The importance of HR analytics

Last Updated on September 8, 2022 by user

Today, most organizations rely on actual data to make informed decisions on how to run their business. Whilst departments such as sales, marketing, and operations have actively been using data analytics to optimize performance, HR experts within a business have been relatively slow to integrate analytics to influence their decision making. Let’s dive a little deeper into the benefits of HR analytics and see how it can help your company.

What is HR analytics?

Simply put, HR analytics is all about analyzing an organization’s ‘people problem’ through data. HR analytics can help HR professionals and executives understand the impact of their human capital strategies on business performance and make data-driven decisions.

HR analytics can be applied to a wide variety of business processes to enhance productivity and efficiency. The following are the most common:


Searching for the ideal candidate to fill an open position is usually time-consuming, expensive and frustrating. Integrating data analytics within your recruitment process allows you to identify platforms that are driving the best talent and analyze profiles that have the highest likelihood of becoming successful new hires. Recruitment analytics also provide insights into how your recruitment functions are working and provide actionable solutions to refine the recruitment process.

Free HR Software for SMEs

Employee performance

HR analytics can also give you accurate insights into who your best and worst-performing employees are. For example, running analysis on promotion rates, wait times for a promotion and the quality of work of employees allow HR departments to make data-driven decisions and eliminate bias when deciding on who to promote.

Compensations and Incentives

Compensation and benefits are one of the most important decisions an HR department makes. HR analytics can be used by organizations to analyze a large amount of employee data and ensure packages offered are on par with industry averages. Exit surveys and declined offers can be investigated to understand what enhancements could be made to offer better incentives to employees. For example, analyzing how much a C-level employee gets paid and what bonuses are offered to them in other companies can help your company attract and retain top talent.

Employee Retention

For any company, losing an employee can prove to be costly. This is due to additional training/onboarding, lost productivity, recruitment costs, and additional visa costs. HR analytics can improve retention by analyzing data points such as current churn rates, employee attrition, and attributes of employees who leave within a year. It can help you spot why employees tend to leave your company so that new policies can be put in place to solve the issue altogether. For example, an employee may not be performing well as he or she feels underpaid. An analysis of productivity along with market-value salaries can narrow the reason’s down.

Time and Attendance

It is very important to analyze work schedules and manage time and attendance for all your employees. By using HR analytics, businesses can manage the scheduling processes for all employees to remain in compliance with regulatory processes. HR professionals can also study patterns of absenteeism that might adversely affect company productivity and growth.

There is enough evidence to support that stronger analytics can give accurate insights to HR professionals into what aspects of their processes are working and where improvements can be made. Implementing a suitable HR software can help you extract the right data and help your company make decisions based on payroll, benefits, work schedules, hiring and more.