HR analytics: Leverage this retention strategy and make informed decisions

One of the biggest issues facing HR professionals is acquiring data they can use to make informed decisions when hiring, onboarding, and retaining employees. 

Data from SHRM shows it costs an average of nearly $4,700 to hire a new employee.[1] This number includes recruitment, pre-employment testing, onboarding, training, human error, lost knowledge, and a drop in morale. 

If you’re going to spend this much money hiring an employee, it’s important that you do your part to retain them. 

HR analytics provide you with the data you need to know what processes and procedures work for your employees and what does not. Connecting this data together with employee retention trends helps you to hire, train, and retain the right employees. 

In this piece, we cover the most commonly used HR analytics, their benefits, and how to put them to practical use in your own organization to fuel your talent retention efforts.

What is HR analytics?

HR analytics is the process of using employee data to gain actionable insights that help you make better talent decisions and enhance workforce productivity. 

Also known as people analytics, this employee retention strategy collects and analyzes information spanning the employee lifecycle from hiring to retirement, providing tangible insights about what works for hiring and retaining and what doesn’t. 

An advanced analytics strategy moves beyond just reporting what happened in the past and instead recommends what actions to take next to help employees and organizations succeed together. 

For example, predictive HR analytics may spotlight areas to refine recruitment tactics, reveal training gaps to fill, predict retention risk, and prescribe management approaches tailored to employee’s individual motivations.

Most common types of HR analytics metrics

There’s an incredible range of HR analytics examples out there, but some of the most common metrics used in companies are:

• Revenue per employee – The average revenue generated by each employee. Tracking this over time for different departments and roles identifies the teams and people who are driving the most business value, helping to determine appropriate employee compensation. 

• Training efficiency – Measures the percentage of employees who show tangible improvement in job performance after completing a company-sponsored training program. This key metric evaluates how the training translates into real on-the-job impact. 

• Voluntary turnover rate – Tracks the percentage of employees who voluntarily resign from their positions during a defined period of time, providing insight into overall employee satisfaction. A high voluntary turnover rate could indicate issues with company culture inclusivity, compensation, growth opportunities, or management. 

• Involuntary turnover rate – Measures how many employees are released from their positions involuntarily, including terminations and layoffs. Although some employee turnover is inevitable, a high involuntary turnover rate can point to underlying problems in talent management.

• Time to hire – Provides visibility into the efficiency of talent acquisition processes by measuring the average number of days between a job opening to acceptance.

• Absenteeism – Measures the average number of days employees are away from work for unapproved and unscheduled reasons during a defined period. High or growing absentee rates can indicate a lack of employee engagement.

• Offer acceptance rate – Tracks what percentage of job candidates accept job offers extended to them. A low and/or declining offer acceptance rate could indicate compensation and employee benefits being misaligned with current market rates or a need to update recruitment marketing messaging.

• Training expenses per employee – Offers useful insights on learning budget efficiency and training strategies, and helps optimize development program spending. 

• Time to fill – Measures the number of days from when a job requisition is opened to when it is closed after a candidate accepts the position. Longer time to fill windows mean critical roles stay vacant for extended periods, which slows business progress.

• Human capital risk – Reflects vulnerabilities that could lead to employees in critical roles leaving without transferring knowledge and key relationships.

Why are workforce analytics important?

Given the continuing trend toward tighter labor markets, an organization’s employees have never been more critical to its success. 

HR metrics and analytics emerge as a crucial strategy that enables both leadership and staff to make smarter decisions grounded in data instead of hunches. 

Why workforce analytics are important to employers

Workforce management analytics are essential because relying on intuition or “gut feeling” in critical workforce decisions is not an option. 

Analytics provide the rigorous, data-driven foundation today's leaders require. Powerful workforce reporting and predictive analytics deliver actionable intelligence to guide priorities and investments in the workplace. 

Specific metrics unveil improvement opportunities around:

• Recruiting efficacy to hire requisites faster and identify best sources

• Predictive turnover risks enabling retention programs to target flight risks

• Skills gaps showing development needs across roles

• Quality of hire correlating recruiting programs to performance

Using data driven recruiting enables you to make decisions from a place of visibility rather than guesswork. Every step of the process, from posting a job to onboarding your new employee, needs to be backed by data explaining why and how you’re going to do it. 

Why workforce analytics are important to employees

Thoughtfully implemented workforce management analytics help employees understand the path they’re on. From hiring to onboarding, training, and progression, employees know what to expect and what is expected of them. 

This personalization breeds trust in leadership’s decision-making and confidence that each employee’s voice is heard through unbiased data patterns. 

Workers get optimized performance management support, transparent career development, and enhanced employee experiences that motivate stronger productivity.

The end result is an employee who feels empowered and involved in their own development. This understanding and transparency is what creates an employee who values their company and continues providing quality work. 

The benefits of people analytics

Some of the benefits of HR analytics include better talent retention, lower costs, and stronger employee engagement. 

When your organization truly commits to acquiring and leveraging people analytics to inform its HR decisions, the rewards trickle down from top to bottom. 

1. Increases retention

In the neverending war for talent, employee retention stands out as a main pain point for a lot of businesses.

HR analytics uncover what motivates and frustrates talent at your organization so you can take the proper steps to give your people what they want. 

A 2023 survey by Bankrate found that 56% of U.S. workers are likely to seek new jobs, up from 51% in 2022. 

Identifying disconnects between employee expectations and current experiences enables you to correct your course and ensure your employees want to stay with you using onboarding best practices, better-aligned benefits, and improved engagement channels to make workers feel valued.

Proactive retention analytics also calculates metrics like the risk of attrition for different employee segments. HR can then concentrate engagement efforts on flight risks through personalized incentives and growth plans that inspire loyalty, improving their employee retention rate.

2. Reduces costs

In addition to forfeiting invaluable expertise when employees leave, turnover also hits organizations hard in the wallet. Industry research suggests the total cost of replacing an employee reaches 50% to 200% of their annual salary when calculating expenses like hiring, onboarding, training, and ramp-up time to full productivity.

Workforce planning analytics and skills gap audits empower HR leaders to reduce turnover costs in two key ways:

• Improved candidate targeting and hiring based on qualities predictive of employee retention and performance, not just credentials

• Identifying and developing internal talent to fill critical roles rather than relying solely on external hiring

HR analytics also enable managers to identify and respond to retention red flags and dips in business performance. 

For example, analytics may detect an increase in absenteeism within a specific department resulting in reduced output. You may identify poor work-life balance and a lack of flexibility as the reason for high absences. 

Powered with that knowledge from employee surveys, you can then work with your team to develop hybrid schedules and more flexible options that help employees get into work more consistently. This is good for both employee productivity and mental health in the workplace. 

By uncovering specific pain points like these that distress employees, organizations can implement targeted interventions like skills development programs, workload redistribution, culture-building initiatives, or improved compensation structures.

3. Boosts employee engagement

It’s equally important to assess how positive or negative peer interactions, manager relationships, job satisfaction levels, communication flows, and other qualitative engagement dynamics resonate across your people.

According to Joblist, half of the workforce says they are currently burned out, and 62% feel that their company isn’t doing enough to address it. Employees who feel burned out are 3.4 times more likely to look for a job in the next 12 months.[2]

Analytics enable HR leaders to spot burnout risk factors and downward engagement trends in their early warning stages. They help to unpack patterns across the workforce, such as recurring absences and declines in productivity. 

When you possess this knowledge, it enables you to diagnose problems leading to decreased employee engagement such as unreasonable workload, inadequate staffing, and a lack of support from management. 

You can then address these issues before they lead to a mass exodus. Fostering workplace environments where people feel fulfilled, recognized, and heard pays unlimited dividends.

4. Improves employee development

By analyzing and questioning your current development programs, you can better understand what’s working and what isn’t. 

Using employee surveys and sentiment feedback, you can learn if your employees feel supported and properly guided throughout their development. 

Using utilization rates and performance tracking can also help you understand if your development programs are actually working and employees are utilizing them to their advantage. 

It’s also important for employees to know that development opportunities exist within your company and that they’re available to those who want them. 

This is where career mobility transparency makes an impact and enables HR to refine development programs based on what employees actually want. Employees are more likely to stay with a company where mobility and growth is an option.

8 best practices for leveraging HR analytics to retain your best performers

Armed with this knowledge, how can you begin to apply these HR metrics and analytics in your business? 

The following steps break down actions you can take right away to improve your organization’s practices and processes. 

Best practice for leveraging HR analytics: Summary table

1. Inform your hiring efforts by using skills data

In leveraging your human resources analytics together with skills-based hiring, you can reveal evidence-based attributes that help you accurately pinpoint the ideal hire for a given role. 

For example, someone applying for a customer service position needs to possess qualities such as communication, problem-solving, and empathy – you know and expect those traits from someone in this position. 

But with more advanced talent analytics, you might also identify that your most successful customer service people all scored well on a Motivation test. 

Using data to reveal this connection between customer service performance and a self-motivated attitude informs your future hiring processes to make even stronger decisions. 

By hiring someone based on their skill set rather than their experience, you’re able to learn what skills and characteristics make up a successful employee in that role. 

2. Conduct a skills gap analysis to determine your workforce needs and long-term organizational goals

Strategic talent planning requires a multidimensional understanding of current capabilities and those necessary for the future. 

A skills gap analysis compares present employee competencies against leadership’s projections for future skill requirements to help support growth plans.

Auditing competencies needed for growth against staff skills also helps you understand what type of talent acquisition strategies you may want to deploy. 

Once you’ve determined where the gaps may lie, you can use performance data to see what employees may possess the skills and interests needed to fill those roles in the future. 

Implementing this proactive approach enables you to always be one step ahead, preventing bottlenecks from occurring. 

3. Ensure your analytics get the go-ahead from the legal team

Any workforce analytics initiatives must ensure compliance from a legal perspective. Well-intentioned data practices still risk legal blowback without vetting through counsel first. 

Common scenarios that may overstep boundaries include:

• Analyzing performance metrics or engagement scores without anonymization that exposes identities

• Tracking individual locations, communication frequency/content, or computer usage without proper permissions

• Combining datasets like performance reviews with protected demographic info

• Capturing data that makes sensitive inferences about health and family status

Appropriate safeguards need to be in place and strictly followed when developing your HR analytics dataset. 

The Equal Employment Opportunity Commission and Federal Trade Commission provide information regarding what you can and cannot do regarding employee data. 

Confirm that your information sources, data analysis plans, application intentions, privacy protections for employees, and consent procedures adhere to the law and organizational policies before your people analytics program is rolled out.

Disclaimer: The information contained in this site is provided for informational purposes only and should not be construed as legal advice on this subject matter. If you have any questions on workforce analytics in your area, please consult with a lawyer.

4. Build your HR analytics tech stack

Creating an effective workforce analytics program requires the right supporting tech stack. The best tools grow alongside organizational needs and help to automate data collection without overwhelming current procedures. 

Key considerations for building an HR tech stack include:

• User experience: Platforms should provide intuitive dashboards enabling seamless data insights for decision-making. Your team will only use the analytics if they’re able to easily understand and access them.

• Support and training: Ongoing learning opportunities ensure users capitalize on the platforms’ full value. Be sure to offer continuous support and training so your team gets the most out of it.

• Integrations: Connecting HR analytics tools with existing systems streamlines exporting/importing data and provides a unified visualization of data. Review integration options or all-in-one HR suite solutions.

5. Gather data from a variety of sources

The best analytics fuse diverse data streams from various HR analytics platforms into a holistic people data canvas. 

• Applicant tracking system (ATS)

• Human capital management system (HCMS)

• Payroll

• Learning systems

• Engagement surveys 

• Talent profiles 

These all provide valuable data points that enable you to compare between sources and get the most comprehensive perspective. Sourcing multiple data points ensures your insights are accurate rather than just one-off outliers. 

Blend internal data with external signals from HR analytics software, job board APIs, compensation benchmarking, skills taxonomy libraries, or social media feeds. 

Sometimes you need to do a little digging to find out what employees actually think about their company. Upward feedback is incredibly important because it enables you to hear the problem directly from the people who deal with it every day. 

Gathering both hard and soft data is the only way to get a 360-degree view of patterns in your business. 

6. Take action on your collected data

Analytics without action is no good. Once workforce insights surface, leadership must be prepared to respond accordingly by updating policies, processes, and procedures based on the feedback. 

Address areas of importance such as: 

• Work-life balance

• Employee compensation

• Onboarding and training

• Retention 

Hold one-on-one meetings with specific individuals who brought problems to the forefront. The faster you react to the data, the more your employees see that you care about them and value their feedback. 

Dedicate resources explicitly to driving decisions and changes tied to analytical findings. Without the execution of recommendations, data investments become sunk costs rather than instruments of optimization.

7. Use HR analytics data to inform employee training programs

Today’s employees expect hyper-personalized learning and development. Workforce analytics serve up tailored information regarding competency gaps to reshape the way employees learn. 

You want to start from the top and work your way down when addressing training and skills issues. Start with the highest priority deficiency and apply the HR analytics data you’ve gained. 

For example, if you have an outside sales department, you might find that salespeople are getting plenty of appointments but struggling to close deals. The analytics you collect from employee feedback reveal the issue is not a lack of sales skills but rather a lack of technical competency. 

Without actually hearing that from your employee, you may have never realized and simply assumed that you had below-par salespeople. 

Now you can develop an employee training program for your sales team that helps them learn the technology they need to close deals. 

As you develop employee training programs, be sure to measure the return on investment based on better employee performance and retention following completion of the training. 

8. Analyze patterns leading to turnover and predict attrition

One of workforce analytics’ most valuable applications is determining your attrition rate and factors that lead to voluntary turnover.

Evaluating historical examples where specific engagement survey ratings, performance changes, tenure milestones, compensation perception, and similar workforce signals preceded resignations enables you to model the likelihood of employee turnover. 

If you’ve calculated your current employee turnover rate, how does it vary from department to department? Long-tenured vs newly hired? Young vs old? 

Arming yourself with these predictive HR analytics enables you to intervene and address flight-risk employees before the problem gets too out of hand. 

3 examples of companies succeeding with HR data analytics as a talent retention strategy

Employee retention is a top three priority for 77% of HR leaders, and for good reason. We see time and time again how retaining the right employees can have a positive impact on your business. 

Let’s look at three HR analytics examples and how they were able to use this data to improve their hiring, onboarding, training, and retention.

3 examples of companies succeeding with HR analytics: A summary

Briggs Industrial Solutions

Briggs, a material handling equipment supplier, relies on its field technicians to service customer equipment all over the country. The high turnover of technicians with three to five years of tenure at the company prompted them to look into this issue.[3]

Seeking visibility into churn drivers, Briggs’ HR team implemented annual engagement surveys to capture employee feedback. Results revealed technicians felt undervalued, lacked career development pathways, and were misaligned with skill-appropriate assignments. 

Survey analytics also showed declining perceptions around recognition, pay fairness, and understanding of company benefits.

Powered by these insights, Briggs’ HR department decided to take steps in the right direction by establishing formal career ladders to increase advancement transparency. It directly tied higher pay grades with new certifications and introduced profit sharing to supplement existing benefits. 

Additionally, the company expanded in-house classroom training for mid-career technicians versus relying solely on senior techs.

Following these targeted interventions, Briggs realized substantial survey score improvements around recognition, trust in leadership, and pay fairness. 

Bonduelle 

Bonduelle, a French food processing company, didn’t initially see anything wrong with its new hire training program because it seemed to check all the right boxes. Despite that, it only had a 35% retention rate, so it was time to make some changes.[4]

Using HR people analytics as the driving force, leadership extended its program from a single day of overwhelming information to a gradual two-week ramp-up. It also paired new hires with tenured employees for extra camaraderie and advice

Analytics confirmed the positive impact of these changes, with retention rising to 60% and climbing.

When COVID-19 required a fully remote work policy and onboarding pivot, the company leaned on its analytics-driven, phased onboarding framework for virtual adaptation. 

This digitized approach enabled building necessary workforce capabilities – despite never setting foot onsite pre-employment. Analytics again validated the successful model adaptation, delivering an 86% retention rate for pandemic hires onboarded virtually.

Anonymous Global Retailer

For this example, we have an anonymous global retailer that wanted to find a more efficient and effective way to hire. However, decentralized processes across regions and business units posed analytics challenges.[5]

The company was able to tackle this by building a centralized infrastructure and applicant tracking system. 

From there, it needed a way to standardize the inputs to generate reliable results. This resulted in a complete data overhaul and quality standards across the company. It expanded its tech stack with tools that provided robust analytics and data-backed insights. 

The analytics-powered talent acquisition transformation delivered impressive dividends. Hiring manager satisfaction with new hire quality improved markedly while time-to-fill talent needs shortened.

Ultimately the retailer’s recruitment analytics investments and governance vigilance provided the trusted insights required to continuously refine and optimize strategic talent acquisition.

Use HR analytics to inform your retention strategies

HR analytics have ushered in a new era for talent strategy as organizations seek to provide a working environment that not only supports business outcomes but also satisfies and retains employees.

Using hard data is the most effective way to make strategic HR decisions, backing your initiatives with solid facts. 

By analyzing key HR metrics around areas like job satisfaction, career progression, recognition, and work-life balance, companies gain invaluable insights to fuel better decisions around retention strategies.

You can also use personality assessments to identify proven qualities that make up the perfect employee for a specific position.

Learn more about using the data you’ve gleaned to build a quality professional development plan to keep your top talent around.

Sources

1. “SHRM Benchmarking: Talent Access Report”. (2022). Society for Human Resource Management. Retrieved December 18, 2023. https://shrm.org/ResourcesAndTools/business-solutions/PublishingImages/Pages/benchmarking/Talent%20Access%20Report-TOTAL.pdf 

2. “Future Forum Pulse”. (February 2023). Future Forum. Retrieved December 18, 2023. https://futureforum.com/research/future-forum-pulse-winter-2022-2023-snapshot/ 

3. “Employee Retention Case Studies: How 5 Companies Leverage Our Employee Success Tech”. Quantum Workplace. Retrieved December 18, 2023. https://www.quantumworkplace.com/future-of-work/employee-retention-case-study 

4. Haggith, Judy. (July 9, 2020). “Building a Better New Hire Experience – Even in a Pandemic”. Intertek Alchemy. Retrieved December 18, 2023. https://blog.alchemysystems.com/building-a-better-new-hire-experience-even-in-a-pandemic/ 

5. “Real-World Case Studies: Success Stories and Lessons Learned”. Agile HR Analytics. Retrieved December 18, 2023.https://www.agile-hr-analytics.com/success-stories-and-lessons-learned/