HR Analytics: What are they and why you need them

Up until the last few years, HR was frequently viewed as an expense. Even people in HR truly accepted and believed that they were nothing more than an expense center. And the reason for this is simple—HR could not measure the value they were creating. All of their terminology was qualitative and anecdotal. However, with the advent of metrics, HR can now communicate in numerical, objective terms, utilizing figures to express activity and value added. Companies use numbers to define objectives and track progress. The main metrics used to measure business activity are sales, operational costs, time cycles, and production quantities.

The most exciting and promising stage of the evolution of human resources and human capital management is about to begin for businesses. Similar to mathematics, HR metrics are free of bias and relevant to a wide range of situations. They can be used to study specific, localized issues or to support organizational-wide changes. Like the source code of computer programs, statistics’ secret sauce is a hidden logic that can help HR advance gradually or quickly. And it all starts with collecting data.

Over the course of many months and years, a company gathers a staggering amount of information and data. Records to comply with labor rules include contracts, payroll, reports, cancellations, registrations, and records. To keep them secure, available, and updated, a document management system (DMS) offers the structure needed. This in turn allows HR leaders to tap into the available data for a deeper understanding of the nuts and bolts driving the company.

The most recent developments in analytical tools should be fully utilized, but many HR managers assert that they are too busy to make any changes. As a result, they consistently lag behind, incur additional operating costs, and assert that their worth is incalculable.

Reasons to use HR Analytics

Analyzing anything entails dismantling it to get a better understanding of it. A rational framework is needed to separate out the numerous factors that can affect human performance to solve organizational difficulties. The greatest assets a company can have is insight and foresight. Metrics can open the door.

There are five different ways to measure anything: cost, time, quantity, quality, and human response. Which metrics are priority depends on the company’s goals. Here are just some of the reasons why businesses need to consider HR metrics:

• HR analytics combines information from several sources, such as surveys and operations of various units to provide a coherent, actionable picture of the business.
• KPIs based on metrics can be defined as HR becomes more strategic and business aligned. It can be simpler for HR to adjust and advance by using HR analytics.
• Metrics can save the company money by lowering the costs associated with insufficient workforce planning such as overstaffing, understaffing, or hiring the wrong people.
• Develop a high-performing organization and improve the allocation of labor resources, compensation, and identify training gaps.
• Use what-if scenarios to forecast how planned changes will turn out (policies, compensation changes, additional shifts, etc.)

Types of HR Analytics

Descriptive, predictive, and prescriptive analytics are the three forms of HR analytics that each offers a distinctive viewpoint on the data belonging to your firm.

Predictive analytics

Predictive analytics are widely utilized in HR and recruitment to identify top achievers and identify employees who are most likely to depart. Additionally, it helpstalent acquisition teams decide whether a candidate would be a good cultural fit for the business before they recruit them.Applying predictive analysis allows HR to move away from depending on intuition and soft science and instead become a strategic partner that uses tested and data-driven prediction models. Predictive analytics for HR make it possible to foresee how people policies will affect wellbeing, happiness, and financial performance.

Descriptive analytics

Predictive analytics work to look forwards while descriptive analytics seek to look back. The fundamental sort of analytics is descriptive analytics. It involves taking historical information and distilling it into a digestible form. The same applies to more complex indicators like turnover rates or ‘time to fill’ for vacancies. These analytics make use of the past and seek to justify what has already occurred or offer a picture to determine how best to address issues within the organization. It would be highly reactive to only use descriptive analytics. HR should emphasize being proactive as it changes to meet business needs.

Prescriptive analytics

The second issue is what can be done about the future once it has been anticipated. Based on projections and past events, prescriptive analytics makes suggestions about what to do. For businesses that experience hectic or peak seasons, this analytical method can be quite helpful. How many employees should a retailer staff over the holidays? Or perhaps a park needs to know how many employees to hire for the summer. To correctly onboard a new worker, based on their abilities and strengths, and throughout the employee life cycle, prescriptive analytics may even be able to aid.

Getting to strategic analytics

HR has the potential to transform into a strategic business partner for enterprises, and all three metrics have the power to alter how HR operates. Understanding the data about the workforce can transform the company and its stakeholders for a well-planned future. Companies can search, save, and manage personnel data with our comprehensive KRIS HR Document Management System. When all your data is in one location, you can run reports and metrics to look for any recurring patterns that can have an impact on crucial business decisions. HR can take action to address potential problems that will result in long-term cost savings for your business.