What is HR analytics?
HR analytics is the process of tracking HR metrics and using them to improve business performance. HR metrics, or Human Resources metrics, are Key Performance Indicators (KPIs) that quantify how well a company is optimizing their human capital. HR analytics provides actionable data to inform decisions.
Businesses can use HR analytics for all workforce management functions including hiring, compensation, training, engagement and retention.
Common HR analytics include:
- Employee turnover
- Overtime percentage
- Revenue per employee
- Employee productivity rate
- Diversity and inclusion
- Pay equity
- Healthcare costs per employee
- Average performance rating
- Employee engagement
What are the benefits of using HR analytics?
Using a scientific process to make business decisions is a best practice used by successful companies. Companies can grow faster and more effectively capitalize on business opportunities by using HR analytics.
Using HR analytics to improve even one aspect of workforce management can set off a chain reaction of benefits. For example, tracking employee hours and setting overtime thresholds can help companies reduce unplanned overtime. This increases profitability by lowering labor costs. Reduced overtime can also improve employee morale. Improved morale can increase employee retention. Increased retention saves money on recruiting and training. As the combined tenure of the workforce increases, performance will likely improve as a result. Consider the impact of using HR analytics to improve many HR processes.
Businesses of all sizes can benefit from HR analytics:
- Optimize resource allocation
- Improve oversight
- Minimize compliance risks
- Improve training ROI
- Improve benefits ROI
What happens if you don’t use HR analytics?
Failing to use HR analytics can cause problems throughout the organization. Here are some potential consequences:
- Customers are ignored when too few employees are scheduled
- Managers waste time correcting timecard errors
- Teams miss project deadlines
- The company can’t compete for talent because their hiring process takes too long
- Employee turnover increases but no one can figure out why
- HR can’t determine the ROI of engagement, benefits or training programs
Is there Work Tech that tracks HR analytics?
These systems are suites of integrated HR tools. These tools include:
Structured onboarding systems increase new hire engagement which speeds time-to-productivity and reduces the risk of the employee quitting in the first year.
Performance management software
Successful companies make sure managers conduct performance reviews often. Performance management software helps managers and employees track performance over time.
Leave management software
Tracking PTO accruals, state and federal family leave, and other types of leave with spreadsheets is time-consuming and vulnerable to error. Companies can customize leave management software for their company PTO policies, state and federal laws, and union or government contracts. Automating this process saves time, improves accuracy and minimizes the risk of a compliance violation.
Learning management systems (LMS)
An LMS is an online platform for managing training programs. (Self-directed digital training is also called eLearning.) An LMS allows HR teams to customize, manage and track employee training in a centralized location. The new hire training component is often integrated with onboarding or performance management software. With the increase in remote working, an LMS is a must-have for modern workforces.
Automated employee timekeeping and scheduling software
Time tracking is a foundational business process. Paycheck accuracy is paramount. Labor optimization requires to-the-minute employee time and attendance. Cloud-based software integrated with hardware clocks provides a unified time and attendance solution. The system captures punches, confirms identity, tracks hours, meals and PTO, enforces schedules and prevents time theft. Integrated mobile clock-in and geofencing allow companies to track offsite employee punches and location.
Employee scheduling is a related HR function that can have a profound effect on organizational efficiency. Scheduling software allows you to create schedules in minutes using templates and drag-and-drop tools. Schedule modules integrated with timekeeping simplify schedule publication, timecard submission and approvals, shift trade requests and approvals, and PTO requests and approvals. Overtime alerts help prevent unplanned overtime and overtime compliance issues.
Benefit management software
Employee benefits are both extremely important and notoriously difficult to manage. Using specialized software to manage retirement plans, health insurance and other benefits is a best practice used by successful companies.