Talent Management

5 Useful Applications for Data Analytics in HR

By | 10 min read | Published

Decision-making without data is a thing of the past.

Is your business’s data analysis and collection strategy all over the place? Is there even a formal strategy in place? If you’re an HR professional who is operating within an organization where data is inefficiently gathered or underused, this guide is for you.

Collecting and analyzing employee data is a cornerstone of strategic HR, but it’s also a necessary practice to navigate the challenges of recruiting and retaining top talent in today’s working environment.

In Capterra’s Company Culture Survey* from early 2022, nearly a third (31%) of respondents revealed that turnover within their department is higher than it was before the COVID-19 pandemic. And considering that approximately four million Americans have left their jobs every month since August 2021, that’s not too surprising.

So, how can data analysis help? By identifying employees who are at risk of leaving your organization, revealing the sources of voluntary turnover in your workplace, and uncovering how you can improve your candidate experience in order to improve your offer acceptance rate. And that’s just the tip of the iceberg when it comes to what’s possible through data analysis in HR.

Ahead, we’ll explain what data analysis in HR is and provide you with five applications of this practice, along with suggestions for software that can help you get started.

What is data analytics in HR?

Data analytics is the process of examining raw data with the goal of identifying trends and drawing conclusions. In the human resources field, data analytics is often deployed to help HR professionals make more informed decisions about the future of their workforce. There are a few notable subtypes of HR analytics, and we’ll give a brief overview of how those are differentiated from one another below:

  • People analytics: People analytics, also called talent analytics, involves collecting information about your organization’s talent with the goal of improving the employee experience. The type of information that would be collected for people analytics includes data concerning employee performance and productivity, work-life balance and well-being, and employee satisfaction and engagement.
  • Workforce analytics: Workforce analytics is a tactic that’s closely tied to strategic HR planning. There are several goals of workforce analysis including managing staffing levels so that they are aligned with business needs and priorities, optimizing your organization’s structure, and preparing for the future of your workforce through informed succession planning. According to Capterra’s glossary, workforce analytics entails collecting information related to recruitment, staffing, training and development, personnel, and compensation and benefits.
  • Predictive HR analytics: More future oriented than the two analytics tactics above, predictive analytics is an advanced strategy that uses techniques such as regression analysis, multivariate statistics, pattern matching, predictive modeling, and forecasting. Adoption rate of predictive analytics in HR is still low, but it can be useful for things such as predicting when employees are at risk of leaving the company.

Capterra tools and tips

Pause and take in these tips before you jump in to learning about the common applications of HR data analytics.

  • Determine where you’re at in the process. What is your current data collection process like? Is information stored in a rudimentary spreadsheet system or across several different tools? It may be time to think about centralizing your data in order to simplify the process of accessing and analyzing information.
  • Align your data analysis strategy with business priorities. So, you’ve got a wealth of data to base organizational decisions on—now what? As the saying goes, Rome wasn’t built in a day. Work with C-level executives to determine what the most-pressing priorities are for your HR department, and build your data analysis strategy around those long-term goals.
  • Work smarter not harder. From niche tools such as applicant tracking systems to robust, full-service HR platforms, nearly every kind of HR software is built with data analysis functionalities today. That means that no matter what your current HR tech stack looks like, you can always upgrade, substitute, or add additional tools to meet evolving needs.

What are the applications of data analytics in HR?

HR data analytics can be used to make improvements in nearly every area of human capital management. Ahead, we’ve included examples of five applications for HR data analytics to illustrate how this practice can be used to finetune different HR processes.

1

Recruitment

If you haven’t heard, it’s a tough time for recruiters. We’re in the midst of an ongoing talent shortage, which means that sourcing and recruiting quality talent is more competitive than ever. Data analytics can help by revealing where your recruiting process can be improved.

For example, you can set hiring goals and see how you’re progressing toward them, compare your time-to-fill and cost-per-hire metrics with other industry standards or organizations through benchmarking, and track how your results ebb and flow after making adjustments to different aspects of your recruiting strategy.

Tool tip
Track the recruiting data that’s a priority for your organization. Many recruiting software platforms offer features such as customizable dashboards as a part of their analytics functionality to help you do this.
Recruiting data shown in a dashboard from Lever
A dashboard in Lever turns valuable recruiting data into easy-to-understand visualizations (Source)
2

Training and development

Are your training and development programs effective? That’s an important question for HR professionals to answer, but without a method for measuring results, there’s no way of knowing if your teams’ resources and efforts were wasted on a training initiative.

An effective approach to gauging the impact of training and development programs involves asking employees for feedback through a survey or manager one-on-ones, as well as collecting and analyzing data related to the completion and comprehension of programs.

In some cases, predictive analytics can also be used to create personalized learning paths for employees and even tailor training content to meet different learning styles.

Tool tip
Measure your employees’ engagement with and comprehension of training programs. Learning management systems (LMS), which are used to deliver training programs to employees, are often built to track learners’ completion rates, time spent training, individual assessment scores, and more.
A dashboard in AbsorbLMS shows learner logins, enrollments, and course completions
A dashboard in Absorb LMS shows learner logins, enrollments, and course completions (Source)
3

Attrition and retention

In Capterra’s Recruiting Strategy Survey** from July 2021, 51% of employees with recruiting responsibilities revealed that the number of job openings that they’re actively recruiting for is higher than average. The talent shortage is partially to blame, but ongoing, record-high levels of turnover is another major factor contributing to the surplus of open positions.

Knowing that, uncovering sources of turnover is a priority for HR leaders. And predictably, data is one of the best ways to do that. For example, you can collect information from departing employees through exit interviews and surveys, then use analytics software to identify commonalities between the results.

Tool tip
In order to get turnover in check, you need to understand what’s contributing to it. HR analytics tools help with this by collecting data related to employee attrition, such as voluntary and involuntary turnover rates, average employee tenure, and employee retention rate.
Employee turnover data dashboard in BambooHR
A dashboard shows tenure and termination reason for employees in BambooHR (Source)
4

Benefits and compensation

One of the biggest expenses for any business is employee compensation. This, coupled with the fact that we’re currently in an inflationary environment, has made compensation analytics a more essential practice than ever for HR managers.

For instance, our Recruiting Strategy Survey* revealed that only 13% of employers are not considering increasing compensation as a means of attracting job seekers to their organization. So, if you’re having a hard time recruiting quality talent and you’re a part of that minority, it’s time to take a more intentional approach to compensation planning. You can do this by comparing your organization’s salary ranges to those from similar businesses, reviewing adoption rates of different benefits to determine where changes should be made, and assessing pay equity gaps.

Tool tip
Ask your payroll software vendor about the capabilities of their reporting and insights functionalities. There may be analytics features that can help guide your compensation strategy that you aren’t currently taking advantage of.
Merit comparisons are shown through data visuals in CompXL
Compare your planned merit spending to suggestions based on industry trends in CompensationXL (Source)
5

Employee productivity

From the perspective of the HR department, productivity refers to how efficiently resources such as talent, money, and time are being used. Data analytics is particularly helpful when it comes to measuring productivity, but the kind of productivity data you should analyze depends on your goal.

For instance, some metrics (such as revenue per full-time employee) are helpful for judging the productivity of your workforce as a whole, while others (such as project completion rate) are more useful for measuring the performance of a team or individual. Further, you can measure how efficiently resources are being allocated by tracking the adoption rates of different tools or benefits.

Tool tip
Encourage department leaders to report on their team’s productivity. Most businesses today use a collaboration tool or project management platform, and these tools often have reporting features that track everything from communication between employees to missed deadlines.
The status, progress, and priority of different company objectives organizes in Asana
The status, progress, and priority of different company objectives organizes in Asana (Source)

Use your organization’s data to make better decisions and meet your goals

According to our Recruiting Strategy Survey**, over a quarter (27%) of the HR professionals we polled already have recruiting analytics software and an additional 52% are either considering or planning to purchase it in the future.

If you’re a part of the minority who is not considering investing in a tool that makes data analysis easy, we have to ask: Why not?

When data informs every decision your HR department makes, from recruiting and retention to training and productivity, the outcome will be a much more effective human resources business function.

And while kicking off a data analysis strategy may seem like a daunting practice to put in place, it doesn’t have to be. Start with the three suggestions we included earlier on in this guide:

  1. Determine where your current data collection strategy is at.
  2. Align the goals of your data analysis strategy with business priorities.
  3. Find a tool, or upgrade your current software plan in order to automate parts of the data collection and analysis process.

And lastly, visit these additional resources for more actionable insights related to the human resources industry:


Methodology

* Capterra’s 2022 Company Culture Survey was conducted in December 2021 among 958 employees at U.S. companies with at least six employees: 332 who work fully on-site (e.g., in an office, store, or other central location), 300 who work fully remote, and 326 who split their time between working on-site and remote (i.e., a hybrid model). The goal of this survey was to learn how hybrid and remote work formats impact different aspects of company culture.

** The Capterra Recruiting Strategy Survey was conducted in July 2021. We collected 300 responses from workers with recruiting responsibilities at U.S. employers. The goal of this survey was to learn how much companies are struggling with recruiting and hiring, and what solutions they’ve considered to improve recruiting and hiring outcomes.

Note: The applications mentioned in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication.


Looking for Human Resource software? Check out Capterra's list of the best Human Resource software solutions.

About the Author

Sierra Rogers

Sierra Rogers

Sierra Rogers is a senior content writer at Capterra, covering human resources, eLearning, and nonprofits with expertise in recruiting and learning and development strategies. With a background in the tech and fashion industries, she has extensive experience keeping her finger on the pulse of the latest trends and reporting on how they impact our world. Sierra enjoys cooking and dining out, collecting vintage designer goods, and spending time with her pets at home in Austin, Texas.

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