HR analytics

What Is HR Analytics? | A Practical Guide

Whether your business has a dedicated Human Resources department or not, you and your team may benefit from HR analytics.

The data provided by this process can often inform your hiring and promotion decisions, improve workforce processes, build company culture, and promote a positive employee experience.

In this article, we discuss some of the key aspects of HR analytics so you can fully understand what it is, why it’s important, how it works, and how it can affect your business for the better.

Table of contents

What is HR analytics?

HR analytics

HR analytics (also referred to as people analytics, workforce analytics, and talent analytics) is the process of collecting and analyzing data about your operation in order to improve workforce performance and business outcomes.

With the advent and proliferation of computers in the business sector, Human Resource Management has undergone a dramatic transformation.

Most notably, HR has evolved from a purely operational discipline concerned with hiring, firing, and training to a more strategic discipline that can have far-reaching effects on the success of your business.

This new form of HR — known collectively as Strategic Human Resource Management (or SHRM) — is the process of managing human capital in order to benefit the individual, the team, the company culture, and the business as a whole.

SHRM is a product of the digital age. As such, it takes a more objective outlook and relies more heavily on data and information. This is in sharp contrast to many of the HR processes of the past that took a subjective outlook and relied on “gut feelings” to drive decision-making.

With the help of computers large and small, the new discipline of HR analytics now provides data-backed insight into what is working and what is not working in the business.

Armed with that knowledge, organizations can make improvements, plan for the future, and keep everything headed in the right direction.

Why is HR analytics important?

A plant growing in a jar of money

Labor cost control

First and foremost, HR analytics may help you more accurately control one of the largest expenses your business has to deal with: labor costs.

On the surface, labor costs may seem like just the hourly wages and salaries you pay your employees.

But look deeper and you’ll see that labor costs also include variables such as:

What that means for your business is that while you may pay your employees $16 per hour, your actual labor costs are much higher — and much more difficult to control — because you have to factor in all of the other variables and expenses.

HR analytics can provide your business with the details it needs to lower labor costs in all corners of your operations.


Process improvement

Analyzing HR data may also help you improve the processes that drive your business every day.

By digging deep into the information you collect, you can answer questions such as:

  • Are there any patterns in employee turnover?
  • How long does it take to hire an employee?
  • What does it cost to get a new employee up to full productivity?
  • Which employees are most likely to leave within a year?

With data-backed answers to these and other questions at your disposal, your business can be in a better position to focus its resources more efficiently, make necessary improvements, and plan for the future.

How HR analytics works

HR analytics

1) Collection

The first step in any HR analytics endeavor is collecting data, such as:

The data can come from any system — extant or new — but the results should be easy to search and organize later on.

2) Measurement

The measurement stage compares collected results to benchmarks like historical norms, organizational standards, and company-defined baselines.

For example, your business won’t know what constitutes an acceptable absentee range if you don’t first define it. Once you set a number, you can compare the absentee data collected in step one to the benchmarks established in this step to measure the results.

3) Analysis

The analysis stage examines the data from the collection and measurement stages in order to identify trends and patterns that may be having an influence on your business.

There are many different methods for analyzing data, but some of the most common are:

  • Descriptive analytics — Focuses on putting historical data into perspective and identifying places for improvement
  • Predictive analytics — Uses statistical models to forecast (predict) possible risks and potential opportunities
  • Prescriptive analytics — Uses those same statistical models to identify the consequences of the opportunities put forth in predictive analytics

4) Application

After the data has been analyzed, you can apply the results to create actionable plans for your organization.

For example, once you understand what the numbers say about turnover in your business, you can change things to reduce or prevent it.

Or, if the data shows that it takes too long to hire and get a new employee up to speed, you might make changes — e.g., simplify the application, conduct phone interviews, or revamp in-person interviews — to streamline the activity and move people through the process faster.

Pros and cons of HR analytics

Pros and cons of HR analytics


1) Accurate decision-making

The data-driven approach of HR analytics can make for more accurate decision-making and can reduce reliance on subjective methods (e.g., intuition and guessing).

2) Improved retention

After analyzing HR data, your business can gain a better understanding of the reasons why employees leave your organization (and why they stay). With that information in hand, your business can develop strategies to improve employee retention.

3) Stronger employee engagement

With the right data, those responsible for managing employees can improve the way they promote engagement and motivation.

4) More effective recruitment and hiring

As we discussed earlier, analyzing data to determine the efficiency of your recruiting, hiring, and onboarding processes can go a long way toward controlling labor costs and helping your business run better.

5) Easier forecasting

Forecasting — planning for the future — is a big part of keeping your business on the right track. With data to support your decisions, forecasting can become easier and end up being more accurate than going on feelings alone.


1) Difficult skill set

Not all HR departments possess the analytical and statistical data skill sets necessary to successfully work with large and complex batches of data.

2) Disparate reporting systems

Depending on the size of your business, various departments and teams may use different management and reporting systems. This can make it difficult to compile and compare data.

3) Data quality

A big measure of the success of HR analytics is the quality of the data you collect. Without up-to-date systems for capturing data points, results may not be as accurate as they could be.

4) Software needs

Analytical reporting software is absolutely necessary for making everything work. But that software can be cost-prohibitive for many businesses.

5) Ethical issues

Collecting data with new technologies — e.g., wearable devices, smartphone apps, and cloud-based systems — can create ethical issues that some businesses don’t want to deal with.

Keep your team organized with Sling

Keep your team organized with Sling

For HR analytics to work, your business needs a good foundation of organization to keep everyone on track and working efficiently. Such organization can really only be achieved with help from dedicated workforce management software, such as Sling.

Features of the Sling app include:

Sign up for a free account and see for yourself how Sling can help you keep your team organized so that HR analytics paints an accurate picture of your business.

For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit today.

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This content is for informational purposes and is not intended as legal, tax, HR or any other professional advice. Please contact an attorney or other professional for specific advice.

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