Understanding Data Analytics in HR, Its Benefits & Applications

HR Data Analytics

No matter which industry and which department you belong to, decision-making is critical to success. Lately, data analysis has emerged as the go-to technique for businesses to optimize their operations and make better-informed decisions.

Just like any other department of an organization, the use of data analytics in HR cannot be ignored. It is significant to understand that using data efficiently can uplift the performance of the HR department and improve the productivity of the professionals.

So, how can data analysis enable the HR department to make informed decisions? It can be done by identifying potential touch points and analyzing past data patterns to predict or suggest what can happen next.

This includes the percentage of employees that might leave the organization, the expected rate of offer acceptance, and various other reasons. This is just a holistic view of what can be achieved by appropriately employing data analytics in HR.

Below, we will discuss what data analysis in HR is, why it is crucial for upcoming industry leaders and some of its applications.

What is Data Analytics in HR?

Data analytics is the process of analyzing raw data collected from multiple sources with the purpose of extracting useful information. Data analysis can help HR professionals make worthwhile decisions.

Moreover, this can help uncover facts about your organization, your talent, and your industry practices that help improve the overall employee experience.

There are some worthwhile types of data analytics techniques used for HR – let’s quickly walk through and understand how they differ from each other.

· Predictive HR Analytics

Predictive HR analytics is more suited for organizations that are gearing up for the future. It is a next-gen method that uses various techniques, including complex statistical models, to produce incredible results—or predictions.

Around the globe, organizations are still on the back foot when adopting predictive analytics in HR departments. Yet, as they become more aware of the technology and how it can help contribute to business stability, its implementation will speed up.

· People Analytics

People analytics is another method famous for data analytics for HR. It primarily entails the collection of information about the people of your organization with the objective of improving their work experience.

It is also sometimes referred to as talent analytics or as the basics of HR analytics. It collects information having varying touch points, including productivity metrics, performance indicators, and more, to ensure work-life balance and employee well-being.

· Workforce Analytics

Different from the two discussed, the workforce analytics method is the one having more input in the strategic planning for the HR department. There are various objectives of workforce analytics, such as staffing management, organizational structure, future preparations, and more.

Workforce analytics mostly has to do with the information regarding staffing, development, training, recruitment, personnel information, and the benefits or compensation provided to the employees of the organization in different categories.

Is It Worthwhile to Invest in Data Analysis?

Data analysis unearths information that has not been seen before and unlocks avenues for organizations to expedite their growth and make their decision-making process more confident as they move ahead.

If your organization wants to know in-depth about employee behavior and improve the culture to complement business strategy, it is important to use data analytics to produce the right results for you.

According to a survey report, the number of organizations using data analytics for research and decision-making purposes has steadily increased over the past decade. The data shows only 31% of organizations used the technology, while this number grew to 46% in 2021 and had a stable growth pattern.

AI-powered analytics is opening new ways for companies and businesses around the world, creating opportunities to be capitalized. As more companies shift to digitally sustainable practices, we will witness more use of data analytics in HR.

What Do You Need to Know About Data for HR Data Analytics?

Before moving forward, you need to understand where you stand in the process of HR data analytics and how you might want your data analysis to be crafted.

· Identify Your Current Standing

Organizations around the world are willing to implement a strategy with no support structure. It is important for them first to identify their current standing with the whole data collection and storage process. For better management, it might be extremely useful to centralize the data in order to expedite the data analysis process.

· Sync Business Objective with Data Analysis Approach

Business objectives drive the business forward—and hence, it needs to align with the data analysis approach. Having large volumes of data with no real use is nothing but a waste. The data needs to be carefully processed with the preferences of your HR department to build a solid data analysis strategy tied to your goals.

· Utilize Smart Tools & Techniques

Conventional methods are good, but doing things the smart way has much more influence than most can imagine. Using modern tools and intelligent techniques to be efficient is not just important; it is the need of the hour. This also means that no matter how advanced your software suite for HR analytics looks, there can always be room for improvement.

Benefits of HR Data Analytics: How Can It Help?

Like many other domains, data analytics in HR can significantly impact business operations and revolutionize processes.

· Better Decision Making

When hiring, instincts can lead you astray. However, algorithms can help organizations make better decisions. The predictive power of numbers can help avoid bias and make decisions solely based on data. From hiring to appraisals to bonuses to performance evaluations—HR data analytics can take care of it all.

· Operational Improvements

Operational improvements in HR can add a lot of value to the department’s functionality and effectiveness. It can tell a lot of detail about the cost of hiring, time to hire, retention ratio, learning and development, and performance metrics—and since it would be based on hard facts and data, it will produce the ideal results.

· Business Case Preparations

A business case of the HR department can include several touch points and information that can be presented to decision-makers and stakeholders. The business functions of the HR department can be explicitly defined, and then through the data analysis, it can be processed, and useful information can be extracted.

Applications of Data Analytics in HR

To assist multiple functions of the HR department, HR data analytics can be used to make significant improvements. We have listed a few examples of where data analysis can be implemented to improve human capital management and optimize different processes of the department.

· Training, Learning & Development

Training, learning, and development are key functions of human resource management—but the biggest challenge that organizations face is whether their programs are effective enough. This is for the HR professionals to answer. Mostly, there is no procedure to trace and measure outcomes and if the efforts made by the team were fruitful.

A better way to understand the outcomes of training, learning, and development efforts is to ask questions. To record the submission, devise a feedback form and collect relevant data through it so that it can be effectively utilized for later phases.

Data analytics has different types, and for effective analysis of data obtained from the HR department, predictive analytics can be employed to personalize the patterns and formulate an efficient strategy to achieve goals.

TIP: A learning management system (LMS) can be handy in keeping track of your employee’s progress. An all-in-one platform to maintain your organization’s learning and development performance. Set multiple parameters and track conveniently.

· Hiring & Recruitment

The world is fast-progressing, and for enterprises to keep growing at a steady pace, they need to have a continuous supply of the right talent. For recruiters and hiring professionals, that is a big challenge. Through data analysis, this can be significantly improved.

Organizations can benchmark hiring goals and track progress. There can be several ways it can be achieved. From studying the candidate’s behavior to diving deep to reviewing candidates with specific backgrounds to reviewing submissions—all can be done using specific HR data analytics solutions.

Hiring and recruitment are the most important domains of a human resources department—through data analytics in HR, the efficiency of this department can be significantly enhanced and made to function better and produce more favorable results.

· Compensation & Benefits

Perks, benefits, and compensation given to employees are the biggest expenses a company has to bear. The recent wave of inflation has made things tougher and made it inevitable for HR managers to incorporate analytics to have a better view and detailed understanding of compensations.

This often leads to companies not having enough talent in their pool—for which they must reconsider their compensatory structure by comparing them with businesses in a similar domain and assessing what salary ranges they are offering.

Moreover, salaries don’t often do all the work for organizations. They also have to maintain their oversight of the benefits and perks offered to the employees on top of the company culture. Employees around the world now regard these small steps more than ever before.

· Retention & Productivity

Modern organizations face a lot of uncertainty with employee retention and productivity. Retention is mostly about maintaining a steady approach and contributing to the sustainability of the organization. Feedback and anonymous surveys can significantly help companies perfect their processes in this regard.

When it comes to productivity, it is deemed as important as anything else. It is also understood as the use of available data, money, time, and talent. Through a comprehensive data analysis strategy for HR, most productivity issues can be terminated.

However, organizations are mostly advised to formulate key metrics based on their goals and available resources. Only then can data analysis bring fruitful results, helping understand how efficiently a resource is utilized.

Data analytics in HR is still new. It will certainly take time for organizations to understand its effective use and how it can help improve business outcomes. From profitability to productivity to retention to amazing organizational culture – data analytics can give you all the answers you need.

When put to the right use, technology can help organizations transform themselves inside out, ensuring all-encompassing improvement.

Suggested: Complimentary Architecture Design Session for Analytics

Bottom Line

Data analytics and its types can have several applications and among many of them. The use of data analytics in HR cannot be ignored. It can help organizations get information regarding their processes and improve them as they progress.

Are you looking for a solution that helps your organization build authority? Veraqor data analytics services can help you transform your business outlook with effective insights never seen or heard before. Unleash the future through data—lead the way.


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Muhammad Bin Habib

Muhammad is passionate about technology, marketing, and writing, particularly intrigued by data, AI, ML, and digital transformation. His writing spans across various topics including emerging tech, mobile apps, cybersecurity, fintech, and digital transformation for enterprises. During his leisure time, he immerses himself in various subjects, while also delving into modern digital literature to enhance his grasp of the digital landscape.