Data is an essential component of any organization. Therefore, HR professionals must develop their data analysis competencies to improve current HR practices and support data-driven business decisions. Moreover, there is a significant shift in HRM functions and roles to adopt an HR analytics approach that enables organizations to measure the impact of a set of HR metrics on business performance and make decisions based on data.
HR Analytics
HR analytics identifies people’s motivation for business results, also called people analytics, workforce analytics, or talent analytics. It measures the cause of something happening and the effect of what happens. It aims to help organizations distinguish which employees to hire, reward, or promotion, what responsibilities to assign, and similar human resource problems. Not only that, but there is also an urgent need for accurate future prediction of the possible outcomes to make high-quality decisions based on reliable and valid data. And then convince the decision-makers and stakeholders of those decisions.
HR Metrics
There is some confusion about HR analytics and metrics and the difference between the two. In comparison, both provide tremendous added value to any organization.
HR metrics are specific indicators used to identify and measure the effectiveness of the performance and efficiency of organizations and the impact of operations and changes. It determines the effectiveness and efficiency of HR policies. Metrics are essential in determining the value and effectiveness of HR initiatives in a realistic manner, and Tracking and presenting this data influence future decision-making. It is, therefore, necessary to study HR metrics to help determine the costs and impacts of HR and organization operations as it provides the first-hand data that leaders need to make immediate and urgent business decisions.
Integration of HR Analytics and Metrics work
HR analytics and metrics are powerful tools that, when used together, create a power of information for organizations, ultimately saving time, effort, and money. Therefore, these two concepts are complementary and constitute an excellent value for organizations. Metrics support analytics, which in turn provide guidance on improving metrics, and HR metrics also give insight into whether the result of HR analyzes are valid.
Integrating HR Analytics and Metrics is a process that begins with an opinion and ends with a vision. Data helps turn this opinion into facts. There are criteria or standards to define and guide them. Thus comes the role of analytics in identifying the causes and how they affect the business. In the end, we conclude with a clear vision foreseeing the future.
HR value chain
We can use the HR value chain to explain the relationship between HR metrics and analytics adequately. Where the value chain presents different types of HR metrics and how they affect business performance:
- Efficiency: This shows how efficient HR are in their work.
- Effectiveness: which shows how well HR perform their role.
- Impact: These are the essential outcomes that affect the organization’s long-term viability.
We conclude that the role of analytics here is to track the effectiveness of HR metrics on human resources, business results, and the organization.
From metrics to analytics
- Start with the data: check its accuracy and validity because intelligent HR system design and high data quality are key components that must improve before they invest in developing metrics for HR reporting.
- Getting the metrics right: Tracking metrics is something that many organizations struggle to achieve, as it requires them to combine multiple systems, such as the main HRIS and their performance system.
- Identify relevant KPIs: The indicators related to the business objectives. The target score for each KPI should also be defined.
- Identify areas where analytics will add value: This begins with identifying a business case that will add value to the business and that the results are actionable.
- Implementation of results: Human resource data create an added value for the organization and its strategic objectives.
Reliable, high-quality data is essential in solving business problems and providing opportunities to forecast future outcomes and plan accordingly. HR Analytics assists organizations in strategic workforce planning, succession management, and identifying future leaders. It also provides clear insights for organizations that lead to continuous action and improvement, ultimately creating a better work environment and making employees happier and more efficient.
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