everyone understands! For example, you could collect data on the following:
- Absence Rates
- Employee Turnover
- Reasons for Absence
- Training cost per employee
- Employee engagement scores
- Probation period success rate
HR analytics involves beginning to combine data from these areas in order to produce something of value to the business. For example, you could begin to look at whether absence rates increase prior to employees exiting a business, or what type of absences are most common prior to exit. You could also investigate whether there is a link between employee engagement scores and average training costs spent on an employee.
It’s also important to point out the difference between standard analytics and predictive analytics. Standard analytics involves the use of historical data, and the interpretation of it to produce reports of what has happened in the past. Predictive analytics involves looking at this historical data, spotting trends, and trying to show what will happen in the future if these trends carry on. The financial markets have been doing this for years, so there are some sophisticated methods out there; however, these are now being used heavily within HR, and will shift HR as a ‘business necessity, but not a core function’, to a ‘intrinsic part of every business, which is the core driver of productivity’.
Another area we need to look at in HR, and surprisingly one which is often overlooked (which is interesting considering the area) is qualitative data. Qualitative data is the opposite to quantitative data which is simply numbers. Qualitative data is usually words and text, whether spoken or written, and can be analysed for trends. This is often more difficult than numbers, but if you think of a word cloud, you will get the picture.
Why would I use HR analytics?
HR analytics will be considered a ‘fad’ by some at the moment. Although the term itself may be misplaced or misused from time-to-time, the principals of trying to use data to drive business decisions (whether through standard or predictive analytics) remains an effective method, and some key statistics can be found around this:
- Analytics returns £13.01 for every pound spent
- HR analytical maturity is directly linked to HR reporting outcomes
- Only 9% of senior executives have confidence in their HR data
- 20% of HR teams lack data analytics skills which are needed to produce relevant reports.
Producing HR analytics data can allow you to drive a more informed decision-making process. Have you ever heard of the HiPPO – The Highest Paid Persons Opinion? This is a tendency for lower paid employees to be ignored when decisions are being made, as opinion only counts.
If you want to make an informed decision, in which all opinions are considered equally, then you need data to back-up what you’re saying. This is where HR analytics really comes in to its own, when any member of a HR team (internal or external) can present a relevant case regarding people to senior decision makers. This can truly help shape an organisation.
So, if you can get hold of this data, what sort of cases would you want to present?
This is what we always regard as a great first step when delving in to HR and Workforce analytics. Simply find a method to start talking to your employees. This could simply be your own annual survey and starting to track trends from it. You could consider breaking this down in to quarterly (or even monthly) surveys with this being such a critical part of the company; can you really afford to only track change once a year? Also, you can begin to look at software tools as a way of interfacing regularly with your employees.
Mental Health and Wellbeing
Once you’ve engaged your employees, it’s important you then set the precedent that you’re looking after them! Most employee engagement tools (manual or automated) will contact your employees and gather data, but it is up to you to then do something about this. You can begin to gather insights into the general mental health and wellbeing of staff and begin to support them. Be careful though, don’t think that just responding with a ‘one-size-fits-all’ approach will work, as this can waste time and budget. Make sure you track the correct data and go with a strategic approach (see below if you’d like help on this!).
After you’ve engaged with your employees, you could begin to look at ways of monitoring performance based on data sets. This obviously gets in to areas which can become a bit ‘big brother’, so be careful about you go about this. Have a look in to productivity tools, and ways of using data you already have.
Workforce planning begins to move more in to the predictive analytics side of things but is incredibly useful. On analysing your previous trends, can you begin to detect where there will be gaps in knowledge, or where there will be strain on certain areas of the business? This may connect in with your health and wellbeing systems, to provide you with additional insights!
How do I get started?
We would always recommend that the first thing you need to do is to speak to your employees! The best way to do this is to start with an employee engagement tool. This could be a software or a manual process through sending out surveys, which will begin to provide you with data.
Once you have completed this, you’ll probably find that a natural progression is to begin looking at the Mental Health and Wellbeing of your staff. Generally, when companies do this, they tend to think there is a ‘one-size-fits-all’ approach. The issue here is that there is no strategy, and this can end up costing a lot of money to pay for all staff to do the same activities.
The first thing you realistically want to achieve, is to begin tracking some basic metrics, in order to calculate the ROI of your program. There are a range of predictive analytics tools which can help you achieve this. This will allow you to start building out your mental health & wellbeing strategy. To help you get started with this, we've created an organisational wellness ROI calculator, which you can download here:
Alternatively, Click here: Wellness ROI Calculator
If you would like to get data back around this area, and think strategically about what you are doing, then try out our Mental Health and Wellbeing Platform, Lumien. It has a free trial which will allow you to get some initial HR Analytics back and get you up and running!