HR Analytics are a Driving Force in Recruitment, Retention and Productivity

April 3, 2017

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A growing number of organizations are crunching numbers to improve their bottom line.

When the vice president of human resources realized the headcount at his manufacturing company was too high for the output they were producing, he turned to HR and data analytics expert Tracey Smith.

The HR data she collected from the manufacturing company was telling. Turns out, she said, that several job functions that were directly related to driving the business’ workload had become less efficient over time.

“With the high cost of employee benefits, especially health care, additional analytics showed that the cost of this company’s workforce would rise faster than their revenue projection, eventually sending this profitable company into the red,” said Smith, president of data analytics consulting firm Numerical Insights. “Using HR Analytics allowed this company to identify where it had too much headcount.”

The company chose to reduce its workforce numbers through attrition in those specific areas. The savings to that manufacturing company? About $10 million.

Data analytics in human resources matter more to an organization’s bottom line than ever before. While people skills are still a top priority for human resources managers, a rapidly increasing number of businesses and non-profits are crunching numbers to assess everything from talent acquisition and retention to productivity to job structure. The move toward analytics is saving them an impressive amount of money.

Smith, who was named as one of the top 15 HR and people analytics experts to follow in 2017, has advised major national and international organizations such as Adidas, FedEx and Goodwill and she has seen the rise of data analytics over the last several years.

“The entry of data analytics into HR is one of HR’s greatest opportunities to modernize the function and raise its level of value,” Smith said. “We often speak of migrating HR from its historically tactical function within a business to being a strategic function.”

And while companies used to outsource data analytics as a rule, many are now handing over the reins to trained HR managers and personnel to get it done in-house. That means human resource managers are getting a seat at the table when it comes to planning and implementing major business decisions, and analytics is a major asset in helping a human resources department steer the ship.

The amount of data a company can collect to improve performance and output seemingly knows no bounds. A growing number of companies are now digging even deeper into analyzing data surrounding its employees, their performance and their wellbeing.

People analytics was named as a top trend in Deloitte’s 2017 Human Capital Trends report, with 71 percent of companies surveyed saying people analytics is a high priority.

Analytics experts and HR managers are using data to study employees’ behavior, how they use their time, patterns of overtime, what makes them stay at their job, how many hours they bill and at what times, even how people relate to each other at work — all in an effort to understand their workforce performance and production.

Retention and recruitment is a top priority for all businesses and organizations and one that is often heavily targeted for analytics.

Smith said she used both existing data and collected new data when a large, global technology company hired her to help it keep the specialized talent that was being poached by competitors.

But with more than 10,000 employees, the company wasn’t sure where it should be focusing its retention efforts.

“They needed a way to focus,” Smith said. “An analytic study revealed three specific job roles that were being targeted and exactly the level of experience being targeted. This allowed HR to focus its efforts on retention in very specific areas.”

People analytics can start before a person is even hired. Some companies have turned to HR analytics tools such as artificial intelligence software that can analyze a video of a prospective employee interview to judge values such as honesty and personality.

The Deloitte report referenced a large telecommunications company in India that used data analytics to streamline the new hire process in hopes of getting new employees up to speed as quickly as possible.

The company, Deloitte reported, “analyzes the time to productivity of every new hire across the company, giving line managers and corporate leaders a dashboard to note when people are behind in their onboarding process.”

For all the talk of the importance of data, it is important to remember that numbers are simply that, and it takes skill and an open mind to analyze those numbers in a way that will provide meaningful change for both the company and its employees.

“A successful HR department understands its business, understands its people challenges and aligns its analytics and technology initiatives to those challenges. A successful HR department is capable of independent thought and does not follow what everyone else is doing,” Smith said. “A successful HR department recognizes the need for multiple techniques and tools in combination with business acumen in order to obtain value from analytics. Technology solutions alone will not make an HR department successful.”

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