How to Get Started with HR Analytics in 5 Steps

Human resources once based human capital issues on intuition. Feelings and “gut instincts” were the deciding factors when evaluating attrition rates, performance appraisals, promotions, and other important decisions.

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While emotional intelligence has long played–and continues to play–an important role in HR/employee relationships, it’s not overly useful when dealing with data-driven issues. Advances in qualitative science and statistical modeling now put HR analytics within the reach of most companies, allowing the use of employee data as a means of improving business outcomes. HR analytics provides insight into key people issues, including turnover rates and employee engagement. To successfully implement an HR analytics program, you need to take the following steps.

Centralize Data

Without careful oversight, employee data tends to grow organically, with different types of data finding homes in different human resources systems and across departments. Throughout its many locations, existing data may be a hodgepodge of Excel sheets and paper records.

You need to find all of your people data and centralize it in a single location. 

Your first task when implementing HR analytics is to find all this data and centralize it in a single location. Promotion paperwork, exit interviews, employee performance check-in data, payroll, health benefits–all employee data needs to be in a single centralized repository. Only once this is done can you start identifying the key performance indicators hidden in employee data, and understand how KPIs influence business outcomes.

Choose an HR Dashboard

The next step is to choose an HR analytics dashboard. Trying to visualize raw data is an exercise in frustration–it needs to be converted into some form of graphic format. A dashboard’s role is to create that format, so you can monitor data and quickly view headcounts, turnover rates, performance appraisal rankings, and more.

Develop Your Analytical Abilities

If you’re just breaking into HR analytics, chances are pretty good your HR department lacks staff with the necessary analytical skills. You’re going to need to develop your team’s capabilities. An alternative is to contract data analysis to an external contractor, which can be effective. Even so, having a few people on staff with data experience makes communicating needs to external contractors easier.

You need to develop your HR team’s analytical skills. 

Put Data into Practice

With the previous three steps in place, you’re ready to start using HR analytics to provide solutions to business problems. Ideally, start with a low-effort, high-impact issue–a project which is relatively easy to complete, but offers high-value solutions. Reducing attrition rates, identifying high performing employees, or ensuring compliance with local and federal Equity Acts are all possible first projects.

Continue to Improve

From here, HR Analytics is a matter of constant improvement. Monitor your analytic processes for signs of inaccuracies, inefficiency, and errors, resolving issues as you find them to prevent future problems. Keep an eye of the rapid changes in analytic trends and technology so you remain current in the field.

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Your ultimate goal is to become a data-drive HR leader and transform HR analytics from a system that resolves existing issues into a predictive system that uses existing data to provide future solutions.