HR Analytics: Why Human Resource Departments Need BAs
It’s easy to think about business analysts taking a high-level view of a company or working on production teams to identify waste, but there are some departments that tend to get overlooked in the business analyst field. Human resources is one clear example of this. Business analysts are essential for HR teams, but few organizations have a dedicated analyst for their human resources department.
The field of HR analysis is growing along with the rise of business analysts and investment in big data. Here are some of the benefits BAs bring to HR and the challenges facing human resource departments across the globe.
What is HR Analytics?
Understanding the concept of HR analytics and the value of this tool are the first two steps toward implementing solutions in your own company. The team at Naukri RMS defines HR analytics as the science of gathering and analyzing data related to various functions in human resources. The main objective of HR analytics is to make sense of the data and turn it into valuable insights.
While some companies might not want to invest in HR analytics initially, wondering why they need a whole resource (or even a part-time resource) dedicated to reviewing data, the investment has a strong ROI when newly discovered insights are applied and result in a smoother hiring process or lower attrition levels.
One of the reasons why HR analytics has failed to become a mainstream part of business analytics is because it is called so many things, says workforce analyst Richard Rosenow. He has seen more than 40 terms to define the field, including people analytics, workforce analytics and talent analytics. It’s hard to keep track of a field when 40 people define their job with different titles and roles.
HR analysts (or whatever similar job title they take on) don’t usually implement the solutions they recommend. This makes the job less forward-facing and hard to see within a company.
“Where the analyst’s job focuses primarily on the collection, analysis, and reporting of data, the business partner (BP) is more involved in communication with line managers and helping to solve their HR related problems,” writes Erik van Vulpen, cofounder of Analytics in HR. “In practice, the BP relies for 90% on soft skills, while the analyst relies just as much on harder (data) skills as on soft skills, if not more.”
The fact that analysts are less forward-facing does not make them any less valuable. To get an idea of how HR analysts help the operations and management team, workplace analysts Chantrelle Nielsen and Natalie McCullough looked at some case studies in an article for the Harvard Business Review, and one in particular stood out.
A company wanted to become leaner and asked its employees to do more with less. This meant a lot of change in a short period of time and HR starting seeing burnout. This created a problem for the company. The leadership team wanted to push forward but knew employees with burnout can’t handle more changes or transitions. Through people analytics, the HR team was able to identify the “burnout teams,” giving them a break while implementing change on less-stressed employees. Senior leadership was able to reach its change goals without risking employee attrition.
Having someone on your team who understands employees and has data on their side can help leaders develop company plans for change and implement them successfully.
More Companies Are Finding Value in HR Analytics
Despite its slow start, HR analytics is catching on quickly. Global industry analyst Josh Bersin found that 69 percent of companies either have or are developing a people analytics database. This is up from just 10-15 percent in previous years.
Additionally, 39 percent of respondents in the 2017 Deloitte Human Capital Trends report said they have good quality data for their people-related decision-making, meaning they can make accurate decisions based on the data they collect. The more companies see the value in HR analytics, the more they will want to invest further and the more other businesses will want to explore this BA channel.
According to the team at SutiHR, many HR departments already collect relevant data that can be used in human resource analysis. They have documented hiring requirements, performance rates, payroll levels, attrition information and other factors that can provide clear insight into the organization. However, having the data is only the first part. Without HR analysts combing through this data and finding valuable data points and places to improve, it will just go stale as the company continues to wonder why employees leave or why the people they interview don’t have the right requirements.
Interestingly, career coach Eva Wislow was one of the doubters of big data and HR when it was first being developed. She initially doubted the value of HR analytics and thought there would be a lot of heavy lifting and investment for results that might be weak or uncertain. However, since seeing HR analytics in action, she is an advocate of the process — when it is implemented well. She guides people on how to use big data for HR and make the most of the tools at hand.
As a result of more people jumping on the bandwagon, the growth in HR analytics that we have seen recently will likely continue its positive trend over the next few years.
Companies Struggle to Collect The Right Data and Use It
While many companies are utilizing HR analytics, not everyone is on the right track. There are many challenges to adopting this form of decision-making and management, creating an uphill battle for some organizations.
HR technologist Chiradeep BasuMallick says many companies want to invest in people analytics and find new HR insights but don’t use the right methods. He points to surveys as a common problem with this. Organizations often send out lengthy and vague surveys about job satisfaction that don’t really provide any information of value. These surveys often annoy employees who are less likely to respond to them in the future.
Instead, HR teams need to be more targeted and use better tools and data-collection resources to answer the tough questions facing their department.
Collecting data is one challenge, using it is another. Companies often don’t realize the power that is at their fingertips and allow valuable data points to fall by the wayside.
“In the past, a lot of HR data went unused or, if it was used, it was put into charts and tables for something like a corporate performance pack,” writes the author of “Data-Driven HR,” Bernard Marr. “Now, in the era of big data and analytics, companies are turning their data into insights...All this means that HR data is more valuable than ever before.“
In fact, companies with advanced people analytics investment have 56 percent higher profit margins than those who are less advanced, reports Slavena Tsoneva, people analytics at SAP. While she stresses the value of people analytics in HR, Tsoneva also understands the issues companies who are just starting out face or those that feel overwhelmed by the amount of data they want to collect.
“It takes some time for the HR function to achieve a certain level of analytical maturity, change mindsets, and develop the skill sets of the HR professionals who use the data to support decision-making,” she writes. “They need to move from intuition to a more evidence-based approach, ensuring more transparency in decision-making.”
Entire mindsets and cultures of teams need to change from decisions based on limited information and “gut feelings” to data and facts. This is easier for some executives than others. A company that has the data it wants and knows how to analyze it could run into a wall if an executive team doesn’t want to listen to what they have to say.
There are Nearly Endless Uses for HR Analytics
The good news is that the more analysts play with data and explore new sources of information, the more value companies can find in people analytics. The field continues to grow as analysts keep asking “what if” when reviewing data options.
Ravindra Savaram of Mindmajix provides several examples of how people analytics can help an organization. Even small companies can benefit from looking at their staff through an analytic lens rather than a subjective one. These benefits include:
Can obtain employee time management patterns by analyzing calendar data and emails.
Can prove real-time benefits of training and coaching.
Can find patterns in overtime and payroll leakage to save money.
Can show top reasons for attrition, particularly related to specific teams and departments.
These analytics don’t just benefit the HR team. They also reduce waste, improve team relationships and help projects run smoother. The whole company benefits.
In another example, HR analyst Ben Eubanks says you can use data to identify the likelihood of retirement for some employees. Data can extend beyond employee age and dig into which benefits an employee is likely to receive and recent changes to their role or salary. An employee might speed up their retirement plan if they are expected to learn a new software platform or have a dramatic change in their role.
Predicting retirement times can help companies with succession planning and prevent large knowledge gaps when that person leaves. The transition is smoother and less unexpected with the help of data.
To further see HR analytics in action, turn to David Green. As an executive consultant on people analytics, Green curated several use cases for HR analytics to show exactly how companies across the world are using data to take control of their processes and improve operations.
LinkedIn used data to improve their talent acquisition predictions, he writes. They were able to better estimate the number of new hires needed, which meant they could staff their hiring team appropriately, creating an efficient workplace without overworking employees. This also meant that talent was hired faster and better candidates filled the positions. This has significant ripple effects through the company as new hires elevate their teams rather than burden them.
Leaders and teams throughout an organization are more likely to turn to HR analysts for answers and assistance if they see how these BA professionals use data to improve company processes as a whole.
People Analytics is Giving Way to Relational Analytics
As HR analytics grows, more people are pushing the boundaries of the data collected and how it is used. There are now advanced fields of people analytics that serve to provide better data with fresh insights.
Professors Paul Leonardi and Noshir Contractor at Harvard Business Review note that only five percent of big-data investments go to HR, meaning this field is still vastly underexplored. They emphasize the importance of “relational analytics,” which reviews people’s interactions with each other. With this wide view approach to data, teams can identify which employees can help the company achieve its goals and whom they can’t afford to lose.
However, relational analytics can be harder to capture, and some employees might not appreciate management collecting various data points with the goal of optimizing the office. For example, Tijo Philip at The Startup says companies need to review data found in emails, chats and other online communication (the “digital exhaust of a company”) in addition to individual points like gender, pay rate, number of missed days and average commute time.
While you might understand an employee’s behavior based on their age or whether they have children, you will learn a lot more by seeing who communicates the most in group chats and who works with people across various departments to get projects done. This information is also arguably more valuable than knowing who in your company has a master’s degree.
It is exciting to see how far the field of HR analytics has come in the past few years as more companies invest in this employee management strategy. By making decisions based on data rather than gut-feelings or assumptions, companies can create better working environments which lead to more engaged employees and increased profitability.
