What Is ‘HR Analytics’?
Every industry today faces tough challenges when it comes to talent. Whether it’s dealing with skills shortages, meeting diversity goals, sticking to tight budgets, or keeping up with changing employee expectations, the pressure is on.
For leaders, talent isn’t just a side concern – it’s a top priority. The average organization spends about 70% of its annual operating budget on employee-related costs. But, when your employees are equipped with the right skills and given the right opportunities, they represent a key source of competitive advantage.
That is: employees are simultaneously the single largest investment for an organization, and its greatest source of potential future value.
Organizations that maximize the return on this investment, the return on talent, really stand to win. To do this they must understand the metrics, the levers, and the measures that can positively influence impact.
HR (or Talent) Analytics can help you make workforce decisions that matter in a rapidly changing market.
What is “HR Analytics”? 🤔
HR Analytics is all about using data and statistical analysis to make smarter hiring and workforce management decisions.
By analyzing data from across the talent lifecycle – looking at everything from candidate skills and preferences, to employee performance and even broader market trends – you can make good decisions that set your organization up for success, and avoid or mitigate risk.
For example, in Talent Acquisition, having a deep understanding of both the wider talent market and your in-house skills can help you hire the right people at the right time.
Not understanding where and how to source talent can lead to shortages, ultimately affecting business operations and growth.
Key Components of HR Analytics 📊
Data Collection:
- Candidate Data: Education, work experience, skills, certifications, application information, interview feedback, assessment scores, background checks, sourcing channels, candidate interaction history, referral detail. You may also gather information on candidates who have been identified as potential fits for future roles but haven’t formally applied, and Profiles from platforms like LinkedIn, job boards, or recruitment databases.
- Employee Data: Skills, job roles, performance metrics, demographics, attendance, compensation, and employee engagement scores.
- Operational Data: Information related to hiring processes, training programs, turnover rates, and productivity metrics.
Data Analysis:
- Descriptive Analytics: Understanding what has happened by analyzing historical data (e.g., turnover rates over the past year).
- Predictive Analytics: Using data to predict future trends (e.g., identifying employees at risk of leaving).
- Prescriptive Analytics: Providing recommendations based on data insights (e.g., strategies to improve employee retention).
Reporting and Visualization:
- Dashboards: Tools that allow HR professionals to visualize key metrics in real-time.
- Reports: Detailed analyses and summaries that help in making strategic HR decisions.
Where HR Analytics Helps 💝
More Proactive, Efficient & Effective Talent Acquisition
In today’s talent landscape, most businesses can’t afford to simply sit back and wait for stellar candidates to apply. They have to be hustling for talent, identifying and nurturing warm leads before ensuring they make a hire that will be high quality. And they need to do that in a smart way, given the constraints most HR teams are facing.
HR Analytics, especially when powered by AI, transforms Talent Acquisition from a reactive to a proactive process.
By forecasting business needs and pinpointing skill gaps before they become urgent, organizations can streamline their recruitment efforts, building up much-needed pipeline so people are ready and raring to go as you require them.
“We are doubling our annual hiring rate. We’re obviously not doubling the size of our talent acquisition function. So we have to be very smart about how we are going to bring in all these additional hires without those extra people to do that. And for us, that's very much about evolving our approach from being reactive to proactive.” – Lara Farrell, Global Head of TA Programmes, Hilti
With good HR analytics, you can also see which sourcing channels yield the highest-quality candidates, so you don’t waste time and effort – and money – on channels that aren’t working.
“The great thing now, with systems and integrations, is the ability to get way more granular and be like: the people I hire through this source, or the people that come in through this channel, and how much better or how fast they are; do they perform better?” – Nigel Williams, Global Talent Acquisition Leader, BlackRock
Analytics should also help you pinpoint where candidates are dropping off in the hiring process, whether it’s during a lengthy application process or too many interview rounds. By identifying these pain points, you can make the necessary adjustments to improve the candidate experience and attract top talent.
A deeper understanding of the skills of your talent pool – employees as well as candidates – also makes it far easier and quicker to make the right call when it comes to aligning them with roles. By recommending talent based on a deep understanding of their skills, competencies, and career goals, recruiters can fill roles more effectively, saving time and resources.
Higher Employee Engagement & Retention Rates
Beyond enhancing recruitment, HR analytics offers deep insights into employee performance across various departments. This makes it easier to encourage and reward high performers, and addresses retention issues – something that is a real challenge in today’s market, where employees demand greater flexibility, competitive compensation, and career growth.
HR analytics supports informed decisions on promotions and compensation strategies, and helps HR teams detect early signs of dissatisfaction. When you understand what your employees need to stay happy and motivated, you can build a retention strategy that works.
Real-time insights into employee sentiment, engagement and skills, as well as where you have gaps in the business, also help you spot areas for targeted upskilling or reskilling. This not only contributes to a culture of learning and growth, but helps you ensure the team can meet wider business objectives – consistently.
“How many people are we developing through the business, and what do we need to replace those people with, and what are the skills going to be that we need in five years time, and where can I start looking for those now? So that we can be quite intentional about what we need. So we can really start building up those pipelines that will add value.” – Elle Lebourg, Global Head of Talent Acquisition, Hilti
More Strategic Workforce Planning
And this connects to the next point: good HR analytics will help you plan better. You can identify global talent pools, determine the optimal investment for the skills you need, refine your recruitment strategies (build, buy or borrow?), and stay ahead of talent demands.
HR analytics can revolutionize workforce planning, by more closely aligning HR strategies with overarching business goals, through things like predictive insights. For example, if the company aims to expand into new markets, HR can use data to figure out what kinds of skills and roles will be needed to achieve this.
Similarly, if trends indicate that certain roles will be in high demand, HR can proactively recruit or train employees to meet this future demand. Many leaders we have spoken to are using smart HR analytics and talent intelligence to plan where to expand to, and inform their location strategies.
“The most important thing I think any people or HR function can do is making sure you’re solving the problems for the business that are needed and relevant, but you also have that advisory and that sort of look ahead to help the business prepare for what’s next, and what we may not even be thinking about. BlackRock is taking a look at our overall footprint and making decisions of: how do we want the firm to look in the future? How do we want our different offices to be different centers of expertise?” – Nigel Williams, Global Talent Acquisition Leader, BlackRock
Achieve Your Diversity Targets
Diversity, Equity, and Inclusion (DE&I) are more than just buzzwords – they’re essential to building strong, successful teams. Research shows that diverse teams outperform their less diverse counterparts, and Talent Analytics can help you hit your diversity targets.
By analyzing data on hiring, promotions, and employee demographics, you can uncover where progress is lagging, identify potential biases, and develop targeted strategies to engage underrepresented groups.
These insights enable you to take actionable steps to create a more inclusive and equitable workplace, enhancing your DE&I outcomes and fostering a culture of belonging across the organization.
Relying on accurate and comprehensive data also helps reduce bias in talent acquisition and management processes. Using HR analytics means you can make decisions based on hard evidence rather than assumptions, leading to fairer and more effective outcomes.
Demonstrate the Impact of HR
As the role of HR becomes more important and more scrutinized, being able to show how talent strategies are working is essential.
Talent Analytics tools can help, giving you powerful insights (as well as customizable, presentation-ready dashboards) in seconds, making it easier to come prepared for high-level discussions.
Whether it’s showcasing what’s working or identifying areas that need attention, these insights allow you to communicate your team’s value effectively.
“Our mantra has been kind of more numbers, fewer words. So we’re really bringing data as evidence around that. And that’s how we demonstrate the value of the function: we’re bringing information that helps you make better decisions and make those decisions faster.” – Lara Farrell, Global Head of TA Programmes, Hilti
The right HR Analytics will give you a complete X-ray view of your global workforce’s capabilities. This holistic perspective reveals both gaps and opportunities, so you can align your talent strategy with your business goals.
Whether you’re planning for growth or navigating change, having a deep understanding of your workforce ensures you can meet any challenge head on.