In a modern organisation, every department should strive to use data to improve its processes and deliver better and more cost-effective results. Human Resources is one area where the targeted use of data has become ever more important over recent years, especially when it comes to creating long-term strategies.
Our guide to leveraging data to inform HR planning explained the importance of data-driven decision making. This article explores how HR leaders can apply this in practice to creating new and better HR strategies.
How data informs every aspect of an HR strategy
An HR strategy bridges the gap between a business’s corporate strategy and the workforce, allocating resources in the most efficient way to meet the company’s goals. And every aspect of an HR strategy can be guided by the data your organisation collects on employee attendance, activity and performance, as well as information from external sources.
We’ve picked out four of the key pillars of an HR strategy to illustrate how data enables smarter planning and better outcomes.
Recruitment
Hiring is arguably the most difficult, yet the most critical, process a business undertakes. It’s estimated that the average cost-per-hire in the UK is around £3,000 - but in truth, a bad hire can cost far more than that after lower productivity and the re-hiring process are accounted for.
It has also traditionally been difficult for HR leaders to assess the effectiveness of their recruitment policies. A business may have a clear idea of the type of people it wants to hire and the best ways to attract them, but without collecting the right data it is essentially guessing whether its strategy is well optimised.
- Data on the attendance, punctuality and performance levels of previous hires can inform the profile of employee you should target.
- Companies should also collect data on which hiring sources produce the best candidates, so the recruitment budget can be allocated more effectively.
- Using data to guide recruitment also helps eliminate any implicit biases in your hiring process which may have been preventing you from employing the best talent.
Retention
A high level of employee churn can prove both extremely costly to a company and a major barrier to growth. But with research suggesting 75% of resignations are avoidable, there is clearly much more organisations can do to hold onto their best talent and that is where data comes in.
- The first step is to accurately calculate the employee turnover rate to assess the scale of the problem. Drill down into the data to establish who exactly is leaving and which profile of employee you are struggling to retain.
- Combining this information with other data sources including attendance and absence allows for a root cause analysis of why turnover is so high. Common causes include overworked staff in certain teams, payroll inconsistencies and unfair disciplinary procedures.
- Findings from this analysis can be used to feed into other areas of the HR strategy like pay structure, training and employee development to create an environment more likely to retain staff.
Employee development
It’s more vital than ever for employers to get development and training programmes right for every single employee. Not only does the upskilling of staff help facilitate quicker growth and improved productivity, it also leads to more fulfilled individuals who are less likely to seek a new challenge elsewhere.
- Predictive analytics can be especially useful for identifying every employee’s skills gap and shaping a training plan. By factoring in information like education level, past performance and experience, companies can also predict new roles that employees may be suited to in future.
- This allows HR leaders to create development programmes that are far more focused on the needs of individual employees. Analysis of previous training processes and their impact on performance also informs the most effective training and support structures for future development.
Pay structure
Getting the compensation structure right is a vital part of any HR leader’s job - for attracting the best talent, retaining staff and keeping employees motivated. But this goes beyond just setting salaries and benefits - it also involves creating overtime policies that are both fair and cost-effective, as well as exploring the benefits of flexible working arrangements like annualised hours.
- Data on the industry average compensation for each role in your organisation can be very helpful for setting a pay structure that is both competitive and good value for the company.
- Analysis of historical overtime spend alongside attendance and productivity data can help identify any areas of overspending or inefficiency. This information may flag up to HR leaders that their overtime policy needs revising, perhaps involving more stringent rules on how much overtime individuals can take on and whether overtime needs to be authorised by managers.
- Using past production and sales data, for instance, can help businesses forecast the busiest periods of the year, and periods where employee workloads peak and trough. Cross-analysis with workforce spend can help HR leaders accurately predict whether new working arrangements such as flexitime or annualised hours would be effective in bringing overall costs down.
