Every department in today’s business world, from marketing to operations, relies on data. HR is no exception, and how HR manages personnel management data has changed dramatically in the last decade. Some HR teams use spreadsheets to track a few essential KPIs, but most companies have progressed much beyond that. They collect data from a variety of sources and analyze it to derive strategic insights.
Let's look at what HR departments can do to provide immediate benefit to their organizations by improving metrics and reporting, while also laying the groundwork for more advanced analytics and shifting towards data-driven HR processes.
Fundamentals of Data-Driven HR
The fundamentals of data-driven HR can be observed while looking at a data cycle that begins with data collection, followed by data analysis and ending with the action that will be taken as a result of this analysis.
At the collection stage, achieving adequate data quality requires that these three conditions are met:
Proper data governance is in place
Data is organized in a way that is conducive to turning metrics into insights
The organization must incorporate data into its culture and decision-making processes.
At the analysis stage of data-driven HR, it is important to first identifying the audience. In other words, you should first understand what the business issues are and what questions you want to answer with the data you’ve collected. Only then can you find the proper metrics or data points that will allow you to solve critical business issues.
To implement the fundamentals of data-driven HR, let’s first take a look at the prerequisites you should have in place before starting your next HR analytics project.
Prerequisites for Data-Driven HR
Objectives: Identifying the purpose of HR metrics is one of the most important, yet often overlooked, steps HR departments can take to improve dashboards and reports. Generally speaking, there are three broad purposes worth considering:
Track your progress toward a goal
Make a specific workforce decision with the information you've gathered
Keep an eye on crucial employment trends
Selection of Metrics: Once the purpose has been determined, it is time to choose the appropriate metrics to validate it. Metrics should always be relevant, i.e., they should relate to the specified requirement, and they should be precise. Limit the number of metrics in reports and dashboards to focus attention on the most relevant ones. Dashboards that are simple and easy to understand can have a tremendous impact.
Audience: Most HR departments begin with an executive leadership report, as leaders in these roles frequently want more information about their workforce. However, reports can be created for different audiences because different metrics and analytics may be better suited for specific roles in the organization.
Methods to Create a Data-Driven HR Function
Even with technology to assist make sense of it all, the sheer volume of information flowing in from recruiting initiatives, talent management projects, workplace concern reports, and elsewhere can be downright overwhelming.
HR professionals now require a methodical approach to gathering and interpreting all of the data available to them. Here are four methods to build a more data-driven HR business without becoming overwhelmed by data.
Centralize Employee Data
Centralize your employee data to develop meaningful insights instead of just collecting it across multiple systems. For example, having your training data in the same place as your turnover or internal mobility data allows organizations to draw more meaningful conclusions about their employee development initiatives.
Traditionally, organiztions use an HR platform to centralize processes and avoid inconsistent data. But the future of HRIS is the composable application, which allows you to use multiple best-of-breed applications and systems in the HR market and connect them to a centralized and consistent platform.
Identify Performance Trends
Every employee, department, and operating unit creates data that can assist you in identifying problems and identifying good strategies to use for future HR initiatives. However, you must first examine the data. For example, performance data might assist you in determining the reasons for the disparity in attrition rates among the company's new hires.
A proper onboarding or training procedures can be established to raise the performance rate by assessing the varying performance rates of different sectors in the organization.
Monitoring Employee Engagement
Creating a positive corporate culture to attract and retain employees is more crucial than ever in this time of historically low unemployment and increased competition for competent individuals. You can learn a lot about how engaged your employees are — and how well your employee engagement programs are functioning — by tracking employee survey data, absenteeism, personnel concerns, and other pertinent indicators.
Data on employee engagement can disclose which policies improve performance and morale and which policies are a waste of time. This information can also reveal when policies need to be updated.
Analyzing Employee Case Management
Dealing with personnel management problems necessitates a significant amount of time and effort. It might be difficult to see and detect recurring trends between cases when many HR and employee engagement specialists are juggling multiple ongoing cases.
Data and analytics, on the other hand, can assist you in identifying bottlenecks, calculating case numbers, and tracking closure rates. You can compare current difficulties to previous similar instances, evaluate outcomes, and develop best practices based on effective handling of certain types of issues by using historical data. This will help you be more consistent and get to your goals faster.
Centralizing data from numerous sources and applying analytics to unearth the insights inherent within that data is the next step to make a company more data driven. Businesses should have a data-driven culture where they maximize the value of the data they already have and use it to improve continuous efforts.