Example of HR Analytics
Business decisions have a big impact on businesses and the people working in them, so leaders are looking for more fact-based decision-making tools.
HR analytics is one of those tools, and has four stages:
· Collecting the important data
· Looking for trends
· Identify what drives the trend.
· Decide how to shape the outcome of the trend.
Each stage requires a full understanding of the earlier stage.
1. Collecting the important data:
All relevant data about the workforce are tracked, organised, and easily accessible.
For example:
· Headcount
· Attrition
· Promotion
2. Looking for trends:
Look for patterns in the data. For example, in the area of workforce planning.
Analyse the data on promotions, attrition, headcount at each management level, and anticipated organisational growth rate. This makes it possible to project the “shape” of your organisation (the percentage of employees at each level) at the end of a year, at the end of two years, or more years.
With the proper system, leaders can include anticipated future attrition/promotion and organisational growth rates to review different scenarios.
By assigning salaries to people at each level, leaders can see the financial impact of having an organisational shape that looks like a typical pyramid (with fewer employees at each level as one moves up the organisation) or a more even distribution across levels, which would happen if the organisation is not hiring but employees continue to receive promotions.
3. Identify what drives the trend:
What activity could be causing these trends?
This example of predicting the future shape of the organisation is useful when you have decided what’s driving each component of the model. For example, it could be that the organisation's projected shape in five years is top heavy. Why is that?
Closer investigation and discussion might show that promotion rates are too high, combined with attrition that is higher at lower levels than it is at higher levels. These discussions give you options on how you can change the outcome.
4. Decide how to shape the outcome of the trend:
The results of collecting the data and looking for trends can help you make the right decisions for the future. Leaders need to discuss how they can shape outcomes rather than just measure them.
Predictions resulting from the organisational shape model may lead to higher performance if you collaborate with the right people in your organisation. The objective is to ensure that managers have a shared understanding of the company’s ambition (for example, sustaining a pyramidal organisational structure) and the actions they can take to achieve those goals.
For example, if analysis shows that the future shape of the organisation is top heavy, the actions include:
· Reduce annual promotion rates
· Introduce attrition-prevention programs if your analysis has revealed that high-performers are the most likely to leave.
· Have a recruitment drive for positions at lower levels
HR analytics can apply to any data collection activity, such as employee opinion surveys, employee selection research, or employee diversity analyses.
Your objective should always be to get to stage that directly impacts on performance: Shaping the outcome.
Learn more about the 5 key areas of HR analytics ...
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