How To Leverage HR Data & Analytics To Fuel Business Strategy

How To Leverage HR Data & Analytics To Fuel Business Strategy

People don’t typically think of human resources professionals as data analytics gurus, but today’s modern HR department has the capacity – and obligation – to leverage enterprise data to fuel business strategy. But, with multiple systems running separately across an organization, data is often siloed, making analysis challenging. 

To make enterprise data actionable, HR leaders are investing in capital management systems to aggregate disconnected streams of data into one single source of truth. The information collected by HR capital management systems, like payroll, benefits, time and attendance, organization chart management and more, can provide valuable insight into the overall health of an organization. But, perhaps the most meaningful data comes from performance management, in which information is gathered during hiring interviews and performance reviews and compiled into one record per employee. 

Regardless of what system is used, it’s ultimately up to the HR department to crunch the numbers and make sense of the unstructured data. This means first defining strategic goals, agreeing upon what information is relevant to track, picking a handful of key metrics to follow in each main sector of the business and finally creating benchmarks to measure the data against. Equipped with this insight, HR leaders can gain a holistic understanding of how the business is performing today, spot potential issues before they arise and ensure the future success of the company. 

Companies can no longer afford to make business decisions blindly, based on gut feelings or the weak rationale of “that’s how it’s always been done.” But, in order to enact change and make improvements to the business, leadership must start by identifying where improvements are necessary. By pulling data from each department, HR can gain a thorough understanding of the business’ performance, backed by tangible numbers. HR should seek data that answers questions such as: Do we need to hire? What’s the right compensation range for each position? What’s the turnover rate and why are people leaving? Once the company gathers this information and analyzes it, any issues that need to be addressed come to light. 

Piggybacking off of the first benefit on the importance of due diligence, once a company notices something isn’t quite right – perhaps an employee is taking more time off than usual or exhibiting an atypical performance issue – HR professionals can aggregate data and empower themselves to make a business case for an intervention. Engaging with the at-risk employee can then provide more data in the form of feedback to prevent future employee attrition and promote company loyalty at large. The data from these interventions can also help HR test their effectiveness for future mediations. At the very least, analyzing employee data can help HR professionals spot these behavioral warning signs sooner, create an intervention plan and ideally do what they do best – run the human side of a business with compassion and care.  

Dealing with an employee intervention might sound tedious and maybe even insignificant – it’s only one employee, after all, right? Wrong. When it comes to how employee turnover relates back to the bottom line, it’s quite the opposite, and the data proves it. In fact, according to Work Institute’s 2019 Retention Report, the conservative estimated cost of losing one employee is $15,000, a substantial sum for both a small company with few employees and for a large company that might experience employee attrition on a bigger scale. Put into perspective, in 2018 alone, U.S. employers lost $617 billion to employee turnover – 76.8% of which could have been mitigated if employers aligned interventions with retention requirements. 

The Work Institute predicts that the annual cost of voluntary employee turnover in the U.S. could very well increase to $800 billion by 2023. Taking a proactive, data-driven approach, HR professionals can cut the costs of losing employees by intervening the moment warning signs start flashing. Additionally, HR can determine the ROI of new hires with high-potential growth paths over time, demonstrating the value of recruitment, training and development initiatives to senior management. These important human resource functions go hand in hand with business goals and therefore should be a top priority for executive leadership. 

Data and analytics empower HR professionals to make more informed, strategic decisions on important business matters such as recruiting, hiring and development. By tightly aligning HR initiatives with business goals, HR departments can help guide the organization into a new era of efficiency and profitability. 

Michael Hoehne, Chief People Officer at AHEAD, oversees AHEAD’s human resources (HR) team, guiding the company’s efforts to attract, engage, develop and retain team members across all business units and regions. As an SHRM senior certified professional (SHRM-SCP) with more than 25 years of global management experience, Hoehne is an expert in building high-performance teams, directing multi-functional project groups and leading global change initiatives. Michael was recently named one of Crain’s Chicago Business’ Notable Leaders in HR for his commitment to driving positive change within AHEAD and the greater Chicago tech community.