5 Key Reasons HR Pros Need to Understand Data Analytics

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We have more employee information available to us today than ever before, and that’s a great thing. Data analytics is vital to performance management, leadership development, and finding talent. No wonder 71 percent of companies see people analytics as a high priority, according to Deloitte.

I have been in leadership and management roles for more than 15 years. I’ve worked with numerous HR colleagues to build and strengthen teams. I understand firsthand how incredibly important data is to the process. For hiring managers and leadership teams who may need some more convincing, however, I hope the following five reasons demonstrate why data analytics matters to your organization:

1. There’s a War on Talent

While we’re all familiar with the “war for talent,” perhaps the more accurate name for the current recruiting environment would be the “war on talent.” As Dr. Tomas Chamorro-Premuzic and Adam Yearsley argue, this war mindset has resulted in organizations “repelling and alienating employees more successfully than harnessing their skills.”

If employers are to truly wage a war for talent, they have to start by learning what current, former, and potential employees think about them. This information forms the foundation of predictive analytics, which can help an organization determine where to recruit the best candidates, how to identify and attract those candidates, and how to keep people happy and engaged once hired.

As talent management expert Megan M. Biro notes, “To really leverage human capital now, we need to turn to the data that is constantly forming, streaming, reforming. Passive and active candidates, onboarding, training, engagement, retention, attrition, performance, recognition: It can all be predicted with big data.”

When you have data indicating that certain departments have higher turnover than others, you can investigate further and implement changes. If you receive consistent negative feedback on the onboarding process, you can make modifications. If you receive positive feedback on leadership and development in one department, you can replicate those practices elsewhere.

2. An Efficient HR Department Helps Your Bottom Line

The HR department is a key part of running any organization and an essential component in ensuring properly managed expenses from a profit and loss standpoint. The costs involved in hiring, firing, training, developing, teaching, and leading employees are not ones to discount.

In a 2018 Forbes article, strategic business advisor Bernard Marr explains how data can further optimize and streamline the HR department to help it make better decisions, better understand and evaluate the business impact of people, and make processes and operations more efficient and effective. Data, as Marr puts it, “improve[s] the overall well-being and effectiveness of the company’s employees.”

In short, data analytics helps your HR department reduce costs, increase profits, and improve your staff. Those are results you cannot neglect.

For more expert recruiting advice, check out the latest issue of Recruiter.com Magazine:

3. You Have to Know Where You’ve Been to Know Where You Can Go

Having access to past company metrics can be profoundly helpful. An organization that wants to grow needs to learn from its past to create its future. As the saying goes, “Those that fail to learn from history are doomed to repeat it.”

“The job of leaders … is to inspire collective efforts and devise smart strategies for the future,” business historians John T. Seaman, Jr., and George David Smith write in a 2012 Harvard Business Review article. “[H]istory is a rich explanatory tool with which executives can make a case for change and motivate people to overcome challenges.”

To understand the story of its past, an organization needs to collect and analyze relevant data, which it can then utilize to develop future strategies. Whether recruiting talent or improving employee engagement, you must know (and use) the KPIs that tell you what works and what doesn’t.

4. To Build a Productive Workforce, You Must Build a Happy One

An often neglected metric of an organization’s success is the happiness of its workforce. Happier workers can be as much as 20 percent more productive, according to one study.

Data analytics can help you evaluate the happiness quotient of your staff. Perhaps more importantly, it helps you find candidates who are likely to be happy in a specific role. Hiring a new employee is less financially efficient than retaining existing talent, so finding someone who is a good fit from the start saves time, effort, and money.

Data about a candidate’s skills, experience, IQ, and aptitudes are classic hiring tools, but in-depth data about personality traits can help predict a candidate’s happiness on the job. A happy workforce equates to a strong, productive, and loyal team. You’d do well to utilize all the data possible to ensure the people you hire will like what they do.

5. Tracking Performance Can Help You Proactively Address Problems

Data analytics can track both individual employee performance and overall organizational performance. If several employees from the same department are experiencing issues, the fault may not be that of the individual employees. Instead, data analytics will make it clear if you need to examine specific processes in that department and make appropriate changes. If multiple departments face similar problems, you’ll need to look closely at your entire company’s workflow.

Using performance data allows you to catch significant issues and obstacles early on. That foresight makes it much easier to restructure and repair your organizational methods before the problems become crises.

Whether your goal is to optimize onboarding, level up recruiting efforts, or increase overall engagement, analytics will help you make the data-driven decisions that ensure success for your organization. Most companies already prioritize people analytics. If you aren’t doing so yet, now is the time to change that.

Michael Z. Stahl serves as executive vice president and chief marketing officer of HealthMarkets.

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