Three Steps to Utilizing Data Analytics to Inform HR Strategy and Shape Culture

HR leaders have access to a mountain of impactful data-driven insights and according to the Paychex Pulse of HR Survey, most (83%) rely on such analytics to make more informed decisions. However, having access to data is very different than leveraging it to gain meaningful insights to formulate a competitive HR strategy. Developing and executing on the right HR strategy will help cultivate a great working environment that supports a company’s vision, culture, and a shared set of values.

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Here are three steps HR leaders should consider when utilizing data analytics to better engage their workforce and drive results:

Step one: Understand the difference between metrics and analytics and how each can drive business growth and success. Metrics and analytics are commonly confused—they’re related but the distinction is important. Metrics show what happened as a result of decisions made in the past. They’re useful in gauging service levels and holding people and groups accountable. In contrast, analytics look to the future, aiming to project the potential impact of business decisions you make today on tomorrow’s outcomes. Establishing baseline metrics to assess past performance is a great place to start as HR leaders set out to use data analytics to inform future business strategy.

Step two: Effectively use data to establish HR goals that are aligned with the organization as a whole. One of the simplest and most widely applicable examples of leveraging data to make better business decisions is with employee retention. Turnover occurs in every organization, but it should be consistent rather than sporadic with unpredictable ups and downs. The ability to track turnover and compare it against historical patterns gives HR leaders the big picture vantage point they need to see if their numbers deviate from industry or geographic norms. A consistent deviation could indicate a pattern and HR can then use that insight to drive strategic conversations with leadership about the underlying larger issues that may be causing employees to leave the company. In today’s tight labor market, it may indicate a larger concern with the competitiveness of your compensation and benefits package or your traditional recruiting approaches.

Step three: Find an HR technology solution that will provide you with immediate access to relevant information and industry trends.The necessary tools vary based on the types of data HR leaders are trying to track. If, for example, the business is focused on recruiting and retention, a solution with reporting features that include hiring and turnover data in context is critical. HR can quickly and easily see turnover trends that can be broken down to uncover areas of the organization that are contributing most to the issue. Benchmarking capabilities within the HR application can also be a game-changer, enabling users to compare their metrics to similar organizations by demographics like region, company size, and industry.

Another key aspect that HR leaders should look for in any technology solution is data centralization. Not only will a single set of data allow HR professionals to streamline administrative tasks, but it also helps ensure that analytics are based on the most complete and robust datasets available, eliminating potential silos and gaps.

HR leaders are being asked to do more today than ever before. From keeping a pulse on company culture and the overall health of the workforce to developing an ongoing culture of accountability and high engagement that delivers business results. It is critical for HR leaders to establish a baseline set of metrics and analytics to compare their results against the norm and allow for immediate course correction when necessary. Today’s C-suite leaders expect their HR teams to present an informed, data-substantiated vision for managing employees and driving organizational success. With the right strategy and tools in place, HR leaders can leverage HR analytics to ensure that they recruit, hire, and retain the right talent to drive the business forward.

Tom Hammond is Paychex VP of Corporate Strategy and Product Management.