The study claims nearly half of businesses are failing to utilise HR analytics
In a recent YouGov survey delivered by MHR Analytics nearly half of the businesses involved showed they were failing to use vital insights from analytics and data within their HR operations. The survey of 500 HR leaders showed that 44% have little focus on HR analytics, including technology and processes that utilise specific data to tackle business challenges and make informed financial and business decisions.
On a more positive note, finance and accounting services are proven to be leading the way in terms of using this type of technology to enhance overall business performance. Around a quarter of respondents within the finance industry are using analytics to acquire predictive insights, with over 40% performing financial or strategic planning within the HR side of the business.
Other studies indicate a similar trend, with a recent Deloitte report indicating that finance teams are generally leading investment in analytics technology (approximately 80%). The MHR study showed that finance and accounting sectors are delivering the most innovative HR analytics, with over 30% intending to use predictive analytics in the next 12 months, compared to an industry average of 15%.
The study indicated that businesses implementing big data are proving successful, with over 40% suggesting they use big data for general operational reporting, 30% using it for financial workforce planning, 23% using it to enhance reporting processes and an additional 14% using it to determine employee retention and the development of the workforce.
The study asked what was preventing businesses from delivering analytics and 35% indicated that it was due to not having the right knowledge or skills. Nearly a third of respondents stated that the biggest challenge was the general lack of quality data available within the business.
Managing people – biggest expense but a most valuable asset to a business
Most people agree that employees are the biggest expense for their business. In times of sluggish economic growth, managing employees becomes a key priority for most businesses. HR analytics is a valuable tool in making key financial decisions for businesses.
Expenses such as pensions and recruitment fees need to be considered to improve financial efficiency and support development for the future. Businesses also need to ensure they recognise the value of employees within their business plan.
To improve the ROI of employees, companies need to really understand their people and ensure their business supports their real potential. Failing to do this can be costly for a business in the long term. Studies suggest it can cost on average £30,000 to replace a member of staff, with other reports stating it can cost businesses 400% of their annual salary to replace an existing role. Further studies show workplace absences are resulting in costs of £18 billion per year to the UK economy, with a predicted increase to £21 billion in 2020.
It is a challenge for companies to ensure they are paying complete attention to managing people in terms of costs and assets. Implementing the right systems in a business to ensure there is a balance between both is challenging. Studies by PwC suggest that over 60% of UK CEOs intend to increase their number of staff and a similar proportion are also intending to reduce costs associated with their employees.
Determining the requirements for this balance based on manual systems is complicated. To really understand employee behaviour and the financial shape of your business requires constant observations and in reality, cannot be achieved via manual systems. Analytics enables companies to take total control of their ‘people data’ and really understand what is going on in their business. Innovative technology enables companies to gain full visibility of the challenges businesses face and providing the tools to predict future scenarios.
We have entered the big data industrial revolution and as the world becomes more reliant on data, analytics is becoming more important within HR and a tool that businesses need to adapt to remain competitive. Gaining insights into the overall performance of employees creates a faster and more efficient decision-making process, creating further financial savings for a business.
What are the key benefits of analytics in HR?
Studies have proven that companies that implement analytics to study their employees have experienced a significant improvement in average annual profits, improvement in sales, higher operating incomes and higher sales per employee.
Leading computer and electronics business Hewlett-Packard had a problem of high management turnover which ultimately resulted in the loss of revenue. HR analytics insights allowed HP to assess and identify key factors influencing employee attrition, enabling HP to create strategies to retain employees, resulting in a saving of approximately $300 million.