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HR Analytics

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“I want HR analytics for my HR department!” In my experience of consulting to clients at various stages of analytics maturity, across different industries in different countries, I have noticed that on a strategic level very few organisations are really implementing HR BI, never mind HR analytics. These are typically the organisations that have realised that their people are actually their biggest asset. How do we get the CIO and/or the CDO on board?

You have probably all seen this joke:

CFO: What happens if we (spend money to) train all our people and they leave?

HR director: What happens if don’t train them, and they stay?

In many organisations the HR department usually fully gets this. They know they can use HR analytics to improve the hiring of “good” or more suitable candidates, to retain “good” staff, to improve staff availability and scheduling, succession planning, team composition, and the list carries on. Their challenge is that HR-related BI and Analytics projects are usually low down on the business priorities list, and they tend to stay down there as new business initiatives always seem to get higher priorities than the HR projects that have been waiting in the queue since when.

The exception is when the executive team realise, or are advised by consultants, that the staff compliment needs to be managed at a higher priority, or that staff availability and succession is a serious business risk. That is when business transformation initiatives include HR to reduce risk or keep ahead of the competition, and sometimes these initiatives require HR BI and analytics to be effective.

While I believe that analytics can certainly assist in the above and so much more, there are, however, some businesses, and more specifically, some HR departments, that don’t fully understand the need for analytics on the workforce – and they can easily shy away from the concept. I mean, they have been managing well without HR BI, never mind HR analytics, since time eternal. In a few cases, the HR department itself is not ready to embrace analytical insights in order to implement analytical-driven action to improve the HR function.

For the CIO / CDO wanting to implement analytics in HR, it is important to stress to the HR team that they are not expected to become data experts and that analytics is not aimed at replacing the HR function. Rather, analytics will be used to find the best candidate for the job and therefore achieve better hiring decisions (and in a timely manner), determine which staff retention strategies may be needed for continued skills development and growth, the likelihood of staff leaving, identifying any possible challenges that can then be managed, and so on. These are just a few examples. These have to be explained to the HR team (especially the HR executive) to illustrate the value to be gained from implementing and operationalising HR BI and analytics.

I recently came across an article that provided some solid insights into the areas where HR analytics becomes key for a business. The article rightly points out that HR departments are generating more data than ever before but at the same time they often struggle to turn their data into valuable insights. Some of these insights I believe will be really useful to the HR executive and team.

Capabilities are different

Some capabilities are not tangible. An example of this is a person in the office who is not on the sales team, but who is known to be good at building and maintaining relationships. Clients are happy dealing with him and so is management. So it is not a qualification or recognised skill, but it is an important asset for the business and for HR to explore. With HR analytics, it would be possible to detect which values this person upholds that would make it easier to choose them to do a sales pitch to a new potential client. This way the business stands a better chance in recruiting more clients and saving some training money “wasted” on the sales team based on insights obtained through the application of HR analytics.

There is room to find ‘the one’

HR analytics can play a key role in a smarter way of recruiting. Forget the traditional methods of hiring a candidate, where the HR consultant had to liaise with the candidate via email and having to constantly update the spreadsheets as too any candidates want this job. HR departments can use analytics and real-time data to find and employ ‘the one’ – that individual with the most appropriate skill set.

Employee churn

Although some “healthy” employee churn may be desirable to get rid of “dead wood”, churn analytics is useful to pinpoint and avoid the regrettable churn of key or star employees. After all, hiring employees, training them and then integrating them into the business cost time and money. Effective action based on employee churn insights can reduce staff turnover rates, and thereby improve staff morale and the company’s reputation as a good employer.

Recruitment channel efficiency

Employees represent the greatest cost and greatest opportunity in most businesses. However, most organisations do not have a clue where their best resources come from – internal appointments, word of mouth, internal references or recruitment agencies? Recruitment channel analytics assesses employee value using measures such as tenure, human capital value, productivity, absenteeism, and return per employee, with recruitment channel as a useful dimension.

These are but a few examples of the many types of HR analytics that may be useful.

Concluding remarks

CIOs /CDOs who explain such examples to HR staff can no doubt have an impact on their view of the benefits that HR analytics offer to the company. I truly believe that the demand for analytics to transform HR departments cannot fall on deaf ears, especially when the opportunities are so clear. The only catalyst required is that the executives need to realise that humans are their key resources.

Reference

http://www.forbes.com/sites/bernardmarr/2016/03/01/the-8-hr-analytics-every-manager-should-know-about/#78bc605c2d2c

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