People are the lifeblood of any business. Having the right people in your business makes achieving your financial goals easier. But that’s not all. An effective HR strategyOpens a new window can keep your best performers in your business â€” reducing turnover and minimizing training and recruitment costs.
Thanks to the increasing use of Cloud-based HR tools, there is a lot of data around that wasn’t available just a few years ago. When this data is analyzed properly, it can be used to improve everything from recruitment strategies to incentive schemes.
If you get human resources right, you can set your business up for long-term success. And here are seven HR analyticsOpens a new window that can help you to do just that.
1. Acquiring Key Competencies
Any business has its own list of key competencies, which must be present in its workforce. When you recruit, you need to ensure that these competencies are acquired through an effective recruitment process. But how do you know you’re acquiring the right kind of people with these all-important traits?
Start by identifying the core competencies that are crucial to the success of your business. Once you know those, audit your existing workforce to see which of the competencies you actually have. If there’s a competency deficit, it points to an ineffective recruitment strategy â€” which you can then address.
2. Employee Turnover
There is a very high cost involved in bringing new people into a business. As well as the administrative costs associated with recruitment, there are the costs of training and development to consider. If you’re leaving this training to existing employees, there’s a cost involved here too. And until your new employee isn’t being fully productive, you’re not getting full value for money.
For all of these reasons, do everything you can to stop key people from leaving your company. Turnover rates can be segmented into divisions, departments and key roles â€” identifying possible issues relating to pay, conditions or career advancement opportunities.
3. Recruitment Channels
Recruitment is an expensive process, and it becomes even more costly when you get it wrong. And despite your best efforts, that’s bound to happen from time to time. But with recruitment channel analytics, you can monitor where your most productive, loyal or long-serving employees come from.
For example, you might notice that employees who apply via a national job website tend to leave for pastures new relatively quickly. On the other hand, it might be the case that employees who are referred to you by a local recruitment agency tend to be more reliable and committed. In this case, you’d probably want to stop using that website in favor of the agency.
4. Individual Performance
It’s important not to rely solely on anecdotal evidence when assessing the performance of your employees. If you’re going to identify training deficiencies, poor performance or opportunities for promotion, you’ll need solid performance analytics.
Identify KPIs for all of the positions within your organization. Using a combination of one-to-one meetings, supervisor reports, financial reports and anything else that might be useful, you can score employees based on how well they deliver on each KPI. Using big data capture techniques provided by HR software platforms, you can analyze performanceOpens a new window more scientifically â€” and get right to the heart of any problems.
5. Workforce Capacity
How do you know that you have enough employees in your business? Having too many wages to cover eats into your profits, but having too few people in certain areas could be limiting sales growth. Imagine you have four salespeople covering your local area. How can you tell when it’s time to increase the workforce to five? Capacity analytics makes this judgment call a lot easier.
HR software produces productivity reports, telling you when employees are stretched too thinly, or when their priorities are wrong. In some cases, restructuring or training might address the issues. But there may be occasions when the data is telling you to recruit.
6. Employee Capabilities
The capability of employees is difficult to monitor, and even more difficult to identify during the recruitment process. Yet when employees are incapable of performing key tasks, the ramifications for your entire business can be very serious.
For example, a key capability could be leading courageously, communicating effectively with people from all social backgrounds, or self-awareness. Over time, you can assess these capabilities through a combination of performance reviews, financial KPIs, one-to-one interviews and on-job assessments.
7. Absence Management
According to The Integrated Benefits Institute absence through poor health cost the U.S. economy $576 billion in 2012. And thanks to increasing levels of work-based stress, this figure is rising. By leveraging absence management data, you can identify areas of your business that demonstrate particularly high levels of employee absence. And when these issues are flagged, you can investigate for possible root causes.
For example, you might find that absence rates are higher among female sales executives. There could be many reasons for this, including a gender pay gap, discrimination or a lack of opportunities for advancement.
If you can improve your small business’ HR strategy, there’s a very good chance you can grow sales, cut costs and give your bottom line a significant boost. These seven key HR analyticsOpens a new window should help you to achieve all your commercial goals â€” and carry your business on to bigger and better things.