This is part 3 of a series on HR data analytics. Read part 1 on what HR analytics is and why you need it and part 2 on the value of integrating varied HR systems.
The COVID-19 pandemic prompted a massive number of employees to quit their jobs — so many that the movement has been called the “Great Resignation” or “Great Reshuffle.” In sheer numbers, the wave is unmistakable: In 2021 a total of 47.4 million people left their positions compared with 42.1 million people in 2019. Microsoft’s Work Trend Index revealed that 43% of the global workforce are considering quitting their job in the coming year, up from 41% a year ago.
Most aren’t dropping out of the workforce entirely, rather they're looking for better opportunities. An August 2021 Pulse Survey by PwC revealed that 65% of respondents were looking for a job.
Still, if people follow through and leave their jobs, this could amount to one of the biggest years of employee turnover ever. This could cost employers billions of dollars in recruiting and hiring to replace them. That’s why there’s so much urgency to retain employees: Talent is valuable, and replacing it is expensive.
Data analytics is a valuable tool that can provide your human resources department with insight on how to best retain your key employees. A recent McKinsey survey found that 70% of company executives consider people analytics a key priority. Although the competitive urgency for organizations to use data analytics in HR isn’t new, data analytics can give a real boost to your recruiting and retention efforts.
HR analytics is a set of methodologies and technologies for collecting, transforming and normalizing HR data used to inform business decisions. HR analytics software actually comprises a wide range of applications and cloud-based services:
- Companies incorporate data from human resources information systems (HRIS) to give management a comprehensive view of HR functions such as employee performance, benefits and payroll. Additionally, organizations incorporate data from applicant tracking systems (ATS) to have a view into their recruiting pipeline and open positions.
- HR data analytics dashboards or management reports allow teams to view HR metrics.
- Organizations build data pipelines from HR applications into data warehouses.
- Business intelligence (BI) software also allows companies to extract actionable insights from HR data presented in reports, visualizations and dashboards.
Key techniques to increase employee retention
Understand employee pain points: In Oracle’s State of HR Analytics 2021 report, 48% of respondents cited compensation as the area in which people analytics plays the most important role in a company. Compensation can be a key pain point for employees. You can use data to analyze your organization’s salary structure to figure out if it’s competitive — and if needed, make changes to keep employees from leaving.
Companies also leverage analytics to evaluate other benefits and rewards for employees. Cloud data platforms like Snowflake provide a way to benchmark your organization's compensation to industry standards so you can ensure that your employees are being paid fairly.
In addition, you can incentivize employees to be productive by using data analytics to tie internal systems for employee goal tracking to salary and bonus models. Be sure to incorporate analytics professionals on your compensation team.
Make better hiring and inclusion decisions: Is HR targeting diverse candidates in recruiting? Once interviewed, are diverse candidates making it through the process? Do employees from diverse backgrounds have the same average tenure at the company as non-diverse employees? Understanding the answers to questions like these is key to identifying and solving issues with diversity and inclusion.
Data analytics can help HR professionals evaluate diversity and inclusion efforts by gaining a holistic view of their organization. With this insight, management can help ensure that the company is addressing real needs.
Use relationship mapping: HR departments can use relationship maps to explore patterns among employees and stakeholders in an organization. Entity relationship diagrams (ERDs) make this capturing of relationships possible. They show the relationships between entities in a database, such as employees, departments, training programs and salary information. You can construct ERDs that are one-to-one, one-to-many or many to many.
The COVID-19 pandemic tested the relationships between workers and employees. Employers who consider workers “interchangeable and easily replaceable” will have a harder time building relationships with them. Those employers who understand and foster meaningful employee relationships will have an easier time retaining them.
Perhaps data-driven techniques using ERDs can help businesses overcome this problem, by identifying networks of relationships within your organization. This in turn can enable HR to foster new kinds of connections where existing relationships are lacking.
Predict which employees are likely to leave and intervene proactively: Another type of data analysis called sentiment analysis helps HR departments gauge the degree of employee contentment. You can use automated staff surveys to keep track of how many employees may be likely to leave. Organizations can then use the learnings from sentiment analysis to increase employee engagement.
By turning to people analytics and data-driven strategies to gather insights on your teams, you have a chance to beat the Great Resignation and retain your employees for the long term. But it all starts with making sure that you’re integrating the data sources available to you, including HRIS, and making them available for analysis. That’s where building a modern data stack comes in.