The Sunday Mail
HR analytics is an emerging field in HR. HR analytics refers to the process of getting business insights from HR data. I firmly believe that looking at the profession’s future, no HR department will be able to give maximum value without an HR analytics professional within their team. Here are my reasons for that proposition:
- HR analytics provide the best chance for HR to be on par with other more business-oriented professions like finance and sales. With HR analytics, HR will link HR practices and business outcomes.
- To succeed in HR analytics, you need a person with above average quantitative reasoning. There are two options to address this; one is to train HR professionals with enough interest and capability to do HR analytics for your organisation. The second option, which is likely unpopular with HR professionals but viable, is to hire people with statistics, applied math or a research-oriented degree. These people could come in as graduate trainees and then graduate into full analytics. As part of their traineeship, they should understand the business and core HR process. However, in cases where HR has people with HR training who have the necessary numerical reasoning to transition to HR Analytics, they could take that route easily.
- With HR analytics, you would be able to do workforce planning and predict the number of people you require for the business both in the short and long term with a high degree of accuracy. When combined with optimisation, you would be able even to know the optimal staff cost for the business, now and in the projected future. That is a big win for HR if they could embrace HR analytics.
- HR analytics enables HR departments to check the effectiveness of training programs using t-tests to look at the before and after data. For example, are there any sales differences between a group that has gone through sales training and a group that has not? With HR analytics, it is easy to check for those statistical differences.
- With HR analytics, you can also predict staff turnover with a degree of accuracy. Besides the ability to predict turnover, the prediction models can identify the factors that drive turnover. You would use several internal factors and demographic variables to predict who is likely to leave the organisation and when. This should allow HR professionals and business leaders to put together interventions to reduce staff turnover.
- Using HR analytics, you would be able to do compensation analytics. You would be able to calculate compa-ratios, range penetration etc. and link these to the performance of employees and staff turnover. You can also use compensation analytics to predict staff turnover.
- There is also scope to do performance analytics. Under the performance analytics, you would be able to dig deeper into HR and business data and find out which factors predict the performance of departments and business units. As an example, does the level of education of managers or employees in the department predict the department’s overall performance? What internal factors seem to drive sales in the department or business unit performance? All of this can be done easily with HR analytics. Imagine the value you will give to the business as HR professionals embrace HR analytics.
- You could also do recruitment analytics. These could be interview ratings, reference check ratings and performance on psychometrics. These can all be linked to employee performance records. Under this, you dig deeper into what factors predict top performances by looking at your organisation’s historical records.
- One of the great opportunities created by HR analytics practices is linking your employee engagement data to actual business outcomes. Suppose you have been collecting and tracking employee engagement data over time. In that case, you can easily link this data to actual business indicators like sales, market share, staff costs, turnover, and many other business outcomes. This will allow you to then come up with interventions to improve the performance of the business.
There are many more human resources practices where HR analytics could be applied. You need to have the skills internally to do the above analysis.
Memory Nguwi is an occupational psychologist, data scientist, speaker, & managing consultant- Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm. https://www.thehumancapitalhub.com email: [email protected] or visit our website at www.ipcconsultants.com
