People analytics is helping HR shape their strategies in regards to hiring, training, and employee management to help create a solid, stronger workforce. But HR is one of the last business departments to start fully embracing data analytics. Most organizations with departments that use analytics are using it to increase their customer engagement and grow their sales numbers, like marketing, customer service, and sales teams. Accounting and finance departments often use them to help identify trends that can be applied to business strategy.
Businesses are starting to understand how analytics can improve their HR processes and ultimately help them improve their business. While HR analytics aren’t customer-focused, they are people-focused and can help HR better hire, manage, and support the people who will help shape the organization and grow it towards its goals.
Building an HR analytics framework, however, is the first step to being able to apply and use analytics in your HR endeavors. Here are several steps to take to begin or improve your HR analytics journey.
Building a better HR analytics framework for your organization
The only way to truly get actionable insight that your business can understand and use is to know where to look for data and, more importantly, what you’re looking for. Businesses who successfully implement useful HR analytics use a process that helps them define and align on goals and then collect meaningful data that can be acted upon. Many businesses achieve this through the LAMP framework: logic, analytics, measures, and process. These are the four components of a measurement system that can drive change in an organization and enable more effectiveness.
This is the step that helps companies to know where to look for insight and connect data points to meaning in order to make better decisions. The connection between the numbers and effects and outcomes is vital in understanding the “why”. Are there connections between employee health and wellness and employee turnover, for instance? Where are the connections in your business practices and your employee performance? This what the logic step of an HR analytics framework can help you understand. InformIT notes that “This framework depicts the connections between HR and management practices, which affect employee attitudes, engagement, and turnover, which then affect the experiences of customers, which affect customer-buying behavior, which affects sales, which affect profits.” Companies who are able to understand the connections between their HR practices and people issues and how they impact the business are the most successful in implementing changes that matter. Analytics helps to highlight the connections.
Good analytics systems built from a solid framework help make sure what you’re measuring is meaningful to your specific organization and business needs. It also helps make sure that what you’re measuring is accurate and meaningful data. Inform IT notes, “Factors such as employee turnover, performance, engagement, learning, and absence are not equally important everywhere. That means measurements like these should focus precisely on what matters. If turnover is a risk due to the loss of key capabilities, turnover rates should be stratified to distinguish employees with such skills from others. If the absence has the most effect in call centers with tight schedules, this should be very clear in how we measure absenteeism. Lacking a common logic about how turnover affects business or strategic success, well-meaning managers draw conclusions that might be misguided or dangerous, such as the assumption that turnover or engagement have similar effects across all jobs.” It’s important to know why you’re measuring what you’re measuring and understand accurately how it affects your business.
Analytics is really how data can provide answers. You may have data that suggests that your employees are engaged in their work based on employee feedback surveys; you may also have customer surveys that indicate they are satisfied with their interactions with your brand. You may believe that more engaged employees work in a way that produces higher customer satisfaction and more loyalty. That may very well be true, but analytics software and systems will help you identify the relationship and let you draw more accurate insights. Analytics allows you to dig deeper with a more holistic approach. It reveals the right conclusions from the data and transforms information into relevant, meaningful knowledge.
This refers to the change management process within an organization. If an organization has used HR analytics to support their employee management, that means that they can create changes based on that data. This is one of the most important steps in the HR analytics system – going from data and information to meaning and then decisions.
The approach to data in HR is the key to solving people problems. It also helps meaningful data and analysis from that data in front of business leaders who can actually affect and support needed changes. InformIT says that leader needs to “buy into the idea that human capital decisions have tangible monetary effects, they may be more receptive to greater sophistication” and other changes to their employee performance management that are needed to help support business success.