Running a business is not just about generating profits; it’s about the people who make it all happen. The people who make a difference. Even if your business isn’t in a heavy people-first industry, Human Resources (HR) is still a significant expense and you must manage your workforce effectively to maintain a happy culture and be successful. Plus, we all know the ripple effect that HR can have on the clients and overall success of a business. So how do you know how your HR is doing and the impact decisions are having? It always comes back to data and HR analytics are key.
It doesn’t really matter what HR system you use because they all capture similar data that is used to improve business. Here’s the thing though, while these systems are fantastic for capturing all sorts of juicy data, they often leave you stuck when it comes to analyzing the information to try and make sense of it all. HRIS and HRM systems collect a lot of data, and our team has deep experience with several HRIS and HRM systems, from the big players such as ADP, UKG, Paylocity, to the more niche options, like BambooHR, Paycom, FuseHR, Paycor, and many more.
Analyzing HR analytics isn’t that common mostly because of reporting resource constraints, but it can have a surprisingly large impact on a company, especially in a company that relies heavily on its team. Pulling the data from these HR systems into an executive analytics system allows us to combine the data with different business areas to find helpful insights and track KPIs across the company. Let’s take a closer look.
How Is Your Retention Rate? Do You Have Excessive Turnover?
You might think an HR system shows you a retention rate since it’s a fairly simple percentage calculation, but unfortunately, these systems can’t. HR systems also can’t track trends or show you where the turnover is or why it’s happening. You can compare it to the average national turnover rate of 3.8% (in 2023), but you still need to know ‘the why’. Are staff joining the competition because they’re getting offered better benefits, or is there something happening in the workplace that needs addressing? For example, an employee witnessing discrimination. Nearly half of Black (47%) and Hispanic (49%) job seekers and employees have quit a job after witnessing or experiencing discrimination at work. These are the burning questions that keep business owners up at night.
It can be incredibly helpful to know not only how many people have left, but also where are they going, why are they leaving, and what main concerns need to be addressed. Is there a specific position or job title that turns over more than others that indicates an issue? Is there anything we can do to fix this? An HR analytics platform is essential across many different industries, like healthcare or hospitality, and everything in between, because it can help you answer these hard-to-ask questions.
In any business in any industry, whether a wholesaler, medical office or retail company, retention is a challenge because of the cost of onboarding and training. In an industry like home services, retention is even more critical because it’s a business risk. When you lose a skilled technician who has built a strong relationship with your customers, it can affect your bottom line. Clients build relationships with technicians and often text them directly to the point that the client might not even be aware of which company their technician works for. If Mrs. Lopez’s toilet decides to overflow in the middle of the night, who does she call? Her reliable and skillful plumber who she’s probably on a first-name basis with. If her plumber decides to leave your company and join the competition, Mrs. Lopez will likely follow because that close relationship is more important to her than the company her faithful technician happens to work for.
Do You Have Any Demographic & Employment Trends?
HR analytics also helps spot underlying demographic trends. In the retail industry, you might be wondering if you have more men quitting than women. Or in the manufacturing industry, if you have certain age groups leaving at a higher rate, and if these age groups are leaving voluntarily or involuntarily? In any industry, you want to know if you have new-hire turnover trends. This is a big one that can often go untracked. If someone is hired and then they leave within a couple of days, that’s extremely expensive. Not only the time and effort to interview, hire, and onboard them but also the uniform costs, scheduling, training, etc. Typically, we help clients analyze this in two separate time frames – 0-3 days and 0-30 days. While both are significant issues, they usually have different causes and need to be dealt with differently.
You can also better monitor workforce dynamics with data on employment trends. HR analytics software can effortlessly track the ebb and flow of the workforce providing real-time insights into the number of employees hired and fired every month. Through powerful custom dashboards, managers can instantly access reports that detail staffing changes, identify patterns and trends, and pinpoint areas that need investigation and improvement.
Is Your Budgeting Appropriate for Onboarding Expenses?
This is a big one because financial planning is important in… well, pretty much everything in life. Being able to analyze this accurately helps people adjust their financial forecast models and budgets to be more accurate. This, in turn, allows their pricing to match, so you’re not losing out on potential profit, or worse, not charging enough to cover expenses. It can also illustrate how investing in better team services could improve retention and decrease those costs. We’ve helped many clients leverage business analytics software to assess onboarding expenses, optimizes financial planning and make sure their pricing strategies fit like a glove.
Do You Have a Healthy Recruiting Pipeline? Do You Know Your Recruiting KPIs?
In 2023, 46% of HR leaders report recruiting as their top priority, however, analyzing this can be challenging. Many businesses rely on HR systems to provide them with their recruiting pipeline and KPI data, which they do, but they make it hard to visualize, and without the ability to effectively analyze, the data has no value.
We’ve had clients who are tracking this data in Excel or their homegrown database, but this can be hard to manage with a distinct lack of analysis. By bringing the data into an executive analytics system, not only can we create, but we can match up recruiting data with your HRS (active headcount by position, open requisition forms by position, etc.) and help your staff analyze key KPIs. Metrics like, do we have enough open positions? Or how many days does it take to close a position? Or what are our average days open for a requisition? In the healthcare industry, these types of metrics are critical to ensuring patient care continuity and upholding the quality of care. These metrics also tell us if job positions or compensation need to be adjusted, which is a must-know for any business.
What Is Your Revenue Per Active Headcount?
Balancing revenue per active headcount with employee well-being is essential to productivity. While we all want our revenue per active headcount to be higher, we also don’t want to burn out the team. If the revenue per active headcount spikes suddenly, then we may want to look at hiring or reassess the workload and overall capacity of the team. If no action is taken, you run the risk of losing people to burnout, whether that’s higher sick days or more resignations. It’s essential to analyze the root cause so that you’re not just hiring more staff when it might be inefficient processes, poor training, etc. that’s the true problem. Monitoring and analyzing the revenue per active headcount has direct ties to a happy and healthy work environment, so make sure you do it regularly and accurately.
No matter what sector your business is in, using business analytics software for HR analytics empowers you with the data to decrease turnover and make critical staffing adjustments that benefit your people and bottom line. It drives data-informed decisions that improve employee efficiency, and your company’s success. Insights into employee behavior, motivation, morale, and performance are just as important, if not more important, than traditional metrics like revenue and profitability because understanding your people and their environment informs decisions that foster a positive culture and a high-performing team. If you’re interested in learning how your HR department would benefit from our data analytics software, talk to one of our representatives today.
