Current trend study confirms: HR analytics is on the rise!

Intelligently utilized, data contributes to creating innovations and achieving better results in various organizations. This also applies to human resources. With the help of People Analytics or HR Analytics, Human Resources (HR) can evolve into a strategic and data-driven business function. This is also the conclusion of the new trend study “Data Driven HRM” by the Institute for Personnel Management and Organization at the University of Applied Sciences FHNW, in collaboration with HR Today. The study examined how data-driven HR is in organizations in Switzerland, how well HR Analytics is embedded, and to what extent the goals pursued with it are achieved. 191 participants provided usable responses to the survey. Here, we present the key findings.

HR Analytics has already gained a foothold in many organizations. About 73 percent of the respondents in the trend study report that evaluations based on personnel information take place in their organizations. However, 17 percent of organizations still do not use these analyses, and 10 percent plan to do so in the next two years.

The use of HR Analytics varies depending on the size of the organization. In large companies with more than 250 employees, 88 percent use personnel information for evaluations. In small and medium-sized enterprises (SMEs) with fewer than 250 employees, this value is 53 percent. In general, it is 6.2 times more likely that HR Analytics is used in large companies than in SMEs.

However, some organizations forego the opportunities of data analysis due to lack of time (53 percent), unclear benefits (44 percent), and insufficient data (38 percent). Nevertheless, about 61 percent of participating companies that do not use such analyses believe that building HR Analytics is important.

Progress in HR Analytics varies among surveyed executives, HR officers, and HR staff. Most organizations use data primarily descriptively to outline past events (93 percent) and current events (87 percent). About 59 percent use this data to explore internal relationships and trends in more depth. Only 37 percent use it to forecast future developments. These data reflect the fundamental trend in Switzerland, where descriptive analysis of personnel data prevails, and predictive use is not yet widespread. Interestingly, the results show no significant differences between small and medium-sized enterprises and large companies.

Only every second organization uses personal data to take specific measures. There is no noticeable difference between SMEs and large companies. It is noteworthy that even organizations that only conduct descriptive analyses and have not agreed to diagnosis or prognosis still derive measures. Here, a clear trend emerges: as the maturity of HR Analytics increases, organizations are more likely to take concrete actions. Advanced maturity in this context means that organizations not only use descriptive but also diagnostic and prognostic analyses.

The study shows that many different data sources are used in HR Analytics. 91 percent of the surveyed institutions rely on data from the HRM system. In addition, 56 percent use data from surveys, 54 percent from offboarding, and 51 percent from HR tools. Although the focus is on quantitative data, 38 percent also use qualitative data. Often, multiple types of data are used to solve a problem. An interesting observation is that HR Analytics data are mixed with those from other business areas. One-third of the respondents (33 percent) confirm this, while 36 percent state the opposite. For 28 percent, this data combination happens at least occasionally.

To ensure that HR Analytics is closely linked to the business area and its value is demonstrated, results should be shared with relevant stakeholders and ideally discussed. In most companies, the executive management (91 percent), HR business partners and HR managers (89 percent), as well as line management (82 percent), receive these results. 56 percent of the board of directors also has access. However, employees only receive the results in 24 percent of cases.

It is noticeable that HR Analytics data are often provided but less frequently discussed. In 87 percent of companies, the data are discussed with executive management, 73 percent involve HR partners or managers, and 66 percent discuss them with line management. However, 20 percent state that they do this only occasionally. Discussing results with the board of directors is less common (34 percent).

HR Analytics becomes more relevant the more it focuses on personnel-related issues of the core business. 62 percent of the surveyed organizations confirm that their HR analysis questions are based on business challenges. For 28 percent, this is only partially true, while for 10 percent, it does not apply at all. There are clear indications that HR and business are not closely integrated in most organizations: 60 percent of organizations do not or only partially use HR Analytics to solve core business problems. Only 14 percent use it fully for core business issues.

Data Foundation
Feedback shows that data quality is a problem for many organizations. Some organizations point to errors in their master data. There are also difficulties with the amount of data – some organizations have too much data, and smaller organizations in particular often have too little. Coordination at company level can also be difficult, especially when defining relevant key figures or combining different data sources.

Resources
Another problem is the lack of resources required for HR analytics. The survey participants stated, among other things, that they require additional resources to implement HR analytics effectively. There is also a lack of time – be it for the planning of efficient HR analytics, the target group-oriented preparation of results or detailed analyses in relation to the strategy.

Recognition
Many organizations encounter resistance to the introduction of HR analytics, whether within the HR department, the specialist department or at management level. This lack of recognition often manifests itself in the fact that the added value of HR analytics is not recognized internally, the HR department is attributed a lack of expertise or HR analytics is not taken into account at various levels.

Knowledge and Skills
The majority of organizations find it challenging to build the necessary skills for HR analytics. There are reports of a low affinity for numbers, a lack of data literacy and a lack of technical and statistical skills. Without the necessary know-how, the targeted analysis of HR-related data can quickly become overwhelming.

Execution
In practical implementation, one challenge lies in the balance between effort and return and in deriving meaningful measures. Some organizations also lack suitable analysis tools or a consistent system landscape.