I was reading through an informative article in SHRM Magazine recently when I realized how little I knew about HR analytics in relation to HR talent acquisition. I understood the writer’s context and the importance of data—data mining, data warehousing, data modeling and the like—but wanted to do a little research to make sure I understood the impact of HR analytics on HR talent acquisition and recruitment, my areas of expertise.
Mark Berry’s fine piece, ironically titled, How To Fail at HR Analytics in 7 Easy Steps, underscores the importance of aligning HR analytics with the vision, strategies and critical business goals of the organization, especially the ones that keep senior leaders up at night! That point alone was instructive. You see, we love to use (and sometimes hide behind) words like strategic and HR analytics initiatives are presumed to be strategic, even when they’re not, e.g., even when they aren’t aligned with the business goals of the organization. I realized, as recruiters, that we improve business outcomes and intersect with properly aligned HR analytics when we deliver candidates who fit a particular company’s profile for high-performing employees, or for employees most likely to be retained.
But I wanted to dig deeper to learn a bit more about how HR analytics actually work.
How HR Analytics Work
HR analytics work by applying analytical processes to human resource department initiatives and programs. The goal: Improving employee performance and netting a better return on investment. Important stuff, right? After all, employees doing the work across the organization are the ones who determine its success or failure. But HR analytics aren’t limited to data gathering related to employee performance. They also provide insights about HR processes, so that leaders can make informed decisions about improving them. In short, HR analytics attempt to draw parallels between business data and people data so that organizations can understand the cause-and-effect impacts of HR programs and initiatives on the bottom line. Creating strategies around this evidence-based information is what HR analytics are all about.
How HR Analytics Bring Efficiency
Most HR departments spend a lot of money on management and employee training activities, right? But are these programs providing a good bang for the buck? HR analytics use reporting data and employee performance analysis in various areas to answer this question. This actionable intelligence quantifies the cost of employee programs and measures the success of HR initiatives so that senior leaders have the tools they need to make good decisions about investments, marketing strategies, and new product introductions. What’s more, through HR analytics, companies can track year-to-year trends and changes to critical performance indicators and make strategic decisions about the time and money currently spent on HR activities.
Three examples of HR analytics related to HR talent acquisition or the efficiency of HR functions include the following:
1. Cost-per-hire: This HR analytic helps organizations measure the total cost of a new hire. As recruiters working with HR talent professionals, it’s important to be aware of this cost, but we have an even greater opportunity and responsibility to make sure this money is used to hire the right people.
2. Time to fill an open position: Using this HR analytic, HR teams might look to reduce costs by shortening the length of time it takes to find a job replacement. Again, recruiters can build efficiencies into this process by finding the right talent to fill the advertised vacancies.
3. HR expense factor: This HR analytic measures HR expenses against the organization’s expenses as a whole. This helps senior leaders to determine if HR practices are too expensive in relation to the company’s overall expenses. (1)
HR Metrics Used In HR Analytics
HR analytics use a variety of HR metrics and measurements to determine the effectiveness of HR initiatives, from retention/turnover rates, training costs, and costs of labor, to return on human capital and expenses-per-employee; these metrics and measures connect the value of HR initiatives with business outcomes.
For example, in Mr. Berry’s current role, retention is his biggest challenge, especially when it comes to junior talent. HR analytics help him solve this problem by providing benchmarks defining how his organization compares with competitors, by identifying reasons for attrition, and through the use of metrics to measure the impact of appropriate interventions. (2)(3)
How Is Your Organization Using HR Analytics?
Is the use of HR analytics a priority for your organization? Are you aware of metrics used to enhance the HR talent acquisition function? Do you feel that HR analytics provide evidence-based answers to the most compelling questions facing business leaders at your organization? Let me know: I’d love to hear from you in the comments below, or you can inbox me at Victoria James Executive Search. We’re in this together, and I’m always looking for ways to improve the value we bring to our HR talent professional clients and job search candidates.
Smile! We leave with the following superb job-interviewing tip guaranteed to land your next job with style
from the folks over at The Poke in the UK (try these at your own risk 
):
At the beginning, try to make small talk with the interviewer, such as,
“Lovely day!” or “You look like my real father.”
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References:
1. HR Metric, Wikipedia, (Accessed May 26, 2016): https://en.wikipedia.org/wiki/HR_Metric; and Kavanagh, M.J. & Thite, M. (2009). Human Resource Information Systems: Basics, Applications, and Future Directions. Thousand Oaks: Saga Publications, Inc.
2. Berry, Mark. How To Fail At HR Analytics in 7 Easy Steps, SHRM, Dec. 2015 (Accessed May 26, 2016) https://www.shrm.org/publications/hrmagazine/editorialcontent/2016/0116/pages/0116-how-to-fail-at-analytics.aspx
3. Techopedia, HR Analytics, (Accessed May 26, 2016) https://www.techopedia.com/definition/28334/human-resources-analytics-hr-analytics
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