Applications of Data Science in HR Analytics
What is HR Analytics?
When data science is completely inculcated in the field of HR, this is referred to as HR analytics. The basic bottom line of HR analytics is that it uses mathematical models, statistical models and analysis to get better results in human resources. All of this analysis helps analyze every employee-related factor that will eventually make the business perform better.
Lately, many businesses are taking into account the importance of analytics and how it can change the way the operations are handled. HR departments are the latest ones to take into consideration the effectiveness of proper analytics in handling the risks and also in making quick decisions based on data collected over time.
In HR analytics, several things are considered like people analytics, workforce analytics, and talent analytics. All these components of analytics help with various functions of human resources by automating them and making them cost-effective over time.
- Attendance data
- Employee surveys
- Salary and remuneration data
- Promotions and appraisal data
- Telemetric data
- Employee reviews and testimonials
- Recruitment procedure and data
- Work history of employees
- Personality data of employees
- Past and historical databases of the employees
All this data is collected and streamlined for better strategic decision-making and HR planning. Data can also help in better alignment and collaboration between various departments of the organization. Also, the HR software can be improved with handling the challenges that are faced by the employees and managers.
HR Analytics Process
Data collection is never the end game because there is a lot to be achieved. HR analysts need to work on various parts of the data by utilizing different models, algorithms, machine learning techniques, etc. to gain insights that can be useful. The data science tools help in creating reports, visualizing tools, and dashboards that will give a deeper knowledge of the HR functions and operations.
- Data collections
- Data cleansing
- Data analysis
- Evaluate KPIs
- Create HR plans based on various insights gathered
- Evaluate the plans
- Execute the plans and streamline them
Benefits of HR Analytics
HR analytics is changing how human resources should function in an organization. This is because before, the decision was not streamlined, and neither was there a huge amount of data that backed up those decisions. But now with proper analytics, things are changing rapidly on the work front. A large amount of data is used to gather insights and then the same insights are used to get a better strategic view of the operational functioning. Therefore, HR analytics is keeping strategy and operational efficiency in the centre by building new views and ideas that are people-oriented. It can be said that HR analytics is not about assumptions and theory-based planning, but is based on data and is more of a return on investment.
Some of the Benefits that HR Analytics is Bringing to Human Resources are:
- Better automation of human resources functions saves time and effort.
- The human resources are becoming better in their hiring and recruitment practices.
- The rate of retention is more enhanced because plans and strategies are not just profit-oriented but people-oriented as well.
- The processes of human resources are more streamlined and improved.
- The workforce, with the help of better analytics, can perform their tasks in less time and in a more productive way.
- The overall employee experience is enhanced which then makes employees happier and more content with their jobs.
- Better talent improvement can be taken into consideration for in-house training and development.
Some of the major Applications that can be found in HR Analytics are:
Retention: One of the biggest problems that are faced by the companies is that the rate of employee turnover is low, and many employees tend to leave in the early stages of their employment. This can cause a decline in organizational performance and overall growth. Also, recruiting new employees tends to get expensive for the organization if variable costs are taken into consideration like recruitment, training, lost productivity, etc. Therefore, there is a need to increase the retention rate of the employees. Analytics can help in increasing the retention rate by effective churn analysis. They can strategize better with impactful data and bring in new policies, training programs, and identify risks in a much better way.
Some of the points that are taken into consideration are:
- Churn rate
- Attributes of employees who have longer tenure
- Reasons why employees are leaving
- Employee survey data
- Onboarding experience
- Future forecasting of employee performance
Another one of the major functions of human resources is to find the right candidate for a certain job or position. Though it might sound easy, finding the ideal candidate is a lot of work and requires clear planning. There is a lot of data that is to be taken into consideration like market data, skills required, past hiring strategies and performance rates, etc.
Talent acquisition can be done from many places, whether through consultancies, colleges, direct sources, references, etc. This is the reason why there is a need to evaluate candidatures and find candidates who have the required experience, skills and educational qualifications. HR analytics can help in sorting and turning the data into a comprehensible manner that can be easily understood and looked through. Better predictive analysis can also help in getting a better idea of how a candidate will fare.
Some of the metrics that analytics take into consideration are:
- Number of positions available
- Number of applicants
- Final rounds and interviews held
- Acceptance rate of the offer
Employee Performance: Analyzing and gauging employee performance is very important to get a better evaluation report on employees. Better analytics can help in retaining qualified and experienced employees and provide better employee growth in the organization. Analytics can help in finding the best performers of the organization, those who are not giving their best, find the average length of employment, what are the motivating factors for the employees, etc. This will help in deciding the career progressions, increasing employee satisfaction, finding leadership qualities in them, and giving motivation to them to boost the overall performance. Therefore, understanding employee performance will allow the organization to improve their overall ROI and find potential leaders.
Compensation: Another very crucial factor that decides employee efficiency and overall business expense is compensation. This is the most important decision that the human resource department needs to make. HR analytics can help in analyzing various types of data like market data, tracking competitors’ compensation styles, what the employees are demanding, what the exit surveys say, why offers are declined, etc. All such things allow the company to decide compensation and remunerations of the employees which will be financially feasible and also will keep the employees happy.
There are three things that human resources can pay attention to with the help of analytics:
- Sales Motivation Incentives: With this, the sales quota is decided on and their bonus structure is optimized.
- Incentives: To make sure that the employees are motivated and have enhanced productivity and that proper incentives are in place, analytics can help provide insights into the motivation factors, both monetary and non-monetary.
- Executive Compensation: To keep the business running with proper leadership, it is important to retain the top leaders. To have better competitive advantages against other competitors, HR analytics can help with deciding on better perks and bonuses.
Training and Development: The skill gap is a problem that is faced by many businesses. Many employees are not skilled enough to handle various duties. Also, there is always a lack of proper skills in entry-level jobs so there is a demand for in-house training. HR analytics can help in filling that gap more effectively. It can help in gathering data about the employees and their level of skill to find out how they can be trained. Analytics can also help with allocating resources in the right places for training the employees and also with evaluating the entire development process. This will help the businesses in making their workforce eligible and more skilled which will not only enhance the business performance but also will help in getting a better edge over the competitors.
Without proper HR analytics today, it can be quite troublesome for the businesses to function. Not only will the data science and analytics help in recruiting and finding the more skilled employees, but it will also help in finding the problematic factors that are causing talent to be flushed away from the businesses. This will also help in enhancing the return on investment and give a better position when compared to the market competitors.
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