Five ways that data helps HR be more strategic

We live in an era in which we have an ever-increasing amount of data about our companies and employees. Leveraging that data can help human resources become a more strategic partner in a company.

HR is no longer considered a tactical function responsible for running payroll and managing benefits. HR has an increasingly strategic purpose. Its leaders are considered part of senior management, and the department’s strategies and actions have a significant impact on a company’s business outcomes.

Here are five ways that HR can leverage data to become more strategic.

1. Smarter recruiting

Recruitment has evolved tremendously over the years. In the past, it was not considered part of an organization’s broader talent strategy, because it was narrowly focused on simply filling open positions. That process was historically very labor-intensive and used more of a wait-and-see approach. A recruiter would post a job and would wait and hope that they got good candidates – and identifying the good candidates would mean sifting through large volumes of resumes.

HR’s job today is to do more than fill a position – it’s to make sure the company has the right talent to achieve desired business outcomes. That means using data to identify talent gaps, and creating and executing on recruiting strategies to ensure the organization has the right people onboard to achieve desired business outcomes.

With a clear recruiting strategy in place, recruiters can leverage technology to quickly search across multiple job sites to identify candidates that are the best match. Not only is it easy to quickly identify candidates, but you can also get a candidate score that tells you how good of a match that candidate is for the position.

Taking it a step further, you can leverage predictive analytics to get insight into whether a candidate will be successful in your organization, based on their work history, personality traits, and other factors. By leveraging all this data, recruiters can make informed decisions and have confidence that the candidates they hire will be a good fit.

2. Increasing employee engagement to boost productivity

There is no doubt there is a strong correlation between low engagement and low productivity. To measure and increase engagement though, you must understand current employee engagement levels, but more importantly, understand the factors that negatively impact engagement.

By conducting an employee engagement survey and then analyzing the data, HR can see if there are issues across the company or whether the issues are limited to specific locations, departments or employee demographics. More importantly, by understanding the root of the problem, HR can develop action plans to address those problem areas.

On the flip side, by knowing what’s working well, HR can invest more effort into those areas and replicate those processes and polices across the entire organization.

3. Identifying high performer flight risk

This is where I think using data really shines. Predictive analytics helps identify employee flight risks even before that employee decides to leave a company. This is key, because studies have shown that replacing an employee can cost six- to nine-months salary on average. The cost to replace a high performer can be even higher.

I’ve talked about how data can be used to develop your compensation strategy. Data can also be used to identify high performers who are at risk of leaving the company. By knowing this, along with the contributors to flight risk, HR and managers can take action before it is too late. Some solutions can take this a step further by providing HR and managers with recommended actions to reduce the chance of someone leaving.

4. Managing compliance to reduce business risk

Every organization must report information on areas such as taxes, diversity, or worker’s compensation. This may seem tactical, but in some cases, it can be strategic because not adhering to compliance regulations can result in big penalties, which in some extreme cases can impact a company’s reputation and bottom line.

One example is related to gender pay gaps. In some states and countries, gender pay equality is becoming law. Using data, a company can identify whether male employees are being paid more than female employees for a given job. Knowing this, HR can then put an action plan in place to close the gap. Some companies that have achieved and publicized pay equity use it as a recruiting tool to attract top talent in today’s tight labor market.

5. Identifying and measuring key performance indicators

Organizations can get into the habit of measuring for measurement’s sake. Measuring something that doesn’t have an impact on desired business performance is not worth measuring.  

There’s no standard set of metrics that fits every organization. So, it is important for organizations to first analyze their data to determine the key factors that have the biggest impact on the business. Once these key factors are identified, companies can establish metrics and set goals for them. They can then monitor the data and in those cases where the goals are not being met, they can develop action plans to get things back on the right track.

These are just a few ways HR can leverage data to be more strategic and to have a larger impact on the organization.