Harnessing HR analytics for better workforce decisions

As an HR leader, you are constantly making decisions that have a direct impact on your company’s most valuable asset – its people.  

If these decisions are based solely on intuition or experience, they can lead to unpredictable outcomes and valuable growth opportunities disappearing into thin air. But when backed by objective data and deep insights, every action you take is bound to bring the desired results.  

HR analytics takes guesswork out of the picture by turning raw workforce data into clear, actionable insights. It helps you answer critical questions such as:  

• Is employee attrition increasing or decreasing?  
• What factors are influencing productivity, engagement, and retention? 
• How is overtime affecting labor costs and employee well-being?  

Such insights can inform your strategies and decisions, helping you manage your workforce better, optimize HR processes, reduce turnover, and steer your organization toward long-lasting growth and success.    

In this blog, we will break down everything you need to know about HR analytics – what it is and how it benefits your business, key metrics to track, steps to implement, and much more.

HR analytics explained: what it is & how it works 

HR analytics is the process through which HR data is collected from multiple sources and analyzed to gain deeper insights into your employees’ productivity, performance, attrition, retention, and much more. 

It uses your most valuable asset - employee data to uncover patterns and trends, so you can use these insights to make impactful data-driven HR decisions, craft actionable strategies, refine existing policies, and build a workplace culture where employees can thrive.  

With HR analytics, the ultimate goal is to use data-driven insights for optimizing your HR function for both employee well-being and organizational success. Whether you are scaling up, improving retention, or enhancing workforce productivity, HR analytics helps you peer through every aspect of your workforce, paving the way for proactive actions and long-term success.  

An astounding volume of data is being generated today across organizations. However, more data doesn’t necessarily mean better outcomes. The pace at which data is being generated should match a company’s capacity to analyze that data to detect challenges and the underlying systemic issues, illuminate solutions, and bring noticeable change across the workplace.  

With the help of HR analytics, you get to: 

• Understand how impactful your new policies and processes are 
• Identify employee turnover and retention trends and their root causes 
• Track DEI and understand how diverse your workforce is 
• Monitor employee leaves, absenteeism, attendance, and much more.  

Making smarter leadership moves with HR analytics 

HR analytics is a must-have for HR leaders. At a time when competition is tough, you can’t simply rely on your gut instincts and experiences. You need access to concrete insights to identify potential challenges, illuminate solutions, and drive workforce strategies.  

Here’s how adopting data analytics in human resources can be a game-changer for your business:  

Talent acquisition 

At Hobasa, we understand how arduous it can be to get the right people on board. And most of the time, things go haywire when the people you hire don’t stand up to your expectations, leave early for better opportunities, or don’t fit in your company’s work environment.  

HR data and analytics can help you refine your hiring strategies by:  

• Analyzing previous recruitment patterns and new hires’ long-term success with your company 
• Assessing candidate profiles and understanding which applicants have the most likelihood to make it through the interview process 
• Identifying the most effective talent acquisition channels, such as employee referrals, job boards, or social media platforms.  
• Creating an ideal candidate profile by analyzing the productivity metrics, engagement level, and tenure duration of your high-performing employees 

Employee retention  

When employees leave, it not only reduces workforce productivity but also drains you financially, given the expenses involved in hiring and onboarding. Using human resources analytics, you can proactively initiate the right conversations by:  

• Identifying early warning signs such as declining productivity, lower engagement, and a rise in absenteeism 
• Analyzing turnover patterns to find real reasons for employee exits 
• Personalizing employee experiences by creating tailored training and development plans, mentorship programs, and wellness initiatives 
• Enhancing your DEI efforts by focusing on employee sections that feel left out 
• Tracking employee productivity and recognizing your star performers 

Employee engagement and productivity 

Productivity and engagement directly impact an employee’s performance. Insights into these two areas, as well as active and passive listening, can help you take prompt actions in the right direction and build a high-performing workforce.  

Here’s how adopting HR analytics in performance management can help you with:  

• Tracking overtime hours and identifying employees consistently working beyond their regular hours 
• Monitoring absenteeism trends to uncover patterns related to excessive and sudden leaves, unplanned absences – all of which indicate disengagement 
• Tracking peak and low productivity hours and aligning the work shifts accordingly 
• Measuring workload distribution to avoid overburdening or underutilization of employees’ work hours
  

Read more: Turn your workforce into a productive powerhouse using time and attendance data

DEI improvements 

A company’s growth hinges on the quality of its employees. Improving diversity in the workforce is necessary as it opens the door for out-of-the-box ideas, new perspectives, and fresh approaches. However, unconscious biases in hiring and promotions can hinder diversity in the workplace.

Here’s how diversity analytics can help:  

• Analyzing trends in candidate selection, performance evaluations, and leadership pipeline 
• Measuring representation and pay equity across departments 
• Tracking if resignation or termination rates are disproportionately high among certain sections of employees 
• HR analytics can bring to spotlight barriers that are impacting DEI in your workplace, so you can build targeted policies and programs to support underrepresented groups.  

Compliance and risk management 

Non-compliance with regulatory requirements on employee salaries, overtime pay, and other employee benefits often leads to costly lawsuits, fines, and reputational harm. HR analytics can safeguard your business from compliance risks by helping you build policies and make decisions that are in sync with labor laws and industry regulations.  

With human resources metrics and analytics, you can:  

• Track overtime trends and ensure employees are compensated correctly for the additional hours worked 
• Monitor employee classification and ensure that full-time, part-time, and contractual workers receive appropriate benefits  
• Analyze salaries across roles, demographics, and departments to detect and address pay gaps
  
  By employing HR analytics insights, you can stay compliant with the constantly changing regulations and build a workplace that’s ethical and fair in every way.  

Data-driven decisions 

HR is a vital business function, a pillar supporting your organizational growth and success. Relying solely on your experience and assumptions may not move the needle.  

With HR data analysis, you can make practical decisions on workforce planning, expansion or restructuring, based on real-time insights. You can also manage risks proactively by closely tracking turnover and absenteeism trends and taking preventive measures, such as refining your policies and improving employee benefits. 

Read more: Winning with data: how analytics drives smarter business decisions

Key HR metrics and KPIs you should monitor 

At Hobasa, we believe that tracking the right HR metrics and KPIs and aligning them with organizational goals is essential to recognize challenges and areas for improvement and develop targeted solutions. The insights you glean from your analysis translate into improved productivity, retention, and cost-saving – all that you need for long-term, sustainable success.  

What’s important to note is that not every metric is going to be relevant to you. Based on your specific business goals, identify the metrics that matter most to your business and keep a close watch on them.  

Here are some of the key HR metrics and KPIs worth tracking:  

Employee turnover rate 

 This metric measures the number of employees leaving your organization during a specific period of time. A closer look at this metric can reveal details about the departments or roles witnessing a continuous loss of talent, issues with your recruitment process, or deeper problems running inside the company, forcing people to switch jobs.  

Absenteeism rate  

 If employee engagement is a concern, tracking this metric might help you take a step in the right direction. Absenteeism rate shows unscheduled, unplanned, sudden leaves, indicating a lack of engagement or motivation in employees. The absenteeism rate should be as low as possible, since a high rate could mean problems like stress, bad management, lack of appreciation, etc.  

Overtime expenses 

While overtime work is stressful for employees, it’s also financially draining for your business. Overtime expenses measure the additional cost you have to incur when employees put in extra hours at work. These expenses can impact your payroll budget, hence, it’s essential to keep overtime work under control.  

Leave utilization  

This metric shows the percentage of paid time off used by employees compared to what they are entitled to. With this metric, you can identify underutilization patterns that are leading to stress and overutilization trends indicating workload imbalance or staffing gaps.  

Retention rate  

Retention rate shows the percentage of employees who remain with your company for a specific period. It’s a critical HR metric that gives a peek into how stable, satisfied, and committed your workforce is. While a high rate indicates fewer expenses on recruiting and onboarding, a lower rate points toward problems related to your work culture, compensation, job demands, etc.  

The 4 different types of HR analytics

There are 4 main types of HR data analytics, and each of these offers a different level of insight to help you not only understand past workforce trends but also predict what’s in store for the future and optimize strategies to stay better prepared.   

Descriptive analytics (what happened in the past?)   

Descriptive HR analytics is focused on historical data and trends. This data aids you in understanding the events of the past that could be related to employee turnover, productivity, absenteeism, or overtime working. With such insights, you can gain a foundational understanding of how things panned out in the past and the specific areas that need your immediate attention.   

Diagnostic analytics (Why did it happen?)   

Diagnostic HR analytics goes a step further by uncovering the reasons behind the events that occurred in the past. It uncovers the root causes of certain trends and patterns by examining the relationship between various HR data points. These insights help you gain a deeper understanding of HR or workforce-related problems, enabling you to address the underlying issues rather than just reacting to the symptoms.   

Predictive analytics (What will happen in the future?)   

With historical data as the foundation, predictive HR analytics forecast trends or events likely to happen in the future. This enables you to anticipate workforce challenges and seize opportunities as they arise.  

You can identify employees with a high risk of leaving based on engagement and performance trends, forecast hiring needs based on your company’s growth projections and industry trends, and take preemptive actions to stay prepared.   

Prescriptive analytics  (what should we do next?)

Prescriptive analytics tells you the best course of action to address HR challenges and achieve the results you want. Using data-driven insights, it suggests actionable recommendations and strategies to bring you the desired HR outcomes.  

There may be suggestions around bringing policy changes to enhance employee engagement, launching training programs to bridge skill gaps, or providing flexible work options to reduce burnout. 

Implementing HR analytics: 4 simple steps  

Here are some simple steps to get you off the ground with HR analytics: 

1. Set your goals 

To kick-start the process, you need to first be crystal clear about the goals you wish you 
accomplish using HR analytics. Identify the areas concerning your business – is it high turnover or declining productivity levels? Or is incorporating DEI in the workplace getting challenging? 

By clearly defining your objectives, you can focus on measuring the right metrics and using analytics in a targeted way. 

2. Collect data and ensure quality 
The process of HR analytics is entirely dependent on the data provided. For analytics to deliver meaningful insights, it’s essential to ensure easy access to data sources such as your HRIS or HCM, employee engagement tools, and feedback surveys. 

Also, data quality is critical for HR analytics. If the data used for analysis is tainted with errors and inaccuracies, it can lead to misguided decisions, legal complications, and inefficient HR processes.  

Since the process of analytics relies heavily on data, it’s critical to adopt measures such as regular data auditing. This will ensure that the tools you use always have quality data to provide recommendations, predictions, and insights.  
 

3. It’s time to analyze data and act on it 

Once the tools are in place, you can start tracking HR metrics and identifying correlations between different factors. This will help you spot patterns between data points and extract critical insights for decision-making.  

With insights into your workforce trends and problematic areas, you will be better positioned to bring strategic changes to your existing processes, launch new initiatives, and refine your strategies. 
 
If turnover is high in a specific department, you can have one-on-one discussions with the team to find real reasons behind the problem and adjust workload distribution to avoid stress. If you find pay gaps in your DEI analysis, consider reviewing and adjusting compensation 
structures to ensure equity in salaries. 

4. Keep measuring and optimizing 

You can’t get done and dusted with HR data analysis all at once. It’s a continuous, iterative process that requires regular monitoring, where you measure the impact of your initiatives, identify new challenges, and adjust your strategies and approaches based on real-time data.  

You need to keep a regular track of the key HR metrics and KPIs over months and years to identify patterns and recurring issues. This is a great way to stay on top of what happened, what’s happening, and what’s likely to happen in the future, as far as your workforce is concerned.  

 
Leave the guesswork behind - let data drive your HR 

At a time when data is the one thing that can give you an edge in the market, you can’t be relying on intuition and experience alone to make big business decisions.  

HR analytics is a necessity for both small and big businesses, as it has the power to transform your HR function into a strategic powerhouse that drives real business outcomes.  

If long-term, sustainable success is on your mind, HR data analysis can be your best ally. With analytics-driven insights, you can make the best hiring decisions, retain your top talent, improve workforce planning, and build a great company culture where employees can thrive.  

The key is to start with clear goals, quality data, and an unwavering commitment to continuously improve.