As shared by Research and Markets in a recent report, Global HR Analytics Market will be worth $3 Bn by 2025.
Often replaced with terms like People Analytics, Talent Analytics and Workforce Analytics, HR Analytics is a broader umbrella that encompasses data-driven people decisions. In other words, HR Analytics refers to using statistics and data-modelling to analyze employee data and drawing relevant insights enabling People Managers to create people strategies that drive business outcomes. The data gathered can range from demographic data, remuneration, performance levels, engagement levels gathered through surveys and more. The basic purpose of consolidating data is to be able to identify patterns, if any, and design people related strategies supported by data that can be aligned to business goals. Analytics can be used to design strategies across multiple focus areas like:
- Talent Acquisition
- Predictive Analytics
- Performance Management
- Learning & Development
- Identifying HIPO
- Tracking success of initiatives like wellness programs
To think about it, with the advent of HR Analytics the term “Human Resources” has found the resource to its human, in analytics. While one might think that HR Analytics emerged as a tool for Human Resources in the last couple of years, one might be wrong. The term may have been coined later, however, the emphasis on HR Analytics goes way back to the latter part of the 1700s, during the Industrial Revolution. Moving to 1900s, Frederick Winslow Taylor’s scientific methodology covers everything that we today understand as HR Analytics. Taylor’s methodology laid the grounds to apply scientific management principles to workforce planning in line with the business goal to improve production. These principles enabled supervisors to scientifically select, train and develop each employee, in line with the business goal to improve production.
With internet conquering the world in the late 90s, data sharing became a concept like never before. Internet made data more accessible, and a lot easier to share and analyze. In the recent years with AI, Machine Learning, and other technologies coming up, the purpose and use of data has been disrupted again. From mere information to being a source for predictions. Today HR Analytics helps HR and business leaders predict outcomes, individual performance, engagement levels along with providing relevant insights on how certain factors in the culture correlate with each other, for example reasons of exits along with demographics can enable an organization to predict high risk employees with similar concerns. Another instance could be assessing engagement levels through surveys and identifying problem areas for employees, measures can then be taken to strategize and implement corrective practices. Some basics to remember while gathering data and analyzing it are:
- Ask the right question
- Select relevant data
- Clean data as per purpose
- Analyze using the right tools
- Draw actionable insights
Breaking down HR Analytics
While it has been established that HR Analytics provide data-based insights to HR and business leaders enabling better decision- making, the nature of this data differs basis the business need it is being utilized for. Addressing specific goals, HR Analytics can broadly be broken down as follows:
Workforce Analytics: This refers to behavior-based data that helps discover existing trends as well as predict future possibilities in areas like recruiting right talent (behavioural fit), designing strategies on how to control/reduce attrition based on past exits, future workforce planning, improving employee experience, etc.
Capability Analytics: Highlight gaps with respect to desired competencies within the organization, assess ability to develop new skills based on past performance data and help in deciding whether the organization needs to invest in upskilling existing talent or hire new talent with the needed competencies.
Performance Analytics: Often performance is evaluated on feedback received at the end of the year or bi-annually and growth areas are recommended which take another six months to show results. With the help of performance analytics, supervisors can track individual performance of every member of the team at regular intervals and identify top performing employees vs. slow performers who might need additional guidance.
Talent Analytics: Talent Analytics if utilized to its full potential can help HR leaders drive business outcomes by hiring, retaining, developing the right talent based on both cognitive and behavioural abilities, overlapping to an extent with workforce analytics. Using analytics, leaders can also anticipate whether an employee is likely to continue or drop out, succeed or fail, stay motivated or lose interest.
Culture Analytics: Culture is a key reason why an individual chooses to continue their employment despite being unhappy with other factors such as salary, supervisor, commute time, etc. With the rising focus on initiatives such as diversity and inclusion, it is crucial to refer to culture analytics to track progress, willingness to accept and current state of mind of employees.
Leadership Analytics: Mediocre or poor leadership is a major barrier in achieving desired business results. Lack of good leadership fosters a culture of uncertainty, demotivates employees and triggers employees to leave an organization. Data for leadership analytics can be collected through anonymous surveys, focus groups as well as one-on-one meetings with employees.
Technology as renewed foundation of HR Analytics
There was a time when companies relied purely on employee files to keep track of data. Gradually they moved on to tracking employee information on desktops, moved on to Microsoft Office. While Microsoft Excel has been the soul custodian of large volumes of employee data for a long time, technologies today have disrupted record management making records a warehouse for decision-making. With the advent of R Studio, Python and other disruptive technologies in the likes of Artificial Intelligence, Machine Learning, Blockchain, etc, decision-makers are now empowered with large volumes of reliable data to construct impactful people strategies.
There was also a time, not very long ago, when employees would wait an entire year for their annual performance review to share their concerns, roadblocks, aspirations. With the emphasis on regular performance feedback along with the development of tools that provide a platform to employees to regularly track growth and improvement areas, employers can now assess the pulse of the organization based on work and culture in real-time.
From the job perspective, there is a cross-functional change happening. While there are companies that are investing in the upskilling of HR professionals in analytics, there are also courses targeted towards analytics’ specialists to acquire HR domain knowledge. However, there is a huge difference in the payout in both these circumstances.
Future of HR Analytics
Where there are people there is data, and where there is data there is an opportunity.
As per a recent report by Research and Markets, Global HR Analytics Market is growing annually at a rate of 13.6 percent CAGR. It is expected that by the year 2025, the market will be worth $3.9 Bn. This at a time when HR Tech is building up as a focus area for corporations, entrepreneurs and investors. Convergence of the two will help the HR function bring about a shift in the mindset from HR being the cost center to HR becoming the innovative center. With the common perception of HR being responsible for hiring, firing and appraisals, adoption of HR Analytics and making effective use of the insights generated will elevate the positioning of HR as a function and reward HR with credibility.
It is a myth that HR Analytics is cost effective only for large corporations. In fact, given the frequency of people issues faced by SMEs and startups, such predictive analytics will facilitate better and quicker strategizing, planning and implementing for companies with lesser headcount. Tracking data regularly be it for performance analysis, recruitment strategies, predictive analytics or other HR delivery areas is relevant for every establishment that is impacted by human presence and performance.
Smarter decisions made possible with the help of HR Analytics and the latest technologies are redefining the future of work and people. Are you ready?