The field of human resources management has changed dramatically over time, and continues to rapidly evolve each and every day. While HR professionals are still focused primarily on the “human” aspects of running an organization, they have also become increasingly reliant on technology and data that, just a decade ago, didn’t even exist.
The emergence of this data—and the influence it holds over HR processes—has given rise to a new term and discipline: human resources analytics. Here, we explore what HR analytics entails and the critical role it is playing in the field of human resources management.
What is HR Analytics?
“Human resources analytics falls within the realm of digital HR,” says Tom Penque, lecturer for the Master of Science in Human Resources Management program at Northeastern University. “As HR technologies and platforms evolve, there is more information [available for us to] capture electronically. HR analytics is about the different ways that we capture, measure, and organize that information to create valuable insights for an organization.”
Due to the proliferation of this data, data-driven decision making has become a standard component of many human resources processes. The reasoning is simple: Access to numbers that can back up decisions regarding recruitment, employee performance, quality of human resource software, and other areas of HR, can often lead to improved business strategies.
Keep in Mind: While human resources analytics is also sometimes known as “people analytics,” “talent analytics,” and “workforce analytics,” it is important to remember that these terms refer to more specific sets of data that are used within the larger HR analytics discipline.
How is HR Analytics Used?
In order to remain successful and competitive, all businesses and organizations must be capable of changing, growing, and evolving to meet the new challenges and realities that they face. This is true for every department within an organization, including human resources. HR analytics can be leveraged in order to create an iterative framework for making these necessary refinements as they become apparent.
As a discipline, HR analytics is generally used to understand and address specific challenges that an organization’s human resources department is facing—for example, to answer questions like why there has been a sudden spike in employees who quit after their two-year anniversary, or why the quality of applications has fallen in recent months.
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Though the challenges themselves are specific, the way in which HR analytics is leveraged is typically the same regardless of these specifics. Most often, this data is leveraged to:
- Establish a benchmark of current performance so that the HR professional understands where their organization currently stands on the metrics that are most important to it.
- Make observations and draw conclusions from this benchmark in order to hypothesize potential solutions to the challenges being faced.
- Implement a change in process that is specifically designed to test the validity of that hypothesis.
- Monitor results so that the impact of the change can be measured, understood, and either rolled back (in the case of a failure) or embraced and rolled out to additional processes as appropriate (in the case of success).
The Impact of Analytics on HR
As the general economy and HR industry continue to change to meet the demands of the digital era, those looking to create a future in HR will need to expand their skill sets and prepare to wear many hats within their roles. HR professionals must be capable of analyzing data and drawing valuable insights, that they can leverage to help an organization meet its strategic goals.
Below we explore the three areas of an HR professional’s work most positively impacted by HR analytics.
1. Performance and Efficiency
Many organizations measure the success of human resources activities and processes by overall performance and efficiency. Tracking metrics can offer valuable insights into how well certain processes are performing.
For Example: As an HR professional, you might track the retention rate of new hires by source. Over time, as you collect this data, you may come to realize that certain sources (such as internal referrals) lead to much higher retention rates compared to other sources (such as LinkedIn postings). Armed with this knowledge, you might then reorganize your workflows to prioritize internal referrals over poorer performing channels, knowing that this is likely to make you more efficient during the hiring process.
Other commonly-tracked metrics that can be used in similar ways include hiring duration, hiring effectiveness, applications and hired by sources, applicants per opening, offer acceptance rates, and employee satisfaction rates, amongst others.
Using data to understand how your processes and workflows are performing will enable you to think critically about how to deploy your resources so that you can focus on the areas that will lead to the greatest overall impact.
2. Recruitment and Hiring Processes
Filling open positions within an organization is often a costly endeavor, both in terms of time and money. According to the 2017 Talent Acquisition Benchmarking Report compiled by the Society for Human Resource Management (SHRM), it takes businesses an average of 36 days to fill an open position, to the cost of nearly $4,500 per hire. For this reason, taking the time to improve a company’s recruitment and hiring processes via data analytics can lead to significant savings.
In this scenario, data can help HR professionals better understand who would be the best fit for both a specific role and with the company’s overall workplace culture. By getting a hire “right” the first time around, HR professionals can spend more of their time focusing on employee retention, and less time replacing a hire who didn’t work out.
Exit interviews, employee satisfaction surveys, team assessments, and quarterly/annual reviews can all offer valuable insights as to which applicants are most likely to thrive within an organization. Similarly, data collected throughout the hiring process can be leveraged to craft better benefits packages and offers, reduce friction, and achieve other positive results.
It is worth noting that although the benchmarks identified above are accurate across industries, an individual organization’s average time to hire and average cost of hire will naturally vary. By leveraging data to understand the true cost of each hire for your organization, it will be easier to prioritize areas of improvement.
3. Employee Experience
Human resources managers do more than sift through applications to fill open positions. They also monitor the employee experience and take steps to improve it, because happy employees tend to be more engaged. This engagement can result in higher productivity, greater retention, and higher levels of success overall.
By monitoring metrics like employee attendance, productivity, and engagement, HR professionals can gain a greater understanding of the overall employee experience. This understanding can help HR determine where the organization shines and where there is room for improvement. Compensation, benefits, vacation policies, and professional training and development opportunities can all be optimized based on these insights.
“It’s not just about recruiting, but about retaining, motivating, and developing strong employees as well,” Penque says. “What HR analytics comes down to is being able to…use all of this information to improve the organization and its people.”
Adapting to the Changing HR Landscape
Measuring HR analytics and turning that data into strategy can help an organization save money, free up time for other tasks, and create a happier company culture. Whether you currently work in the field of human resources and wish to advance, or you’re just starting, embracing HR analytics and becoming more data-driven in your approach can help.
To do this, HR professionals should consider pursuing a master’s degree in human resources management. Top universities like Northeastern have developed their curriculum to include “the topics that are critical to being a modern-day HR professional,” Penque says, listing digital HR and HR analytics among them.
Alongside the development of these tailored skill sets, students who embark on the master’s in HRM program will have the opportunity to declare a concentration in a niche area of the industry, including:
- Artificial Intelligence for Human Resources
- Digital HR
- Global Talent Management
- Organizational Communication
- Project Management
The pursuit of a tailored degree is only one of the many benefits of Northeastern’s program, however. Students who pursue this degree are given the opportunity to learn from industry-leading faculty, network with the thousands of classmates, professors, and alumni within Northeastern’s global network, and apply the skills learned in the classroom hands-on through experiential learning.
Learn how a Master’s in Human Resources Management at Northeastern can prepare you to advance your career today.