People power: Harnessing data analytics in the HR department

Data analytics is revolutionising every area of business. Departments and individuals throughout numerous organisations, both large and small, are exploring data in various different ways, uncovering new insights that improve efficiency, maximise effectiveness, and deliver tangible impact.

Research shows that approximately 2.5 quintillion bytes of data are created every day, and more than 90% of all data in existence was created in the last few years. Analysing this towering wave of data poses a challenge, but also an opportunity – the chance to improve previously untapped areas.

”People analytics” is one such area. While data analytics isn’t new to the HR department, it’s only recently that the idea of using data to make decisions about people, rather than relying on subjective assessments, has begun to gain significant traction. How can businesses harness employee data within company databases – as well as that of third parties – to make real-world decisions about their employees, improve productivity, and boost the bottom line?

Forward-looking HR departments are already investigating the use of people analytics to optimise recruitment, minimise employee attrition, evaluate performance, identify future leaders, and design pay and reward policies. It’s a new area and most companies are still in the exploration phase, but there is increasing interest across the business world.

While the potential of people analytics is immense, HR departments today are primarily focusing their analytic efforts on one of two goals: better employee retention and more effective staff compensation.

Dealing with staff attrition

Companies generate terabytes of data every day. While much of this is related to sales and business operations, a significant proportion includes information about the employees themselves, including their performance and history with the company.

An international financial content and analytics company, focused on capital and commodity markets, wanted to identify its most valued employees and then focus its retention efforts on those who presented the most significant ‘flight risk’. To achieve this, it built two ‘attrition risk models’ – analytical workflows for analysing vast quantities of data across its international operation, and determining the highest attrition risks.

This meant pulling data from the company’s internal HR system which covered a three year period, and then adding employee demographic information and work history data. Having conducted an initial analysis for around 2,000 employees, the organisation was able to identify attrition risks and intervene to retain its most valued employees. This year, the programme will be extended to all 20,000 of its employees across the globe.

One of the major professional auditing giants also uses analytics to maximise employee retention. Drawing on a multitude of factors – including pay, percentage raise, and job ranking – the company determines the impact that each factor has on employee retention and then creates reward systems that address the problem areas.

Compensation and reward

By analysing all the data available about a particular employee, it’s now possible to build a holistic picture of their history with the company, including their job profile, performance, career progression, and current compensation package. From there, even the largest organisations are able to provide personalised compensation packages for each of their staff. One of the world’s largest and most famous retailers has already done just that.

Every employee has a specific, clearly defined role within the company, which is listed in their personnel file alongside information on how long they’ve worked for the company, which locations they’ve worked in, and what roles they’ve previously had. However, the business used to work with a fixed, inflexible compensation framework which couldn’t take all of this context and background information into account.

After blending billions of data records together using a self-service data analytics solution from Alteryx, the company was able to incorporate all of these factors into pay-rise assessments. This allowed local managers to factor in more than just job title and create a compensation plan that was unique to each employee.

The same employee profiles that help the company to formulate its individual pay and compensation packages also allow it to be better coordinated when communicating internally. When many employees are being promoted at the same time, it’s vital that everyone within the company finds out about these changes at the same time, to avoid anyone feeling they’ve been overlooked or missed.

Thanks to a workflow developed within Alteryx, all promotion and compensation notices are communicated at exactly the same time to the organisation’s 500,000 associates, across all time zones.

Prospective people analytics

Looking beyond the management of current staff, one of the greatest opportunities that lies ahead for people analytics is in improving recruitment practices. As yet, this remains a largely unexplored area, but is in fact a proactive extension of identifying top performers within a business.

Once top performers have been identified in the company, HR teams will be able to identify and isolate the factors that make for an exceptional employee, such as personal characteristics, skills, diverse experience, career path, and more. This insight can then be used when hiring new employees, removing some of the subjectivity and episodic decision-making which can take place during the recruitment process.

Answering specific needs with training

Whilst keeping hold of top performers and hiring the right new staff forms a major area of focus for HR teams, ensuring that current staff are as productive and valued as possible is also critical. Training is one area that can undoubtedly be optimised through the use of analytics, helping HR to ensure all training is efficient, effective, and directly related to business needs.

One top bank identified this potential and used it to optimise training for its call centre staff. By analysing how many times customer calls were passed on, the amount of time taken to address queries, and numerous other metrics, the company was able to identify problem areas and organise training to address them. What’s more, this analysis can be used again in the future to check that training is delivering the impact it needs to.

Going beyond scratching the surface

Companies are already using people analytics to gather insights that inform decisions around retention, promotions, and pay. But this is only scratching the surface of the possibilities which analytics could uncover within the HR department. Training, leadership evaluation, recruitment, promotion, job and team design, and hundreds of other company-specific needs could all be addressed, more efficiently and effectively, with the right analytical deployment.

Talented employees are the most important asset in any organisation, and data analytics can guide the improved, evidence-based decisions that ensure you’re looking after them.

By Bob Laurent, VP of Product Marketing, Alteryx, Inc.