How a Small Business Can Maximize HR Analytics

How a Small Business Can Maximize HR Analytics

June 29, 2023
How a Small Business Can Maximize HR Analytics

Looking for a better way to interpret your workforce data? Understanding hidden patterns in your HR data via HR analytics can help you make smart business decisions. A small business can use analytical tools to optimize its management, operations, workforce planning, employee satisfaction and more. Even a manager with extensive experience and the best instincts can benefit from workforce analytics to enhance overall business performance. After all, why shouldn't a business use all the data at its disposal in the sharpest way possible?

What is HR Analytics?

Human resources analytics is a way of managing your business data to maximize success. By using HR analytics, you can uncover in-depth insights into your business and identify trends and patterns that matter to you and your workforce. Understanding your business’ people analytics can help you make better talent decisions, cultivate better work experiences and improve employee behavior.

HR analytics provide a powerful way to add value to your business by using data that’s unique to your organization. It helps align HR initiatives with workforce management techniques to create more efficient internal processes and optimize planning and performance.

The three most common types of business analytics are:

  • Descriptive analytics, which use statistical methods to search your collected data and identify trends and patterns.
  • Predictive analytics, which use historical data to give you an idea of what’s in store for your business.
  • Prescriptive analytics, which use the forecasts from predictive HR analytics to recommend actions. It lays out the possible consequences of different scenarios and recommendations, which opens the door to data-driven decision making. As artificial intelligence methods develop, this method can become even more powerful.

Benefits of Using HR Analytics

Because HR reporting uses data to provide insight on employer operations, it’s an essential component to ongoing success. It also allows HR leaders and business teams to gain a better understanding of employee data. They can use the data and those insights to create metrics to optimize HR practices and performance management, which may help support improved business performance.

HR analytics can also help identify problem areas so they can be addressed promptly. While tracking performance through HR reporting is an indispensable part of any business, HR analytics takes it a little further.

The potential benefits of using HR data analytics include:

  • Attracting and retaining talent and improving overall talent management
  • Improving operations and financial performance through understanding employee operations
  • Boosting employee engagement, employee performance and employee experience
  • Addressing knowledge and skill gaps
  • Regulating costs and risk mitigation
  • Identifying compensation-related trends

To get the most out of your efforts, pair HR analytics with industry-specific expertise and reliable support.

How to Use HR Analytics in Your Business

Your employee data can be used to provide insight on internal trends, employee performance and ongoing internal development. A small business can use several analysis techniques to develop strategies, depending on the specific area it wants to improve. Let’s look at some of the ways to use HR analytics metrics in your business:

Talent recruitment and management

By analyzing talent management and recruitment efforts, you can stay aligned with market trends to prepare for future hiring needs. Talent analytics allows you to track ability and efficacy in regard to sourcing and recruiting new talent while properly managing new hires.

Employee experience

A 2019 study by the Harvard Business Review found that employee satisfaction is directly related to employee productivity and engagement. Additionally, having access to benefits is often considered part of a positive employee experience. By tracking interactions using performance management reviews and satisfaction surveys, you can gain a better understanding of what employees think about their roles and how they feel about their employer. HR analytics can often track benefits-related data, providing you with the feedback you need to enact positive changes.

Employee engagement

It’s normal, and even beneficial, for employees to use time off throughout the year, but absenteeism is a problem that should be addressed. When employees don’t feel engaged and aligned with their organization, they’re more likely to display habitual absenteeism, which can hurt productivity and overall office morale. HR analytics can identify employee engagement trends in your small business to help reduce absenteeism, improve productivity and decrease turnover.

Employee retention

With critical compensation insights and a detailed view into wages and bonus breakdowns, you can make more informed decisions and stay competitive in your industry. This can help boost employee satisfaction and retention rates.

Implementing HR Analytics

Before you can use HR analytics to benefit your business, you must first create a supporting framework. This includes understanding what areas you wish to focus on and developing a methodology for the project. The important steps for creating a targeted HR analytics effort include:

  • Consider your desired outcomes. For effective analytics, you need to consider the areas your business can improve in. Take some time to summarize your current workforce in conjunction with your desired business outcomes. Before implementing any HR analytics tool, determine why you need them in the first place. This gives you more direction and a better baseline for comparison later on.
  • Create a project statement. Once you’ve determined your motivation for improvements, conduct internal research and gather any data or knowledge from industry experts in respective fields. Discuss onboarding and training best practice procedures with HR professionals. Consider surveying employees and talking to managers about ongoing employee performance reviews and satisfaction. This allows you to create a project statement, or goal, for your HR analytics solution.
  • Gather data appropriately. Next, take the time to collect data for the appropriate comparison. Always make sure that you use quality data that meets ethical and security standards. You may want to begin this analysis with only new data or you may decide to include existing data. Either is acceptable as long as you’re consistent across different fields. The data collected should be relevant, nondiscriminatory in collection and use, and aligned with data privacy compliance. Include relevant data sources from different areas—HR, payroll, employee benefits and operations—to get a comprehensive understanding of your workforce.
  • Establish key performance indicators. Identify how you will monitor changes during workforce analysis by determining what your key metrics and performance indicators are. This could be a change in turnover rate, length of vacant position, employee satisfaction level or anything else you choose to monitor.
  • Organize your data. When you begin gathering data, it should be organized in a way that helps you quickly assess changes and encourage engagement of those reviewing it. This can be automated when you use the right HR analytics software solution, such as TriNet’s Workforce Analytics tool. You’ll receive access to user-friendly, customizable and engaging dashboards that provide snapshots into your human resource management data along with compensation, employee turnover and organizational growth by function, role or location. The dashboard is updated in real-time to provide ongoing clarity regarding your progress.
  • Analyze and interpret. Finally, it’s important to analyze and interpret HR data—including any historical data—in regard to your goals. This allows you to make more educated decisions to better advance your mission and company culture while improving workforce efficiency. It’s important to delegate tasks accordingly and ensure that everyone understands what they’re responsible for doing.

As technology continues to evolve, so do analytics and machine learning capabilities. Thus, it helps to take a dynamic approach to HR analytics. Automation has improved tremendously over the years, allowing for ongoing data analysis, calculations and optimization regarding workplace data. While there are challenges in using HR analytics, the benefits can be tremendous. This is especially true when you pair the expertise and support of HR professionals—or an HR department—with analytics.

Investing in Professional Workforce Analytics to Support Your Business

The success of your business depends on the strength of your workforce and procedures that are implemented daily. TriNet’s Workforce Analytics can help you gain meaningful insight and identify the trends that matter to you and your business. You can make smarter business decisions based on real data when you:

  • Visualize your HR, payroll and TriNet-sponsored benefits data through pre-built and customizable dashboards that update in real time
  • Gain critical compensation insights using custom analytics
  • Have easy access to dozens of workforce reports

TriNet understands that success doesn’t stop with technology. This is why we offer Workforce Analytics as a technology solution that, combined with access to HR experts and tools, can help your business stay ahead of the game. Learn how TriNet’s comprehensive HR solutions can help your business today.

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