What are HR Metrics and Analytics

HR metrics are the measurements used to numerically describe the state of different HR-related functions. Some examples of metrics include cost, retention and turnover rates, and ROI of training. Analytics, on the other hand, takes the data a step further by identifying trends, drawing conclusions, and making predictions that could influence HR decisions. Analytics usually aims to answer key questions about the metrics and offer insights about an organization’s HR functions. Some questions could be: “What are the factors that drive employee turnover?” or “Does our incentive program improve performance?”

Why do you need HR metrics and analytics?

HR metrics and analytics enable companies to make decisions and implement changes based on conclusions drawn by hard data rather than intuition or mere observation. This paves the way for companies to make smarter investments by focusing on data-driven innovation and performance improvement.

Both metrics and analytics are important. Although many companies have acknowledged the need to track and gather data, few are able to translate the data into actionable insights. A 2017 report from Deloitte claims that “While 71 percent of companies see people analytics as a high priority in their organizations (31 percent rate it very important), progress has been slow. The percentage of companies correlating HR data to business outcomes, performing predictive analytics, and deploying enterprise scorecards barely changed…”

Here are some key benefits of using HR metrics and analytics:

• Add value to HR operations and learn from readily available information.

Day-to-day HR operations requires the processing of hundreds of record-keeping tasks and data entry. There is a wealth of information that can be utilized for the benefit of the company, and deliberately using metrics and analytics helps achieve that.

• Allow for innovation in the company’s recruitment efforts.
  Recruitment is the top area of focus in analytics, according to the same Deloitte report. This is because companies recognize the need for a more strategic approach to winning top talent. With metrics and analytics in place, companies can more effectively identify areas of weakness and opportunity.
  
• Understand and maximize the company’s human capital.
  Performance management, engagement, and retention are only a few examples of areas that metrics and analytics can measure and provide insights for. Understanding your workforce and its needs can help transform the way your company operates.
• Involve HR in company strategy.
  The role of HR is changing because of how technology and digitization are transforming organizations and the need for talent. HR teams must move beyond operational and documentation tasks and instead take on a more strategic role in organizations, enabling foresight and agility in workforce management and talent acquisition.

What are examples of HR metrics and analytics?

To implement metrics and analytics in HR, it is important for organizations to identify critical  areas for improvement and opportunity. 

Here are some examples of how metrics and analytics can be used in an organization. You can start by asking the appropriate questions:

• Retention – What is the current retention rate? What factors affect employee retention?
• Time to hire and cost per employee – How much time does it take to hire new talent after a job position is opened? How much does it cost the company to hire new talent?
• Employee engagement – What is the engagement rate? What factors affect employee engagement?
• Performance management – How well do employees perform (error rates, sales deals closed, etc.)? What factors drive performance improvement? Is there a trend in performance within specific employee groups (same demographic, same manager, same role, etc.)?
• Turnover – What is the turnover rate? What factors influence employee resignations? What changes can be made based on trends in turnover?
• Training ROI – How effective are the training initiatives in improving employee performance? How much is the ROI of training?

The future of HR in metrics and analytics

An article from Harvard Business Review states, “The ability and cultural readiness to fail fast but learn faster and continuously innovate new solutions are among the most critical to mastering a new mind-set for the future of HR in order to drive the value that enterprises require. As artificial intelligence, robotics, and cognitive solutions grow in sophistication, the nature and typology of work will continue to change.”

As the demands of the work change, HR teams must learn to evolve to keep up with major shifts in the business world. Technology has provided the tools to enable organizations to make smarter, scientifically-backed decisions. Metrics and analytics can make a significant impact on the way companies work and improve their work.