Human Resource Analytics: What It Is And How to Use It

Newsroom | Articles April 5, 2020

Three human resources professionals use analytics on a computer to assess performance.

Human resources (HR) involves matching employees to roles within companies to ensure a good fit as to skills and work culture. In addition to recruiting and staffing, HR professionals, departments, and organizations handle employee training and development, employee relations, and compensation and benefits. This comprehensive job relies heavily on data-driven human resources analytics to navigate these complex areas and to develop solutions to identify conflicts related to human capital. It’s imperative that the HR leaders of tomorrow possess a strong understanding of the various types of HR analytics and know how to apply them in their organizations.

What Is Human Resources Analytics?

Human resources analytics, also referred to as talent analytics or workforce analytics, offers a means of measuring a company’s human capital investment. It encompasses many different fields:

Capability analytics enables managers to identify core competencies their business would benefit from.
Competency acquisition analytics assesses how well the business succeeds at acquiring those competencies.
Capacity analytics measures the operational efficiency of individual employees.
Employee churn analytics assesses turnover rates, which is the first step in figuring out how to decrease them.
Corporate culture analytics examines corporate culture across an organization, attempting to pinpoint potentially toxic environments.
Recruitment channel analytics seeks to determine where top-performing employees tend to come from.
Leadership analytics and employee performance analytics assess the overall performance of managers and workers based on information like interviews.

Each field of human resources analytics relies on data. Consider leadership analytics. An HR professional may gain insights about a leader’s performance by gathering information through surveys, focus groups, and employee interviews (ideally anonymously). For example, employees may be asked to rank how motivated they feel on a scale of 1 to 10. The responses can then be charted using digital tools, and statistical modeling can be used to determine if a leader is successfully inspiring the team. Such information can improve the leader’s future performance. The HR department can identify gaps and organize leadership training sessions to address these gaps and build positive behaviors in leaders.

Human resources analytics is used to improve company performance and profitability in various ways. For example, employee performance analytics determines if individual workers are a good investment, specifically if they’re executing strategic plans and generating revenue while simultaneously minimizing expenses and risks. Meanwhile, recruitment channel analytics helps HR managers determine where to look for highly productive employees. This adds up to a more thoroughly vetted workforce that will better serve the company and meet its needs in terms of performance and profitability.

Human Resources Analytics Types and Processes

Human resources analytics doesn’t just encompass various fields, like competency acquisition analytics and employee churn analytics. Different types of human resources analytics can be identified and applied across these different fields. These distinct processes serve different purposes, but they all share one thing: a reliance on data.

The primary types of human resources analytics are:

Operational reporting. Operational reporting is used to examine what’s happened in an organization’s past. It relies on existing data, which is then analyzed to determine what it means for the company. For example, operational reporting related to employee churn can be used to understand why a large number of employees left an organization in the previous year. Since most companies require exit interviews, HR professionals can examine this data to determine trends.
Advanced reporting. Advanced reporting is proactive, casting an eye toward the future rather than looking back. It’s an automated process and regularly examines relationships between variables. For example, advanced reporting related to competency acquisition can track competencies that are in demand in a company to guide future hiring. As companies become more digitally driven, they may have less need for administrative staff to handle tasks—like printing, transcribing, collating, and copying—and require more tech-savvy individuals instead.
Strategic analytics. Strategic analytics consider financial, organization-specific, historical, or employee-driven data to inform business planning. In studying corporate culture, it might analyze the correlation between financial investment in team-building events and the results of employee satisfaction surveys. If the analysis shows a link between increased frequency of team-building events and higher employee satisfaction, it would suggest that this is money well spent.
Predictive analytics. Predictive analytics is the most mature type of human resources analytics. Instead of just analyzing data, this approach evaluates data in order to make predictions about the future. The resulting knowledge can be used to plan ahead. For instance, a strategic look at capacity analytics may indicate that employee productivity lags around the holidays. In this case, HR can propose that the company offer added incentives, like a performance-based bonus, to keep productivity on track at that time of year.

The Future of Human Resources Analytics

Human resources analytics will remain essential to successful HR operations in the future. Forbes asserts that the data used for such purposes is an HR organization’s most valuable asset. Companies are taking note of this fact: According to an Economist Intelligence Unit report, 82% of organizations were planning to increase their use of big data in HR departments before the end of 2018. Intelligent HR relies on data. Professionals who know how to collect, store, and analyze such data will be in high demand by employers. In general, the prospects for HR professionals look positive. The U.S. Bureau of Labor Statistics (BLS) predicts that opportunities for HR specialists will grow by 5% between 2018 and 2028. The BLS further reports that the annual median pay of an HR specialist was $60,880 in 2018.

Individuals who are interested in pursuing this rewarding career path should consider the LSU Online Master of Science in Leadership and Human Resource Development. The program enables students to develop organization development skills and gives them the skills they need to lead and develop people. Coursework includes Human Resource Analytics; Introduction to Leadership Development; Training and Development in Organizations; Cultural Competency and Diversity; and Team and Group Dynamics. Students benefit from learning from an award-winning faculty and have the opportunity to connect with an expansive alumni network that can open doors upon graduation. The entire program can be finished in as few as 12 months. Explore a future in HR with LSU Online and embark on an exciting new career.