Software Advice, an HR technology review company, released a report on how analytics impact HR and recruiting metrics and how they can help small business owners as well as recruiters and HR professionals.
The key findings:
- More HR analytics software users than non-users rate their performance on common HR key performance indicators as “good” or “very good”.
- Over one-third of small businesses in the sample (37 percent) use some form of HR analytics software to help them make better hiring decisions.
- 53 percent of respondents say the perceived high cost of HR analytics software is their biggest impediment to adopting it.
What do we mean when we say ‘HR analytics’? According to Techopedia HR analytics is applying analytic processes to the human resource department of an organization in the hope of improving employee performance and, therefore, getting a better return on investment.
Depending on the size and culture of your company this definition can be a little skewed. Whether your version of HR analytics means having a software that computes this information, or you’re simply recording and storing it on a spreadsheet, is completely dependent on your preference and budget. Regardless of how your company tracks HR data, the information can be greatly helpful in your everyday processes; the ultimate goal being a boost in the company’s bottom line.
Companies With HR Analytics Software Perform Better Than Companies That Do Not
HR analytics have been and continue to be a hot topic for businesses. We’ve witnessed the progression of HR moving from admin tasks to more of a strategic role within an organization. It makes sense then that companies who utilize a software to aid in their analytics will outperform those who do not. According to a 2013 assessment report by SHL, less than half of global companies use analytics to make talent-related decisions.
When looking at HR, key performance indicators (KPIs) are typically:
- Time to hire
- Cost per hire
- Employee retention
- Completed employee trainings
- Employee productivity
- Employee diversity
- Competitive compensation
- Competitive benefits
When recruiters were asked to rate their performance on HR KPIs on a scale of “very poor” to “very good”, 86 percent of respondents who utilize software reported “good” or “very good”, while 58 percent of non-software users reported the same.
Another reported perk of using software in your HR processes is the ability to predict when hiring. Essentially what I mean is you can use data to spot desired traits in candidates and seek candidates who possess these traits. Aside from hiring, there are noted benefits of improved retention and lower training costs for companies who use software.
Over One-Third of Small Businesses Use HR Analytics Software
According to Software Advice, small businesses of 1 to 100 employees are most likely to be using some form of an HR analytics solution (27 percent). Small business may receive greater benefit from HR analytics because even a small percentage of bad hires can have an enormous effect on the company’s finances. Alternatively, if a large company has a small percentage of bad hires the financial impact won’t be as clear.
Budget is the Greatest Obstacle
The perceived cost of implementation is a barrier for many companies. 53 percent of respondents claimed they chose manual methods for HR analytics over software because of the cost. Keep in mind that respondents did not cite that the cost was actually out of their price range, rather they simply assume it is expensive.
Considering most HR software is cloud-based, implementation is much less costly than traditional implementation. Cloud-based software breaks down into monthly fees (or per pay cycle if you’re pairing it with payroll), making it much more manageable.
Best Practices for Implementation
- Track and record your data
- Aggregate your data
- Decide which metrics matter most
- Use data to make informed business decisions
Knowing what metrics matter most to you and your company will be the key factor in making HR analytics work best for your business. By identifying desired outcomes, you can use your data to better reach your end goal.
Read the full report here.