Step by Step Guide for Establishing HR Analytics

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The financial crisis and everything that has followed has changed the business landscape forever, with effects in every single department.

Many a business would have sat around a table looking at how they can keep their heads above water and where they can cut costs, with some of this responsibility being passed on the HR departments.

A major question that HR professionals are being asked is about their return on investment, which is where analytics is playing such an important role.

Why Analytics?

Scott Staples, a co-founder of MindTree, told HRMagazine.co.uk that this concept should "scare many HR departments" around the world, and this is leading large numbers to look towards using data to enable better and faster decision making.

Analytics cover a whole spectrum of HR activities, such as performance management, succession planning and recruitment, giving executives more of an insight into the big picture.

"While digging into the data of any one of these areas will derive meaningful insights, the true power of HR analytics is harnessed when you correlate, or overlap, data from various areas," Mr. Staples added.

The expert went on to tell the publication that along with the changing face of businesses, other drivers such as outsourcing, viral recruiting and social media were hastening the need for good analytical practice.

"HR departments must connect their strategy to the business strategy. The only way to do this is to collect the right data, analyze it regularly, and produce compelling reports that people will read and understand," he noted.

How To Establish Analytics

One of the first things that HR departments need to do when it comes to analytics is to decide which areas need pure facts from which decisions can be made.

Knowing which sections decisions should be made on with the help of analytics is useful, while being aware of which processes can be automated will also help in deciding a battle plan before choosing from a whole market of analytical tools available.

Mark Conway, director, product marketing, business intelligence, for Oracle, told Dashboard Insight, that developing a culture of evidence-based decisions will help firms to grasp HR analytics, which could mean making changes to the firm's infrastructure, analytical capabilities, data quality and governance.

Tom Davenport, co-author of a report titled Competing on Talent Analytics, which was published in the Harvard Business Review, said that while many businesses will feel that they have processes in place to collect data, very few of them are using it to its full potential.

"Maybe 10 percent of large companies are carrying out some variation of [data analytics]. The time is right for HR organizations to say 'Let's add some value'," he suggested.

Getting The Best Out Of HR analytics

As with all business processes, they must be used to their maximum potential in order to get the most out of them and it is no different with HR analytics.

"A lot of companies only do it for junior level people - they consider management somehow exempt," Mr. Davenport wrote in his report, suggesting that improvements can be squeezed out of top level management and all other areas of the company.

Businesses should also not limit themselves to looking at data in isolation, with Mr. Staples advising an approach which includes correlating and overlapping information from various areas.

He noted that this will allow businesses to answer queries on who their top performers are and whether succession plans are in place, and is return on investment being achieved through training – which will provide very useful results if used in the right way.

The value of HR analytics was proved earlier this month, when a deal was agreed to the tune of $76 million, which will see IBM provide this service to Air Canada.

Mark Levy, general manager of HR and learning solutions at IBM, noted that this move will allow the aviation company to "provide the best possible level of services and improve the overall employee experience."

However, no matter what the analysis in place, at the end of the day human judgment should be the ruling factor.

"If you only go by analytics and never think you need to meet the people it is a recipe for disaster. You need to use both your human intuition and analytics," Mr. Davenport stated. 

Contributor:   From the HRIQ Editorial Desk

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