Introduction to HR Data Analytics

The proper use of HR data analytics can transform human resources departments in all aspects of their planning, processes, and functionality. However, there are challenges with HR analytics that are often overlooked and can inhibit and limit an HR department’s ability to perform efficiently and effectively. This article sheds light on why HR analytics is crucial to your business, the challenges posed and how to overcome them, the role of Big Data in HR analytics, and what the future holds for HR data analytics.

Definition and Importance of HR Data Analytics

First, let’s be clear on the definition of HR data analytics. HR data analytics is comprised of three components:

Harvesting and collecting the data related to your HR operations
Processing and analyzing the data
Using the analytics to improve, refine, and optimize everything related to your HR processes and practices

HR data analytics will help you make more informed decisions, better manage employees, reduce risk, lower costs, and be more likely to achieve your HR and overall business goals. Every aspect of HR operations can benefit from a well-structured approach to analytics and data utilization.

How HR Data Analytics Transforms Human Resources

It’s a no-brainer that data-driven insights can benefit your HR business. But the depth and range of human resources analytics can impact every aspect of your HR business and fundamentally transform what you do, how you do it, and what you’re capable of.

Consider all the data points that can be collected and analyzed. Starting with the existing workforce, HR data includes employee demographics, job performance, employee engagement, absenteeism, compensation/benefits, training, retention, reviews, and any other data your particular industry generates. All this data can help your HR department in a variety of ways, such as reducing workforce turnover, improving performance and productivity, improving training programs, increasing employee engagement, and creating a better work environment and company culture, just to name a few.

Then consider the data you gather from your entire hiring process, such as attracting, sourcing, and vetting candidates, interview performance, time-to-hire, success rates of new hires, on-boarding, attrition, and the candidate experience. With the insights provided by the data, you can better identify the best candidates and increase the success rate of new hires by utilizing hiring software to streamline candidate selection and improve your entire recruiting and hiring processes. That’s a positive transformation, and you already have the data to achieve it. Now comes the hard part – collecting, analyzing, and utilizing all that data.

Major Challenges in HR Data Analytics

With all the benefits HR data analytics bring to your business, come several challenges to identify and overcome. Being aware of these challenges is the first step to avoiding pitfalls and getting the most out of the data.

Integrating Data from Multiple Sources

Finding, combining, and properly merging data from multiple sources is a tall task to begin with, but as the volume of data and its complexity increase, this becomes even more challenging. Data may be in different formats and languages, have various ranges of quality and compliance standards, and be fraught with a myriad of other inconsistencies. Implementing structured interview software can help standardize data collection for better analysis. And with real-time data, the challenges are exponential, such as with synchronization of the data and how it may be siloed from the source.

Skill Gaps and Training Needs in HR Analytics

Another challenge with HR data is the lack of the skill set required to analyze the data. The complexity and volume of the data may be more than a traditional HR team can handle. A 2023 survey by XpertHR revealed that 57% of HR professionals believe they don’t acquire enough data to measure the performance of their own employees, and 32% didn’t believe their current staff had the acumen to evaluate data well enough to understand its value or how to take advantage of data they received.

Furthermore, the data can be misinterpreted, which can render the data useless, and opportunities may be overlooked. Also, the fear of inaccurate interpretations exacerbates other challenges, such as leadership questioning the quality of the data and being skeptical of the data results. This leads to hesitancy in using the data to establish HR strategies and tactics.

Not having the right tools to properly explore and evaluate the data compounds the frustration of HR teams tasked with analyzing the data. Without the tools and expertise, it can be overwhelming to comprehend the data, glean meaningful insights, and implement any changes in a timely manner. Also consider that users may feel undo pressure for quick results, anxiety of having to adapt to new processes, and potentially not having the support from leadership to implement change from data-driven analytics.

IT and Infrastructure Limitations

Having the right technical infrastructure in place is tantamount to the success of your HR data analytics operation. It is pertinent that you have significant systems in place for collection, storage, integration, and parsing of data. This includes keeping your technology and software updated to handle these requirements.

Furthermore, data analysis is resource-intensive for IT, which makes it especially challenging for smaller companies that may not have the resources to handle analytics programs. Make sure your infrastructure is ready to meet the demands of HR data analytics and is scalable to ensure it can keep pace with the evolution of data analytics.

Lastly, and perhaps most importantly, is the security of the data you collect. The ramifications of a data breach can be devastating, legally, financially, and for your reputation. Always question the vulnerability of your data, test the security of your infrastructure, and be mindful of internal data breaches.

Privacy and Compliance Concerns

Much of the data that is collected for HR data analytics includes sensitive information of your candidates and employees, such as personal details, private banking and health records, salary history, performance evaluations and more. It’s up to you to be aware of, and be compliant with, any laws and procedures that go along with the collection of personal data, such as consent management. This includes the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPA). Local regulations may also be in place that affect your data collection processes.

Other considerations include what and how much your company surveils employees, any third-party access to data, protocols in place for data breaches, and legal action taken by a disgruntled employee.

Maintaining the “Human” Element in Data-Driven HR

To many HR managers, the idea of implementing HR data analytics is simply letting computers decide whom to hire. Although the desire to be ethical by putting technology in the backseat of your hiring decisions is commendable, it’s up to you to use all available tools to hire the right people for the right jobs in the right companies. This is the ultimate ethical achievement for HR. It’s fair for employees, shareholders, society—everyone.

HR data analytics is a tool to support hiring, to help you ind the best candidates, and to understand what makes candidates truly successful. But human beings still make the final decision. Thanks to data-driven insights, they make better decisions.

Solutions to Common HR Analytics Challenges

There are several things you can do to overcome the challenges associated with HR data analytics and mitigate the risks involved with data-driven HR strategies.

Improving Data Integration and Accessibility

Successful data integration involves a lot of moving parts. First, create a detailed plan in collaboration with all departments involved. Your plan will include identifying a data integration platform that is appropriate to your needs. You will also need to identify the sources of data, the standards of each source (format, structure, nomenclature, etc.), and an evaluation process for the quality of the data to ensure the data is reliable, accurate, validated, current, consistent, and useable by your analytics team.

Next, establish internal governance rules and regulations as to how the data will be accessed and used by your team. Lastly, protect your data. As discussed, have rock-solid data security practices in place, as well as protocols if the data is breached.

Training and Development for HR Analytics Skills

Having the right tools and training is key to getting the most out of HR data analytics. The proper tools, like assessment software, can ensure the data is high quality and structured in a way that allows HR teams to achieve useful, measurable results. The proper training will include data literacy, an understanding of statistics, and data sciences. All the data is moot unless it can be digested and utilized. Also, make sure your staff is properly trained in data privacy policies and the responsibilities that go along with their role in your organization.

If you’re an HR manager, invest in training courses for your team. It is money well spent and will pay off in terms of how efficiently and effectively you can implement solutions derived from HR data analytics.

Using Cloud and SaaS Solutions for Data Analytics

Improve your analytics workflow with software tools that are appropriate to your HR analytics goals. Software platforms can do much more than integrate the data and make it accessible. SaaS solutions will provide centralized storage for your data, automate collection, and, most importantly, provide a visualized dashboard for review and generating reports.

Many SaaS solutions also give you advanced analytics options and will integrate with other HR software you may be using.

Managing Privacy and Compliance Effectively

Privacy and compliance are serious issues for HR data analytics and can have significant legal ramifications if not addressed. Assuming you’re compliant with all exterior requirements, look internally to ensure you’re covering all the bases.

Have internal policies: You should have HR-specific guidelines and security policies to control access and usage of sensitive information.

Transparency: Communicate with people about the data you’re collecting and how you’re using it.

Guidelines: Have documentation in place about the ethical use of the data you’re collecting and that it’s being utilized and protected responsibly.

Data volume: There is a thing such as gathering too much data. How much do you need to realize its value, and when does it become so much that it exceeds your ability to analyze it? So, be intentional with the data you collect. Otherwise, the sheer volume becomes suspect by your employees.

The Role and Impact of Big Data in HR

Human resources departments have been slow to get on board with big data, and it’s not just a lack of forward thinking. As this article has shown, HR departments face daunting challenges when implementing data-driven HR strategies that involve infrastructure, logistics, and changing mindsets. Having a deeper understanding of big data and how it can be integrated into HR data analytics will help in its adoption and application by your team and leadership.

Big Data vs. HR Data Analytics: Understanding the Difference

The terms of big data and HR data analytics are often used in HR discussions, but they are not the same. “Big data” refers to the overall data that is available, and it can be accessed for a variety of purposes and functions. “HR data analytics” is the process of using big data for the betterment of all things related to human resources. It’s up to an HR analytics team to use big data to address their needs.

Key Benefits of Big Data in HR Analytics

If used properly, big data can be your closest ally for benefiting all facets of your HR operations. Here are just a few:

Hiring right the first time: Big data can help you find the best candidates that are uniquely qualified for specific jobs you need to fill. Bad hires can cost you up to 30% of the annual salary of the position, according to Business.com. Save time and money by hiring right the first time. Big data can also help keep your pipeline full of qualified candidates.

Retention: Employee retention continues to be one of the biggest headaches for recruiters. Big data provides insight into who is leaving your company, how quickly, and for what reasons. It can identify trends in workforce turnover, which can help you identify why long-term employees stay with the company. This information can help you develop a better company culture to ensure retention and turnover are less of an issue.

Forecasting workforce needs: Big data can present a clearer picture of what your company will need from a workforce perspective. Don’t be caught off guard when you need to hire and for what roles. And it may not be additional resources. You may be able to fill workforce gaps with task distribution. Furthermore, you may discover that the skill sets of current employees can complete tasks and projects you were about to hire someone else to complete.

Management: Big data can help you analyze and evaluate the performance of your employees, manage their performance, and help ensure you’re doing your job in assessing them fairly and ethically.

Be the best HR department you can be: Big data can help you do your job better. With the knowledge you have at your disposal, you can develop better hiring strategies and processes, get insights to improve morale and retention, identify patterns and trends that impact who and how you hire, and so much more. And big data helps prove your ROI and make decisions based on factual data. Leadership loves that!

Future of HR Data Analytics

The evolution of HR data analytics is happening almost faster than most HR operations can keep up with. Combined with the ever-increasing utilization of AI in all aspects of HR, the demand for data-driven workforce strategies is more important than ever. In fact, data-driven insights may soon become a fundamental requirement for achieving broader business objectives. To stay competitive, HR professionals must keep pace with emerging trends, technological advancements, and the future of data-driven HR strategies.

Emerging Trends: Predictive Analytics and AI in HR

Many HR software solutions, like HireVue, have been spearheading the integration and utilization of predictive analytics and AI for several years. Expect to see an increase in personalization of the candidate and employee experience. For candidates, this means providing a more personalized experience during the hiring process, onboarding, and training.

For existing employees predictive analytics and AI can help identify potential pain points, provide real-time performance insights, remote work optimization, and even identify patterns in compensation and benefits. This allows you to develop a positive work environment and culture, increase their satisfaction, and reduce turnover.

For HR processes and tasks, predictive analytics and AI will continue to expand. Its impact will be seen in a multitude of ways, including:

Forecasting new hire success
Reducing time-to-hire
Predictive scoring models to reduce poor hiring
Reducing candidate attrition
More immersive and personalized VR for training and onboarding
Providing a more holistic employee experience
Creating a more DEI-friendly culture
Continuous performance management

The proper utilization of predictive analytics and AI can give you a competitive edge, but it requires your team to have the skills necessary to take the advantage.

Evolving Roles and Skills in HR Data Analytics

So, what does your team need to fully understand and utilize HR data analytics? Focus on building a team that can analyze data, has a deep alacrity with statistics and metrics, understands predictive modeling for forecasting and identifying trends, and is proficient in creating clear, concise reports, dashboard, and documentation. Again, this is where ongoing training and education are key. Invest in your team, and the returns will be magnified in the overall performance of your department.

Having the right software is critical as well. HireVue’s suite of software solutions is designed to support a wide range of HR operations regardless of size, industry or location.

Conclusion

Key Takeaways for HR Data Analytics Implementation

Implementing HR data analytics is a necessary, critical step to ensure your company’s ongoing success. Take the time to develop the infrastructure you need and collect the data the right way. Have the team in place that is ready to take full advantage of the data. Be prepared to implement the analytics across all aspects of your HR operations. You will realize its immediate impact on your operations, candidates, and employees and discover what you and your team are truly capable of.