Businesses can use analytics to gain an edge over their competitors in almost every field. And this technology can be used to make Human Resource (HR) operations to improve HR processes and contribute to achieving overall business goals. So, let’s explore in detail about what HR and people analytics are, what their importance is, and how it used to make business more efficient.
What are HR Analytics?
HR analytics popularly known as people analytics or workforce analytics is a process of collecting, analyzing, and interpreting HR data to make informed decisions about human capital.
According to Market.us, the Global HR Analytics Market is expected to reach $6 billion by 2028, growing at a CAGR of 13.4%.
HR analytics goes over and above the traditional HR reporting method by using advanced data science tools, statistical methods, data mining, predictive modeling, etc. to get insights that can help improve various HR functions, including but not limited to:
- Recruitment
Helps identify the best candidates, optimize the recruitment process, and reduce the time for hiring
- Training and Development
Evaluate the effectiveness of training programs, identify skill gaps among employees, and customize their learning experience
- Performance Management
By analyzing data in HR, organizations can understand what drives performance, identify the top performers, as well as address performance issues
- Employee Engagement and Retention
Data analytics in HR can help identify things that make employees happier and give them satisfaction which in turn can help them design strategies to improve retention
- Workforce Planning
One important application of using HR analytics is forecasting future workforce needs. It can detect talent gaps and develop succession plans.
Benefits of HR Analytics
Now, let us see some notable benefits implementing people analytics provides to organizations.
- It enhances decision-making by providing HR professionals with the necessary insights to make informed and strategic decisions.
- HR analytics optimizes several HR functions and identifies areas of improvement that can contribute to enhancing overall efficiency and productivity
- It optimizes the recruitment and retention process, thus saving huge costs associated with turnover, hiring, and training.
- Enhances employee experience by understanding their needs and preferences and create a more positive work environment.
- HR analytics also helps align HR strategies with business goals that ultimately help improve the performance of all business operations and increase profitability.
So, we can now figure out why data science education is important for everyone, including HR professionals. This will help them use data science techniques properly and gain the required insights.
Different Types of HR Analytics
HR analytics is generally classified into four main types.
The first category is Descriptive Analytics which involves summarizing and describing the historical data in HR to understand past trends and patterns. For example, it is used to calculate the employee turnover rates and find out the average time-to-hire. This is good for identifying employee demographics.
Next, Diagnostic Analytics is used to understand why certain events or trends occurred. HR or data science professionals use data mining and statistical techniques and identify the main reasons behind HR issues like why the employer turnover is high in a particular department.
Another type of HR analytics most widely used is Predictive Analytics. HR professionals use a variety of data science tools, statistical models, and machine learning techniques to predict future HR outcomes like predicting if an employee will leave the organization, for example. Lastly, Prescriptive Analytics is used to recommend specific actions to achieve desired goals. It includes optimizing techniques and simulation and suggesting the best course of action. Professionals can use it to personalize training programs and improve employee performance.
Challenges with HR Analytics
By using people analytics, organizations can definitely enjoy several benefits. However, they need to be careful with certain challenges and limitations as follows:
- Inaccurate and incomplete data can lead to misleading insights and affect the proper decision
- Data in HR is quite sensitive and they must be handled with care. Organizations should therefore comply with various data privacy regulations and ensure they store and use data securely.
- Not all HR professionals are equipped with the right data science skills and knowledge. So, organizations need to provide data science education to the HR team to effectively use this technology.
Data science certifications for business professionals are a great way to learn various data science applications, tools, and techniques in HR operations and enhance overall HR processes.
Conclusion
The world of data science is evolving at a much faster rate and organizations who do not adapt to this changing environment can be at risk of falling behind. Now HR analytics also uses advanced AI and ML learning techniques that make decision-making and prediction even more accurate. Several tools offer real-time analytics to make decisions in real-time. So, we can say, the application as well as adoption of data analytics in HR is increasing and organizations must leverage this opportunity. They must develop efficient HR solutions, train their employees with data science education, and most importantly pay attention to ethical considerations for a more impactful result.
