As qualified candidates become more difficult to find and retain, improvements in performance evaluation can prove to be tremendously valuable. HR analytics leverages your employee data to determine who your best and worst performers are, based on factors like past work experience, length of employment, and to whom they report. Common characteristics between groups of employees can emerge, which can be used to properly motivate employees and ensure they receive the right rewards.
Career progression is an important component to monitor, as well, since employees are much more likely to leave if they’re not satisfied with their career trajectory. Analysis of promotion rates, promotion wait times, and qualitative data from employees will help HR meet employee expectations and keep them motivated.
Leadership traits may emerge in some employees, and companies can determine which characteristics correlate with future leaders. HR can then foster this potential, resulting in long-term ROI for the organization.
Not only do organizations need to ensure they have employees with the right skills presently, but they also need to be able to anticipate future departures or changes in the organization’s needs, particularly for business growth. HR needs a data-driven approach to successfully navigate the ever-changing composition of organizational talent. This ensures that workforce and capacity planning are optimized.
For example, an electronics OEM may need to anticipate a greater need for call center support with the release of new products in the next quarter. Once again, HR needs to be aligned with the goals of the business and upcoming changes. Predictive analytics and data analytics platforms are changing the way HR can utilize and anticipate these changes.
Compensation and Incentive Programs
Compensation is often the largest business expense, which underlines its importance in organization decision-making. Data analytics platforms can help analyze large volumes of employee and market data to achieve a competitive advantage. Smart HR analysts will keep track of what competitors offer employees to ensure top talent is attracted to the company. They can also look at exit surveys during the recruiting process and declined offers to better understand the compensation and incentive landscape. HR analytics can provide:
- Incentive programs to motivate employees to maximize productivity. Data analysis can provide insight into the most impactful monetary and non-monetary rewards. For example, an HR department might implement a referral program where employees receive a bonus for referring new hires. With enough data, HR can determine what the ideal bonus amount is and cross-reference this to the increase or decrease in quality of hires.
- Sales team motivation is another application. What quota should be assigned to each salesperson and what should their bonus structure look like? This may vary on the team, region, and products sold.
- Executive compensation analysis needed to attract and retain top leaders. HR analytics can analyze the market rates for executives at similar companies, bonuses that properly motivate, and perks to provide. This is critical to the direction of the organization and can either make or break it.