With markets becoming more competitive and job seeking transforming from the traditional resume to an online-only process, data is a vital tool in your hiring arsenal. Cristian Ulloa, National Leader for People Advisory, and Jonathan Stone, Partner for People Advisory from BDO Australia, explain how HR analytics is helping hiring managers find the right talent.
HR analytics: A new avenue for sourcing top talent
HR analytics – also known as people analytics, workforce analytics and talent analytics – uses statistics and large data sets taken from HR systems (payroll, recruitment management platforms and satisfaction surveys, for example) to measure a range of HR metrics. The insights gathered can help a company predict future staffing needs, improve the quality of new hires, implement more targeted and effective training programs and build higher-performing teams.
As Jonathan puts it: “HR analytics is an enabler of good practice.”
But it’s also so much more than that, particularly in how it can elevate an organisation’s hiring processes. “It is all about making informed decisions,” Cristian says. “We’re using data to help make fact-based decisions about the workforce, about who we want and need to hire, and about how we can look to improve the workforce as a whole.”
What type of data is most valuable and where can employers find it?
Jonathan and Cristian say you need to know what data to leverage in order to secure these benefits for your hiring practises. Traditionally, an employee’s work history has been the focal point for hiring managers, but modern technology means HR professionals can now gather data points from a variety of sources. These include:
- Demographic information
- Personality and temperament data (derived from surveys, references, psychometric
- Performance reviews
- Satisfaction surveys
- History of promotions and current salary
- Employee training records
- Employee tenure
Once this information is gathered, HR analytics software compares the data against historical information, norms and averages to identify trends or patterns. The results – presented in various forms including dashboards and reports – can be applied to make informed organisational and hiring decisions.
Analysing data starts with identifying your organisational goals
HR analytics empower businesses to align HR KPIs with strategic business goals, but first, organisations need to ask: what are the future capabilities required of individuals within our workforce?
“If they understand the critical challenges, and can articulate what their capability framework might be, then they can use technology to actually assess an individual’s likelihood to perform the activities required,” Jonathan explains.
“Workforce analytics can also help you identify what you actually recruit for, which are the hard-to-develop capabilities. So, if you understand what those are, you can use data to help you identify the best individual qualities for the job you’re hiring for.”
Using HR analytics to minimise risk
Cristian cites a recent example where people analytics worked its magic to help one of BDO’s clients make smarter hiring decisions.
“Our client, a major aged care provider, was engaging in data analytics around recruitment, purely from a profiling point of view,” he explains. “They were concerned about attracting the wrong type of individual into a carer role – specifically, they were concerned about employing high-risk-taking individuals, who have the potential to create problems for them downstream in OH&S (Occupational Health and Safety) claims. So they really needed to reduce their exposure to people who were quite happy to take significant risks in such an environment.”
HR analytics helped the aged-care provider exclude individuals who were seen as risk-takers and also revealed potential hires who had an aversion to risk. Having this specific data at their disposal meant the hiring process was fast-tracked, heavily reducing the time and money spent on screening applications and interviewing jobseekers.
Data is a support tool, not an all-encompassing rule of hiring
Both Jonathan and Cristian are quick to point out that HR data is simply another instrument in the hiring manager’s toolkit and as such, it should be combined with more traditional techniques, such as interviewing, employment screening and reference checking.
“If it’s about volume, then sure, HR analytics can actually help weed out a lot of poor hires,” Christian says. “But because analytics is very much an indicator, you need to augment that with other processes so that you’re not just purely focused on the data.”
Jonathan agrees and says it should always be used as a ‘gatekeeper’ rather than a final decision-maker. “It’s an enabler, and it can help you dig deeper.”
How can HR analytics improve hiring efficiency
HR analytics can help hiring managers engage the right people with the right skills at the right time and cost.
Through continuous and targeted analysis of the ever-changing composition of talent within the organisation, employers can predict which candidate characteristics will make the best employee and identify specific skills that are proven to make a hire successful in a specific role. It can also determine what other screening methods to use during the selection process.
When aligned with business goals effectively, this data can also be used to make strategic decisions based on statistics, not assumption. This better equips hiring managers and HR teams to attract, retain, manage and engage with their employees, which in return, improves employee performance and productivity.
In any organisation’s language, that’s a real win for the bottom line.