Recent research by Deloitte found that 83% of the 924 companies surveyed globally had low workforce analytics maturity. In contrast, higher-maturity organizations use consistent data definitions, embedded reporting and analytical tools, and data integration capabilities to understand employee behaviors.

Contents
What is workforce analytics?
Types of workforce analytics
The benefits of workforce analytics
Workforce analytics metrics to track
Workforce analytics examples and use cases
Workforce analytics software
Workforce planning and analytics: HR tips
Workforce analytics training for HR

What is workforce analytics?

Workforce analytics, also known as workforce planning analytics, is the systematic use of workforce data to inform and optimize HR decision-making.

It uses data-driven insights to enhance workforce efficiency, success, and strategic alignment. This helps organizations achieve their goals by ensuring the right people are in the right roles at the right time and proactively addressing workforce-related challenges.

Key elements of workforce analytics

Workforce analytics involves collecting HR data from various sources, including employee performance metrics, engagement surveys, attendance records, and demographic information. This data collection is essential for building a comprehensive understanding of the workforce.

The next step focuses on understanding the significance or implications of this data in relation to organizational goals. This entails analyzing trends, identifying patterns, and correlating workforce metrics and business outcomes. By interpreting this data, HR can gain insights into areas such as employee productivity, retention, and skills gaps.

As an HR professional, you can use this data to optimize the decision-making process. By integrating data-driven insights into HR strategies and operational plans, HR teams can make informed decisions about talent acquisition, development, and deployment. This optimized decision-making process helps create a more agile and responsive workforce, driving better business performance.

Types of workforce analytics

1. Descriptive workforce analytics

Descriptive workforce analytics involves analyzing past and current workforce data to understand the present state of the workforce.

Example metrics:

• Employee turnover rates
• Average tenure
• Absenteeism rates.

2. Diagnostic workforce analytics

Diagnostic workforce analytics goes a step further by examining the reasons behind the patterns that descriptive workforce analytics identifies.

Example metrics:

• Employee engagement scores
• Exit interview feedback
• Performance review data.

 3. Predictive workforce analytics

Predictive workforce analytics uses historical data to forecast future workforce trends and potential issues. It aims to predict outcomes and help organizations prepare for future scenarios.

Example metrics:

• Predictive turnover models
• Talent pipeline forecasts
• Workforce demand projections.

4. Prescriptive workforce analytics

Prescriptive workforce analytics builds on predictive workforce analytics by recommending specific actions to achieve desired outcomes. It uses advanced algorithms to suggest optimal solutions to workforce challenges.

Example metrics:

• Optimization models for staffing
• Scenario planning outputs
• Prescriptive talent management recommendations.

The link between different workforce analytics types

Descriptive workforce analytics provides a clear picture of current trends and happenings in the workforce, while diagnostic workforce analytics helps HR understand the reason behind them. Together, they offer a comprehensive understanding of the state of the workforce and its underlying causes.

On the other hand, predictive workforce analytics forecasts future trends based on historical data, while prescriptive workforce analytics suggests actionable steps to optimize outcomes based on these predictions. This combination helps HR proactively address future workforce challenges and opportunities.

Utilizing all four types of workforce analytics will allow you to gain a holistic view of your organization’s workforce, understand the factors driving current performance, anticipate future needs, and effectively implement strategies to achieve goals.​​

The benefits of workforce analytics

• Improved HR decision-making: Workforce management analytics provide HR professionals with valuable insights, leading to more informed and effective decision-making.
• Enhanced employee experience and retention: HR can identify factors influencing employee satisfaction and engagement by analyzing workforce data analytics. It can also improve onboarding processes and retention rates.
• More cost-effective business practices: Workforce analytics can highlight inefficiencies and areas for cost savings, allowing for more strategic resource allocation and reduced operational costs.
• Greater understanding of future workforce needs: Workforce planning metrics help anticipate future staffing requirements, ensuring the organization is prepared to meet its goals.
• Better alignment between HR and company goals: By leveraging workforce analytics, HR can ensure their strategies and actions align with overarching organizational goals.

Workforce analytics metrics to track 

1. Employee turnover rate: Measuring the rate at which employees leave an organization within a specific period (typically a month, quarter, or year) helps HR understand workforce stability and gauge its effective retention strategies. High employee turnover rates may indicate job satisfaction, compensation, or work environment issues, prompting a review of HR practices to improve employee experience and retention.
2. Average tenure: Calculating your organization’s average employment length provides insight into employee loyalty and the success of HR’s retention efforts. If the average employee tenure is short, it could signal problems with onboarding, culture fit, or career development opportunities.
3. Absenteeism rate: Tracking the frequency of unplanned employee absences — be it due to illness, stress, or other personal reasons — can help prompt initiatives to improve workplace wellness and support. High absenteeism rates can indicate, for instance, low employee engagement or health issues in the workplace.
4. Time to hire: Measuring the period between the posting of a new open position and a candidate accepting the job offer gives HR an indication of how efficient the recruitment process is. Prolonged time to hire can harm the candidate experience and lead to talent loss, necessitating a review and optimization of the recruitment and hiring process.
5. Cost per hire: Calculating the cost per hire, i.e., the average cost of hiring a new employee (including advertising, recruiter fees, and onboarding expenses), can help HR identify cost savings opportunities and optimize recruitment budgets.
6. Employee engagement rating: Gauging the level of employee engagement and satisfaction through surveys and feedback gives HR a good idea of how happy employees are. Engaged employees are typically more productive and less likely to leave the organization. On the other hand, low engagement scores should prompt HR to implement initiatives to improve workplace culture, communication, and employee recognition.
7. Revenue per employee: Assessing the average revenue generated per employee provides insight into overall workforce productivity and efficiency. Low revenue per employee may indicate inefficiencies or a need for better training and development programs to improve employee performance.
8. Early turnover rate: Tracking the percentage of employees who leave within their first year of employment can highlight issues with the hiring process, onboarding, or early employee experience. A high early turnover rate — also known as new hire turnover — warrants a review of recruitment practices and onboarding programs to ensure new hires are well-integrated and supported.
9. Employee net promoter score (eNPS): Determining eNPS through employee surveys indicates employee loyalty and their likelihood of recommending the company to others as a good place to work. A low eNPS score can signify employee dissatisfaction and potential turnover, prompting HR to investigate and address the underlying issues.
10. Training effectiveness: Evaluating the impact of training programs on employee performance and development helps HR assess and improve its employee experience strategies. This includes pre-and post-training assessments and feedback. A high degree of training effectiveness can enhance employee skills and productivity, while HR can redesign or replace ineffective programs to better meet both employee and organizational needs.

HR tip

Start small and scale up. Begin your workforce analytics journey with a few key metrics that align closely with your organizational goals. As you begin to see and act on results, you can fine-tune your approach and gradually expand the range of metrics you use for more comprehensive workforce analytics.

Workforce analytics examples and use cases

Example 1: Evaluating the impact of employee engagement initiative

An HR manager at a healthcare organization wants to understand if employee engagement initiatives positively influence retention rates. The goal is to determine which engagement activities are the most effective in retaining employees.

The HR manager collects and analyzes data on various initiatives, such as wellness programs, team-building activities, and professional development opportunities. By comparing retention rates before and after implementing these initiatives and correlating them with employee feedback and engagement scores, the HR manager can identify which activities significantly impact employee retention.

Example 2: Predicting a tech company’s future workforce needs

A tech company is experiencing rapid growth and needs the right talent to meet future demands. The HR team uses predictive workforce analytics to forecast staffing needs based on historical hiring data, project timelines, and market trends.

By analyzing past hiring patterns and upcoming project requirements, the HR team predicts the number of software developers, project managers, and support staff the company needs over the next year. This allows the company to proactively recruit and train employees, ensuring they have the necessary skills and capacity to support its growth.

Example 3: Optimizing the recruitment process through data analysis

A retail company wants to reduce the time and cost associated with its recruitment process while improving the quality of its hires. The HR department uses workforce analytics to evaluate the effectiveness of different recruitment channels and methods.

The team tracks metrics such as time to hire, cost per hire, and candidate quality (based on performance reviews and retention rates) for various recruitment sources, such as job boards, social media, and employee referrals. By identifying the most cost-effective and efficient channels that yield high-quality candidates, the HR department optimizes the recruitment strategy, reducing costs and time to hire while improving overall candidate quality.

Workforce analytics software

There are various companies offering workforce analytics tools and software. Some of these include:

Workforce planning and analytics: HR tips

HR can use workforce analytics in workforce planning. Some of the areas workforce analytics can help with planning include: 

1. Identify skills gaps: Use analytics to assess current employee skills and identify gaps to closed through training or hiring.
2. Forecast workforce needs: Use predictive analytics to forecast future staffing needs based on business growth projections, seasonal demands, and turnover rates.
3. Enhance succession planning: Identify high-potential employees using performance data and engagement metrics to ensure a robust pipeline for key roles.
4. Optimize talent acquisition: Analyze recruitment data to determine the most effective sources and methods for attracting top talent.
5. Improve employee retention: Use retention analytics to identify factors contributing to employee turnover, and develop strategies to improve job satisfaction and retention.
6. Align workforce with business goals: Ensure that workforce planning and analytics are aligned with overall business strategies and goals to drive organizational success.
7. Monitor and manage performance: Utilize performance analytics to track employee productivity and effectiveness. This helps HR identify areas for improvement, as well as recognize top performers.
8. Budget effectively: Use workforce analytics to inform budgeting decisions, ensuring financial resources are allocated as efficiently as possible to meet workforce needs.
9. Enhance employee engagement: Leverage engagement analytics to understand employee sentiment and develop initiatives that enhance employee engagement and morale.
10. Support diversity, equity, inclusion and belonging (DEIB): Use analytics to monitor diversity and inclusion metrics to ensure the organization progresses toward its DEIB goals.

Workforce analytics training for HR

As an HR professional, upskilling yourself in workforce analytics can help you make better data-driven decisions. This is where workforce analytics training comes in. Engaging in specialized training programs will improve your ability to analyze and interpret workforce data, leading to more strategic and effective HR practices.

AIHR analytics courses

AIHR offers various analytics certificate programs to help you develop your data analytics skills: 

• People Analytics Certificate Program: This comprehensive program covers essential topics in people analytics, including data collection, analysis, and interpretation. It equips HR professionals with the skills they need to implement and leverage analytics effectively in their organizations.
• People Analytics Foundations online course: This course provides a solid foundation in people analytics, focusing on key concepts and practical applications.  It’s ideal for HR professionals looking to build a strong understanding of using analytics to drive business decisions.
• HR Data Analyst online course: This course is designed to develop the skills necessary for analyzing HR data. It covers various analytical techniques and tools, helping HR professionals become proficient in data-driven decision-making.

To sum up

Incorporating workforce analytics into your HR practices provides a strategic advantage, enabling data-driven decision-making that aligns with organizational goals. By systematically collecting, analyzing, and interpreting data, you can address challenges proactively, optimize talent management, and improve overall business performance. This approach ensures the right people are in the right roles, enhancing organizational efficiency and effectiveness. 

The distinct types of workforce analytics (descriptive, diagnostic, predictive, and prescriptive) offer valuable insights at various stages of the HR process. From understanding current workforce trends to predicting future needs, these analytics tools empower HR teams to make informed decisions that drive success. As the business environment continues to evolve, workforce analytics will remain crucial for maintaining a competitive edge and achieving long-term organizational success.

The post What Is Workforce Analytics? Your 2024 A-Z Guide appeared first on AIHR.

But what is the difference between OKRs and KPIs? This article will explain the key differences, when to use each, and metrics to track when measuring each methodology.  

Contents
What is an OKR?
The benefits of setting OKRs
What is a KPI?
The benefits of setting KPIs
OKRs vs. KPIs: The main differences
Why use HR OKRs
Why use HR KPIs

What is an OKR?

• Objectives serve as ambitious, qualitative descriptions of what the organization aims to achieve
• Key Results are specific, measurable milestones indicating progress towards those objectives. 

This framework fosters alignment, accountability, and innovation within organizations, driving success across industries.

The benefits of setting OKRs

• Alignment: OKRs help align HR goals with the organization’s overall objectives, ensuring that HR initiatives contribute directly to the company’s success.
• Clarity: OKRs provide clarity on HR priorities and expectations, making it easier for you and your HR teams to understand what must be accomplished and how to measure success.
• Focus: By setting clear objectives and key results, OKRs help your HR teams prioritize tasks and initiatives, focusing efforts on the most impactful activities.
• Accountability: OKRs facilitate accountability within HR by establishing measurable outcomes and timelines for achieving them. This encourages you, the HR professional, to take ownership of your work and deliver results.
• Continuous improvement: OKRs promote a culture of constant improvement within HR by encouraging reflection and adjustment based on performance data. Your HR teams can use OKR results to identify areas for growth and refine their strategies over time.
• Employee engagement: When HR goals are aligned with the organization’s objectives, employees are more likely to feel engaged and motivated. OKRs provide a framework for communicating your HR priorities and creating a sense of purpose among employees.
• Transparency: OKRs promote transparency within HR and across the organization by clearly outlining goals and progress. This transparency builds trust and collaboration among team members and stakeholders.
• Adaptability: OKRs allow your HR teams to adapt quickly to changing business needs and market conditions. By regularly reviewing and adjusting objectives and key results, you can remain agile and responsive to new challenges and opportunities. 

HR tip

Sears implemented the OKR framework to boost performance. Initially, the company limited this to salaried employees, overlooking sales agents. After a year, with minimal OKR impact, it realized adjustments were necessary.

Sears achieved notable improvements by refocusing efforts on outbound call centers and emphasizing add-on sales metrics. Sales increased by 8.5% and hourly sales rose from $14.44 to $15.67.

What is a KPI?

A Key Performance Indicator (KPI) is a measurable value that gauges how effectively an organization is achieving its key objectives. 

• Key indicates the metric’s importance in relation to organizational goals.
• Performance emphasizes its role in assessing the effectiveness and execution of strategies
• Indicators highlight the measurable nature of these metrics, which provide valuable insights into progress.

KPIs are essential tools for decision-making, helping organizations (and HR teams) to track and optimize performance toward desired outcomes.

The benefits of setting KPIs

• Performance measurement: KPIs can provide you with quantifiable metrics to measure the effectiveness and efficiency of your HR initiatives, processes, and programs.
• Goal alignment: KPIs help align your HR activities with the goals and objectives of the organization.
  Data-driven decision-making: KPIs can provide you with actionable insights based on real-time data. This data will help you make informed decisions and prioritize initiatives that impact organizational performance most.
• Accountability: By setting clear KPIs, HR professionals and teams are held accountable for achieving specific outcomes. This builds a culture of responsibility and ownership within the department.
• Continuous improvement: KPIs serve as benchmarks for your performance. These benchmarks help you evaluate and refine your HR strategies and processes to improve your effectiveness over time.
• Resource optimization: KPIs help you to allocate resources more effectively by identifying areas of strength and weakness. This lets you focus resources where they are most needed to drive performance and results.
• Employee development: You can use KPIs to track and evaluate employee performance, identify areas for improvement, and establish individual and team development goals. This contributes to a culture of growth and development within the organization.
• Communication and transparency: Setting KPIs promotes transparency and open communication both within HR and across the organization by clearly defining expectations and goals. This creates collaboration and alignment toward common objectives.

OKRs vs. KPIs: The main differences

Why use HR OKRs

Here’s why implementing HR OKRs within the HR function is beneficial:

1. Aligns with organizational goals

OKRs help you align your HR objectives and initiatives with the company’s broader strategic goals. By setting clear objectives and defining key results contributing to these goals, you can focus your HR team’s efforts on activities that drive organizational success.

2. Provides focus and prioritization

OKRs provide you with a framework for prioritizing activities and allocating resources effectively. You can better direct your efforts toward the most critical initiatives by establishing ambitious yet achievable objectives and defining key results that measure progress.

3. Maintains accountability and measurement

OKRs create accountability within HR by establishing clear expectations and metrics for success. You can achieve your HR goals and optimize your HR team’s performance by regularly tracking progress against key results and holding individuals and teams accountable.

4. Encourages continuous improvement

OKRs promote a culture of continuous improvement within HR by encouraging reflection, learning, and adaptation. Regular reviews help you identify areas for improvement, refine strategies, and iterate approaches to achieve better results over time.

HR tip

Inject creativity into OKRs by encouraging cross-functional collaboration to spark innovation and develop a culture of collective ownership of shared goals.

How HR can use OKRs

There are many objectives that OKRs can help you to achieve. Some of these include: 

Improving recruitment and onboarding 

Setting clear OKRs for recruitment and onboarding helps your recruiters and talent acquisition team improve their work in these key areas. For instance, the goal might be to enhance the quality of new hires with specific targets like “boost candidate survey scores by 20%”, “raise new hire retention by 15% in the first year”, and “cut down the hiring process by 10 days”. 

This method focuses on attracting the best talent and making sure they settle in well, increasing their commitment and participation from the start. With OKRs, HR can use data and feedback to keep improving how they hire and welcome new employees.

Improving employee engagement and satisfaction

For instance, a goal could be “increase employee engagement and satisfaction,” with measurable outcomes like “boost employee engagement score by 25%”, “cut employee turnover by 20%”, and “start at least two workforce development programs.” 

By establishing these objectives, you can work towards fostering a positive culture that appreciates and rewards employees’ efforts. OKRs promote ongoing feedback, making employees feel valued and listened to, which boosts loyalty and productivity.

Developing Diversity, Inclusion, Equity and Belonging

Use OKRs to improve Diversity and Inclusion in the workplace. For example, an objective might be to “amplify diversity and inclusion in all departmental teams” with measurable outcomes such as “increase the representation of minority groups in management positions by 15%” and “achieve a 25% increase in employee perceptions of inclusivity”. 

By setting specific, actionable goals, HR can ensure that DEIB initiatives are not just token gestures but are integrated into the organization’s culture. 

6 examples of HR OKRs

Example 1:

• Objective: Improve employee engagement
• Key result 1: Increase employee engagement survey scores by 10%
• Key result 2: Reduce voluntary turnover rate by 5%
• Key result 3: Implement at least three employee recognition programs.

Example 2:

• Objective: Enhance diversity and inclusion
• Key result 1: Increase representation of underrepresented groups in leadership positions by 15%
• Key result 2: Achieve 100% participation in diversity and inclusion training programs
• Key Result 3: Implement unconscious bias training for all hiring managers.
  

Example 3:

• Objective: Strengthen talent acquisition
• Key result 1: Reduce time to fill vacant positions by 20%
• Key result 2: Improve candidate satisfaction scores by 15%
• Key result 3: Increase employee referral hires by 25%.
  

Example 4:

• Objective: Optimize performance management process
• Key result 1: Increase employee and organizational goal alignment by 20%
• Key result 2: Conduct quarterly performance check-ins with all employees
• Key result 3: Raise performance appraisal completion rates to 95%.
  

Example 5:

• Objective: Enhance employee development
• Key result 1: Increase participation in training and development programs by 30%
• Key result 2: Achieve 90% satisfaction rate in post-training surveys
• Key result 3: Implement a mentorship program for high-potential employees
  

Example 6:

• Objective: Improve HR operational efficiency
• Key result 1: Implement HR automation tools to reduce time spent on administrative tasks
• Key result 2: Streamline onboarding process to reduce onboarding time by 25%
• Key result 3: Increase self-service HR portal adoption rate to 80%.

HR tip

Learn to make data-driven decisions by upskilling yourself with an AIHR People Analytics Certificate Program. The self-paced program will teach you how to analyze HR data and build interactive HR dashboards and reports so you can measure and transform data into actionable insights. 

Why use HR KPs

KPIs can serve several purposes within HR:

1. Align with strategic objectives

KPIs help HR departments align initiatives and activities with the organization’s overall strategic objectives. By measuring specific metrics, such as talent acquisition, employee development, and retention, HR can ensure that its efforts contribute directly to achieving broader organizational goals.

2. Monitor key metrics

You can track critical workforce management and performance metrics with KPIs. These metrics may include employee engagement levels, turnover rates, diversity and inclusion metrics, training and development effectiveness, and HR operational efficiency. By measuring these key indicators, you can identify areas of strength and areas needing improvement. This enables you and the company to make informed decisions and take proactive measures to address issues as they arise.

3. Drive performance improvement

KPIs provide HR with insights into the performance and effectiveness of various HR programs, policies, and processes. By setting benchmarks and targets for key metrics, you can establish performance standards and identify opportunities for improvement. This enables HR to implement targeted interventions and strategies to enhance employee performance, engagement, and overall organizational effectiveness.

4. Improve decision-making 

KPIs serve as valuable tools for data-driven decision-making within HR. By analyzing KPI data, you can gain insights into trends, patterns, and areas of concern within the workforce. This enables HR to make informed decisions regarding talent management, resource allocation, strategic planning, and other critical HR initiatives, ultimately leading to better outcomes for the organization.

How HR can use KPIs

Measure performance

Use KPIs to measure the performance and effectiveness of your HR programs, initiatives, and processes. For example, KPIs related to recruitment and selection can help HR assess the efficiency of talent acquisition efforts. KPIs related to training and development can help gauge the impact of employee learning programs on skill development and performance improvement.

Set and monitor goals

Establish specific KPIs aligned with HR goals and objectives and use them to set performance targets and benchmarks. By monitoring KPIs regularly, you can track progress toward achieving these goals, identify areas of success and improvement, and adjust strategies and tactics to stay on track.

Identify trends and patterns

HR can analyze KPI data to identify trends, patterns, and insights related to workforce dynamics, employee behavior, and organizational performance. For example, KPIs related to employee engagement can help you identify drivers of engagement and areas of concern, helping you develop targeted interventions to improve morale and satisfaction.

Benchmarking and comparison

KPIs can be used to benchmark performance against industry standards and best practices or compare performance across different departments, teams, or time periods. This helps you identify areas of strength and areas needing improvement relative to peers or internal benchmarks.

Drive accountability and transparency

Promote accountability and transparency by establishing clear KPIs and communicating them to stakeholders. Employees and managers can then better understand expectations and performance standards, track progress toward goals, and take ownership of their contributions to success.

Assess the effectiveness of strategies and policies

KPIs help you to evaluate the effectiveness of existing HR strategies, programs, and policies. By measuring outcomes against predefined KPIs — such as recruitment effectiveness, training program success rates, and diversity and inclusion metrics — you can determine whether its initiatives are achieving the desired results. You can then identify what’s working and what requires improvement, leading to more targeted and effective interventions.

6 examples of HR KPIs

Example 1:

Employee turnover rate: Percentage of employees who leave the organization within a specific period, typically calculated annually.

Example 2:

Absenteeism rate: Percentage of scheduled work hours that employees are absent from work, often calculated monthly or quarterly.

Example 3:

Time to hire: Average number of days it takes to fill a vacant position from the time you post it until the organization hires a candidate.

Example 4:

Training program success rate: Percentage of employees who successfully complete training programs or courses within a given timeframe.

Example 5:

Employee engagement score: A composite measure of employee satisfaction, motivation, and commitment, often assessed through employee engagement surveys or other feedback mechanisms.

Example 6:

Diversity index: Measure of workforce diversity that considers factors such as gender, race, ethnicity, age, and other aspects of diversity, often expressed as a percentage or ratio.

To sum up

OKRs and KPIs are invaluable tools for driving organizational success. OKRs provide a structured methodology for defining clear objectives and measurable outcomes, guiding teams toward strategic goals. On the other hand, KPIs offer real-time insights into performance, enabling you to track progress and make data-driven decisions.

The post OKRs vs. KPIs: The Key Differences & Use (With Examples)  appeared first on AIHR.

In this article, we will explain what HR analytics is, its benefits, as well as how to get started and grow in your HR analytics capabilities.

Contents
What is HR analytics?
What is HR analytics used for?
Importance of HR analytics
HR analytics examples
Key HR metrics
Data analytics in HR: How to get started
How to transition from descriptive to predictive and prescriptive analytics in HR
HR analytics certification
FAQ

What is HR analytics?

HR analytics, also referred to as people analytics or workforce analytics, involves gathering, analyzing, and reporting HR data to drive business results. It enables your organization to better understand your workforce, make decisions based on data, and measure the impact of a range of HR metrics, ultimately improving overall business performance. In other words, HR analytics is a data-driven approach to Human Resources Management.

Although the term “HR analytics” is widely used, there is a growing trend of referencing “people analytics” as well. The two may often be used interchangeably, but technically there is a subtle difference. HR analytics originates from data housed within Human Resources and is aimed at optimizing HR functions. People analytics expands beyond HR to incorporate data from other sources within the organization, such as marketing, finance, and customer statistics, to address a wider scope of business issues. 

In the past century, Human Resource Management has made a dramatic shift from an operational discipline to a more strategic one. The popularity of using the phrase Strategic Human Resource Management exemplifies this. The data-driven approach that characterizes HR analytics is in line with this development.

Analytics enables HR professionals to make data-driven decisions instead of relying solely on instinct and opinions. Furthermore, analytics helps test the effectiveness of HR policies and interventions.

Types of HR analytics

Different data analysis methods provide insight and identify trends within data. Being familiar with these methods helps you understand how analytics can contribute to HR planning and decision-making. 

Here’s a brief overview of the four types of HR analytics:

• Descriptive HR analytics: Examines historical data to see what has occurred during a specific time. (Example: Annual employee turnover rate.)
• Diagnostic HR analytics: Investigates data to ascertain the causes of past occurrences and behaviors. (Example: Examining unplanned absence data to identify absenteeism drivers.)
• Predictive HR analytics: Explores current and historical data and uses statistical models and forecasts to predict future behaviors and events. (Example: Exploring recruitment data to discover the key attributes of an ideal candidate for a particular position.)
• Prescriptive HR analytics: Suggests potential future outcomes and scenarios and proposes recommendations for addressing them. (Example: Developing an algorithm that predicts what type of onboarding a new hire will need according to their experience and skill level.)

What is HR analytics used for?

Analyzing your HR data helps you draw conclusions, uncover insights, and make predictions. Data analytics in HR is used to improve HR functions in a variety of ways. 

Here are a few examples:

• Identifying patterns in voluntary and involuntary employee turnover
• Assessing the recruitment effort through candidate and process data
• Evaluating talent management effectiveness with metrics such as engagement and absenteeism rates
• Determining training and development needs from a skills inventory
• Optimizing compensation and benefits through analyzing market trends, internal equity, and effectiveness of current compensation packages
• Predicting future workforce needs by analyzing current workforce demographics, skill sets, and retirement projections.

We discuss more real-life examples below.

Importance of HR analytics

Leveraging data has become essential to expanding HR’s role within organizations by moving it from an operational function to a strategic partner. Knowing the impact of HR policies helps HR align its strategy with business goals and quantify the value it adds. Increasing what HR has to offer benefits employees and makes a positive impact on business results. 

Engaging in HR analytics enables HR to:

• Make better decisions that impact employees and the organization using the evidence data reveals
• Uncover and remedy inefficiencies to improve employee and organizational productivity and reduce costs
• Create a business case for HR interventions
• Evaluate the effectiveness of HR interventions and people policies
• Assess and strengthen DEIB efforts
• Be proactive in navigating change, disruption, and uncertainty.

At AIHR, we see HR analytics as identifying the people-related drivers of business performance. It takes the guesswork out of employee management and is, therefore, the future of HR. Or, to put it in the words of Edwards Deming: “Without data, you’re just another person with an opinion.”

HR analytics examples

To get an idea of how HR data analysis can make a difference in your organization, here are three companies that have successfully put HR analytics into practice:

1. HR analytics in recruitment at Google

Multinational technology company Google embraced predictive analytics in its recruitment efforts to reduce costs and shorten the hiring process. 

Google had previously required candidates to endure 15 to 25 rounds of interviews and testing. However, an analysis of the hiring process revealed that successful candidates could be predicted with 86% confidence from just four interviews. This reduced the number of hours and staff required to screen applicants effectively.

In addition, Google formulated an algorithm that analyzes resumes that had been rejected for one position to source potential candidates for another opening.

HR tip

If you’d like to read more about how data can change hiring practices, we recommend Laszlo Bock’s book ‘Work Rules’. Laszlo Bock was the senior VP of People Operations at Google and describes in more detail how hiring practices changed at Google after analyzing recruitment data.

2. HR analytics in employee attrition at Under Armour 

American athletic footwear and apparel company Under Armour wanted to reduce its employee attrition rate. They used an integrated workforce analytics tool to sort through data and detect the top causes of attrition. They were also able to forecast departures at Under Armor’s different locations and predicted that within the next six months, 500 out of the 5,000 employees would resign. 

With the attrition drivers identified, Under Armour was able to make improvements to its employee retention efforts with enhanced people strategies, including incentives and rewards. With these interventions, the employee attrition rate ended up being 50% lower than the initial prediction. 

3. HR analytics in absenteeism at E.ON

German electric utility provider E.ON needed to address an elevated absenteeism rate within its 78,000-person workforce. A team of analysts worked with the available data to find the main factors contributing to the increase in unscheduled absences. 

They discovered that absences were more frequent among employees who didn’t take their allotted vacation time. With this insight, E.ON made policy changes to support and accommodate employees in planning their time off. The company encourages employees to take at least one longer period of time off per year, as well as multiple shorter breaks. 

For more real-world HR analytics examples, you can refer to the case studies we published in the past. Here are links to three of them:

• Case Study 1: Key Drivers of Retail Sales Performance
• Case Study 2: Reducing Workplace Accidents Using People Analytics
• Case Study 3: How We Determined Optimal Staffing Levels

Key HR metrics

HR metrics are essential data points for tracking human capital and measuring the value of HR initiatives. There are numerous HR metrics used in HR analytics, but here is a brief overview of a few of the more common ones:

Data analytics in HR: How to get started

HR data analysis has several phases. You must understand the process to be able to apply HR analytics effectively. 

Here is a simplified overview of the five steps:

1. Asking a relevant business question

Your goal for using HR analytics should be to enable HR to impact business outcomes. For this reason, you need to start with the end goal in mind.

Clarify which area you’re focusing on and what you need the data to tell you and then put it in the form of a question. For example, if you want to optimize succession planning, the right question could be, “Which employees have the highest potential for progression and leadership?” 

2. Data selection

The second step is to identify which information you need to answer the question and where you will find it. Your HR tech stack or other internal data sources should house most of what you need. However, certain circumstances may require incorporating external benchmarking data. 

This stage will be cumbersome without a system that can sort and organize the data. Ideally, it should also be integrated with a reporting system.

3. Data cleaning

Once you’ve collected the right data, you’ll likely have some that are duplicated or incorrectly formatted. Without identifying and correcting this you may end up with a faulty analysis. 

The data cleaning process depends on the data set, but it typically involves removing or fixing duplicate, corrupted, incorrect, or incomplete data. You should also review it for any missing data and structural errors.

4. Data analysis

Next comes summarizing and analyzing the data to reveal trends, correlations, and patterns that help you draw conclusions. This can be done using various analysis techniques or tools such as Excel, ChatGPT, R, or Python. 

The results of your analysis will show what the data tells you about your original question.

5. Actionable insights

Now it’s time to interpret what the data is telling you and turn that into courses of action. Based on the findings, you can evaluate the impact of HR processes and policies and make decisions or recommendations for improving them.

How to transition from descriptive to predictive and prescriptive analytics in HR

With data now at the heart of business operations, organizations must learn to take full advantage of what it offers. It’s time to move beyond simple descriptive analytics and harness more advanced data analysis capabilities, yet the level of analytics maturity varies by company. (There are HR analytics maturity models that can assess your organization’s status in this area.)

An Oracle report that surveyed HR executives on trends in HR analytics showed the most sophisticated type of analytics being used by their organizations was as follows: 

• Novice = 6%
• Descriptive = 17%
• Diagnostic = 26%
• Predictive = 32%
• Prescriptive = 19%

Organizations can choose to put their data to work more effectively by making data analytics a priority and embracing the use of diagnostic, predictive, and prescriptive analytics.

Following are some ideas for developing your organization’s HR analytics maturity: 

• Develop analytical capabilities: Invest in training and development programs that will enhance the data literacy and statistical knowledge of HR employees and HR analysts. Incentivize staff to pursue external education and certification in HR data analytics.
• Assess data infrastructure: Ensure that your data infrastructure is capable of handling predictive and prescriptive analytics. It should be able to integrate data sources, clean data, create reports, and establish data governance protocols.
• Invest in the right tools: If necessary, invest money and effort in the tools it will take to ensure you can collect quality data and conduct predictive modeling. Examples include data visualization and analysis tools like Visier and Tableau, advanced HRIS, and statistical analysis tools like R and Python.
• Pilot projects and iterate: Start with small-scale pilot projects for testing predictive and prescriptive models. Gather feedback on the project and then iterate based on the insights and outcomes. Then you can scale up with initiatives that impact the entire organization.
• Establish a data-driven culture: Foster a culture that values the use of data in achieving success. Equip employees with the skill set required to use data while carrying out their responsibilities. Ensure everyone has access to data through transparency, collaboration, and experimentation across departments. Leaders should champion and set an example of data-driven decision-making.

Put simply, HR data analytics holds enormous value for an organization. By applying complex statistical analyses, HR can predict and change the future of the workforce and create real financial impact of Human Resource practices.

HR analytics certification

With HR Analytics Manager being one of the fastest growing jobs, becoming adept at HR and people analytics is a great way to expand your career opportunities. According to Global Market Insights, the worldwide HR data analytics market size was valued at $3.7 billion in 2023 and is projected to grow to $11.1 billion by 2032.

Upskilling yourself with an HR analytics certification gives you the knowledge and credentials you need to develop and succeed in this evolving HR field.

AIHR’s People Analytics Certificate Program delivers the core analytics comprehension, skills, and experience it takes to leverage HR data for improved talent decisions and initiatives that render strategic value.

Highlights of what this program equips learners with include: 

• An understanding and application of key statistical concepts and analyses
• The ability to capitalize on what HR data reveals to improve business outcomes
• How to create interactive HR dashboards and reports using Microsoft PowerBI
• How to assess an organization’s analytics maturity.  

This engaging, in-depth course is 100% online and self-paced. It includes competency assessments to apply what you’ve learned and case studies that bring HR analytics to life.

As an AIHR member, you’ll also have access to a community of worldwide HR professionals and our vast HR resource library of tools, templates, and playbooks.

In closing

The contemporary HR environment is both people-focused and data-oriented. HR data holds unbiased information and insights for crafting strategies and best practices that lead to more efficient and valuable HR services. This promotes higher employee engagement and productivity for better overall business achievement.

HR professionals who embrace the role of HR analytics and can decipher its insights help their organizations thrive and set themselves up for success in the future of HR. 

FAQ

The post What is HR Analytics? All You Need to Know to Get Started appeared first on AIHR.

Formal training, such as an HR analytics course, can help you build analytical skills that you need to play a more significant and strategic role within HR.

There are numerous Human Resources analytics courses available that range from basic statistical knowledge to HR data and metrics and more. To help narrow down the choices, we’ve listed 13 HR analytics courses to consider. Our list includes a selection of beginning and intermediate-level training opportunities. We hope you’ll find one that’s just right for you.

Contents
People Analytics Certificate Program by AIHR
People Analytics by University of Pennsylvania
HR Metrics & Dashboarding by AIHR
Essentials of HR Analytics by Cornell University 
Data Analysis for Improving Organizational Performance by HRCI
People Analytics Specialty Credential by SHRM
People Analytics Accredited Programme by CIPD
HR Analytics by Management Concepts
R Programming Fundamentals by PluralSight
R Programming by Johns Hopkins University
HR Data Science in R by AIHR
Data Mining with Weka by University of Waikato
Basic Statistics by University of Amsterdam

Please note that this list is compiled based on publicly available information. We have not tried the courses ourselves, with the exception of AIHR’s courses.

1. People Analytics Certificate Program – AIHR

Designed as an “all-in-one” course for (future) HR analytics professionals, this is the most comprehensive course on HR analytics out there. Its focus and approach are for practitioners who will participate in or manage HR analytics projects.

This HR analytics certification will teach you how to start using data to make fact-based people decisions that drive business value. The 15-module course will equip you with a full HR data analytics skill set to bring back to your organization. For example, you’ll learn how to:

• Transform, organize, clean, and analyze large HR data sets
• Create powerful HR dashboards in Power BI
• Apply statistical concepts to HR data and conduct statistical analysis in Excel

The course offerings include video lessons, interactive case studies, hands-on projects, and much more – all of which you can find in the course’s syllabus.

Upon completion of the course, you’ll receive a certificate from AIHR, the largest and most specialized institution in the field of online HR analytics courses in the world. You can add the HR analytics certificate to your performance review, include it on your resume, and share it on Linkedin.

2. People Analytics – University of Pennsylvania

This online Human Resource analytics resource is available through The Wharton School of the University of Pennsylvania. The Wharton People Analytics course is taught by three top professors and introduces you to the major areas of people analytics, including performance evaluation, staffing, compensation, collaboration, and talent management. All subjects are illustrated by real-life examples of how various organizations tap into HR analytics techniques to help them flourish.

While this course does present an overview of people analytics theory and some of its basics, it does not teach complex data analysis. What you will get is a good understanding of how HR can leverage data to take on a more strategic role and make better business decisions.

You can complete the course’s four modules in about eight hours of study time. You’ll be awarded a certificate once you complete the course.

You can access the course here.

3. HR Metrics & Dashboarding – AIHR Academy

This is the most hands-on of the people analytics courses listed here. It’s aimed at HR professionals who want to get into working with data.

AIHR’s HR Metrics & Dashboarding course will help you master powerful reporting skills and get the metrics right. You will finish the course as an HR Reporting Specialist with a broad skill set that covers the whole reporting process, from implementing essential HR metrics to automated reporting within intuitive HR dashboards. 

The course focuses on doing analytics using Excel, PowerBI, and Tableau. You will learn to:

• Leverage strategic workforce planning to make better decisions.
• Calculate the Return on Investment (ROI) of HR interventions and selection methods.
• Connect different data sets.
• Clean and structure data.
• Create interactive HR dashboards in Excel, PowerBI, and Tableau (see below)
• And much more.

All of this is offered in 28 hours of learning from 14 modules. You’ll also have the opportunity to apply your new knowledge with four hands-on projects. Want to know more? Check the course’s syllabus.

At the end of the course, you will have learned how to create an interactive dashboard that combines multiple separate datasets. A dashboard example is included below.

4. Essentials of HR Analytics – Cornell University

The Essentials of HR Analytics course is taught by a Professor of HR Studies at Cornell’s ILR School and prepares learners to begin their HR analytics journey. 

Using Excel and the datasets provided, this HR analytics training teaches the concepts, language, and tools you need to understand and leverage data to solve business problems.

At the end of the course, you will have the skills to:

• Pose questions and choose relevant data sources.
• Exercise essential HR data analyses.
• Interpret HR data.
• Discover insights and recommend actions.
• Use data visualization to present findings.

The format is instructor-led online over two weeks and requires 3-5 hours of effort per week.

5. Data Analysis for Improving Organizational Performance – HRCI

Drawing on data to improve employee and organizational performance is the whole point of people analytics. The Data Analysis for Improving Organizational Performance will show you how to bring HR data to life and make it work for you. This is an intermediate-level course that explains how to measure data.

It covers some necessary frameworks and tools for summarizing and delivering data, describes certain measurements, and clarifies the role of assessments in developing strategies. 

This training will help you understand:

• The use and validity of performance measures in different settings.
• The distinctions among a variety of performance measurements.
• The advantages and disadvantages of KPIs, Balanced Scorecard, and Net Promoter Score.
• The correlation between performance assessment and organizational strategies.

Once purchased, you’ll have on-demand access to this course for 180 days.

6. People Analytics Specialty Credential – SHRM

If you’re an HR professional who would like to acquire a recognized credential in people analytics, you can consider the Society for Human Resources Management (SHRM) program. Obtaining this credential will give you the know-how to make the most of your organization’s HR data, including articulating your findings and recommending solutions for addressing business issues. 

According to Nick Schacht, SHRM’s Chief Commercial Officer, this program “is designed to give HR practitioners a firm foundation in the principles and applications of metrics and technology that support HR practices and organizational objectives.”

You’ll be required to purchase an instruction package that includes an online 50-question knowledge assessment you must pass to earn the credential. 

The People Analytics Specialty Credential package includes the following learning:

• Foundations of Data Literacy (eLearning module)
• Taking Data-Driven Action (in-person or virtual seminar)
• The Metrics Behind People Analytics (eLearning course)
• Understanding Your People Data (eLearning course)

7. People Analytics Accredited Programme – CIPD

This people analytics curriculum offered by the Chartered Institute of Personnel and Development (CIPD) is for HR professionals with a foundational grasp of analytics who want to further develop their skills in this area.

The People Analytics Accredited Programme will give you practical skills and knowledge you can apply within the scope of your work to add value to the organization. 

The course’s potential outcomes include:

• Gaining a deeper understanding of people analytics to make a meaningful impact on your organization.
• Having the ability to oversee a productive people analytics project and successfully present it to stakeholders.
• Using people analytics for planning and improved decision-making and HR practices.
• Incorporating people analytics into organizational and HR strategies. 
• Differentiating between metrics, measures, and KPIs.
• Making effective use of statistical models. 

This online self-directed program takes 50-70 hours and must be completed within 12 months of registration. It requires the use of either Excel or Google Sheets. Other tools, such as R, SQL, Python, and machine learning are discussed but not necessary to access for participating in the course.

8. HR Analytics – Management Concepts

This HR Analytics training instructs you on how to apply the Analytics Process Model (APM) and use Excel to organize, analyze, and present your organization’s people data. It is geared toward HR professionals who want to leverage data to make informed decisions. Learners should have experience working in HR and a functional understanding of Excel.

The following topics are covered in this course:

• HR Analytics and the Analytics Process Model (APM)
• Excel quantitative techniques
• HR regulations and reporting requirements
• Effective presentation of HR data

Once you completed this training, you should be able to:

• Identify the phases of the APM and their purposes.
• Follow HR analytics best practices for data-driven decision-making.
• Identify relevant HR metrics and benchmarks for organizational goals.
• Use Excel to analyze people data to identify trends and other insights to take action on. 
• Conduct a brief presentation on data analysis results.

This two-day course is offered both in-person and virtually. It includes facilitated discussions, case studies, group and individual activities, and self-assessments.

9. R Programming Fundamentals

This is the first of three on our Human Resources analytics courses list that covers R.

You can do HR analytics in Excel; however, it has some major limitations. R is an open-source tool for statistics, visualization, and data modeling. The programming language for R is specially designed to work with data and to do statistical computing. It provides statistical techniques and visualization capabilities for large data sets, as commonly used in HR analytics.

R goes further than the traditional tools used for HR data benchmarking and analysis, such as Microsoft Excel, Access, and SPSS. It combines all of them into a programming language that can quickly import, edit, and visualize data. This does mean that R requires you to do some coding, making the learning curve steeper.

R is thus also harder to master compared to Excel. However, R does offer endless computational possibilities and enables you to do more advanced analytics compared to Excel.

We recommend the Programming with R course by Pluralsight to get started with R. This course teaches you the basic syntax for R coding and available data types and structures. It provides hands-on practice to get a feel for R and its functions.

10. R Programming – Johns Hopkins University

Johns Hopkins University offers a more advanced course in R called R Programming. This intermediate-level program requires some basic experience with R and will take you roughly 57 hours to complete.

The course starts off by teaching you the nuts and bolts of R, before diving into the more technical aspects. It’s taught in four modules that include practical skills such as programming in R, reading data into R, and writing R functions. 

At the end of the course, you’ll be able to understand programming concepts and run more advanced statistical techniques in R for productive data analysis. 

11. HR Data Science in R – AIHR Academy

Predictive modeling is one of the most transformative tools available within People Analytics and a highly coveted skill set to have. The HR Data Science in R course is your path to gaining these skills. The course starts with the basics, so no prior R or programming experience is required.

You will learn how to use R to create predictive HR analytics models for solving HR challenges. The course covers data management in R, data exploration and visualization in R, and three dynamic case studies focused on different aspects of analyzing data. Its six self-paced modules take about 16 hours to complete. 

12. Data Mining with Weka – University of Waikato

Weka is a data mining software. It has a visual and clickable interface which means you ‘drag and drop’ using your mouse instead of having to program as you would in R. 

This open-source software was developed at the University of Waikato in New Zealand.  It offers both a wide array of data mining algorithms and ways to visualize data. Examples of machine learning algorithms include decision trees, Bayes, simple rules, clustering, and meta-classifiers. 

The Data Mining with Weka course explains these algorithms and their statistical backgrounds. This will help you understand the workings of data mining in general and how it can be applied to different sets of (people) data.

The format of this free course is a series of practical videos that feature Professor Ian Witten explaining how Weka works. Within half an hour into this course, you will run your first data mining algorithms and create your first decision tree. 

This online Human Resources analytics course requires no prior programming knowledge. It is especially suitable for people who will not be analyzing data in their daily jobs but who wish to get a grasp of the fundamental techniques. Because of its user-friendly interface, Weka enables you to do various analyses in a short time.

13. Basic Statistics – University of Amsterdam

In R, you learn how to use statistics to run algorithms. However, doing statistics without really understanding it poses a risk. It is difficult to fully grasp the possibilities and pitfalls of HR analytics without a solid understanding of statistics. Therefore, whenever we talk about HR analytics training, a statistics course needs to be included. In the end, data science is all about statistics. 

The Basic Statistics course from the University of Amsterdam covers how to calculate and evaluate statistics. It explores methods of descriptive statistics, the basics of probability, and how to evaluate patterns in data. It also includes training on using statistical software to calculate and generate these statistics. All these concepts apply to data science and form a necessary foundation for anyone looking to start with any form of analytics.

The course requires about 26 self-paced hours to complete. Basic Statistics is part of a five-module specialization called Methods and Statistics in Social Sciences, which dives even deeper into quantitative research methods. The other courses in this specialization are relevant to people analytics as well.

A final word

Committing to a learning mindset can future-proof your HR career path as you gain new and expanded skills. HR analytics is an in-demand area of expertise that’s well worth the training investment. We hope this list of relevant courses will be a helpful resource as you delve into HR analytics. 

As informed and equipped HR professionals continue to drive the growth and value of HR’s role in the world of work, AIHR is here to support the effort. Our online HR courses and 13 HR certifications will help you diversify your range of abilities and take an active role in moving HR forward.

FAQ

The post 13 HR Analytics Courses Online To Check Out in 2024 appeared first on AIHR.

Let’s take a look at the commonly used HR metrics and how you can track and utilize them in your organization.

This list is by no means exhaustive. Rather, it is a core grounding in the most common metrics used in the field. We discuss this further in our HR Metrics & Dashboarding Certificate Program, where you will learn how to turn data into intuitive reports and compelling stories for decision-makers.

Contents
What are HR metrics?
Why are HR metrics important?
HR metrics examples in recruitment
HR metrics examples related to revenue
Other HR metrics examples
Soft HR metrics examples
FAQ

What are HR metrics?

HR metrics are quantitative measures used to track and assess the efficiency and effectiveness of human resource management practices within an organization.

These metrics cover a wide range of areas, including recruitment, retention, training, employee satisfaction, performance, and productivity. They provide valuable insights that help inform strategic decisions, optimize HR processes, and boost overall organizational performance.

Why are HR metrics important?

Making the HR function more data-informed has numerous benefits not only for the HR operations but also for the organization. Here are the key reasons why HR metrics are important:

• Strategically managing talent: HR metrics assist in identifying talent needs and gaps, guiding strategic decisions in talent acquisition, development, and retention. HR can leverage this information to create targeted talent management programs that address specific organizational needs, enhancing workforce capabilities.
• Optimizing costs: By analyzing recruitment, training, and turnover costs, HR metrics help in allocating budgets efficiently and identifying cost-saving opportunities. This allows HR to justify investments in employee development and retention strategies by demonstrating potential cost savings and ROI.
• Supporting strategic planning: HR metrics help uncover trends and make forecasts that are essential for informed strategic planning and organizational growth. HR can use these insights to align workforce planning with long-term business objectives and secure the right talent for the organization to meet future challenges.
• Improving decision-making: Data-driven insights from HR metrics empower HR professionals to make evidence-based workforce decisions. For example, by leveraging data on the impact of employee wellness programs on absenteeism rates, HR can make informed decisions about continuing, expanding, or modifying these programs to maximize their effectiveness.
• Highlighting the impact of HR initiatives on organizational performance: Tracking HR metrics and being able to show how they correlate with key business outcomes enables HR to showcase the tangible impact of its initiatives on organizational performance. This approach not only validates the strategic importance of HR efforts but also helps secure executive support and investment for future HR projects.

Put simply, HR metrics are essential tools for forecasting, planning, and optimizing the workforce for the future. Now, we’ll look at HR metrics examples across different areas of HR and the business.

HR metrics examples in recruitment and retention

1. Time to hire

Time to hire is one of the most widely used metrics for recruitment. It measures the number of days between a candidate applying for a job and them accepting a job offer. Time to hire gives insights into recruiting efficiency and candidate experience.

Here’s how to calculate your average time to hire:

Average time to hire = (1st candidate time to hire in days + 2nd candidate time to hire + nth candidate time to hire) / Total number of jobs

Recruitment efficiency measures the speed at which HR processes a candidate – assessment, interview, and role acceptance. If your organization has a long time to hire, it reflects that your processes are inefficient.

Having a long time to hire might negatively impact the candidate experience. Candidates may drop out of the recruitment process if it is too long, getting hired by a competitor instead.

Time to hire should not be confused with time to fill. This metric typically measures the days between the approval of a job requisition and the candidate accepting the job offer. This definition is in line with the Society for Human Resource Management (SHRM) and ISO 30414. 

2. Cost per hire

The cost per hire is a recruiting metric that shows how much it costs the company to hire new employees. This also serves as an indicator of the efficiency of the recruitment process.

Cost per hire can be time-consuming to work out, as you need to add together internal recruiting costs and external recruiting costs and divide the sum by the total number of hires. The costs and number of hires will both reflect a selected measurement period – such as monthly or annually.

Cost per hire = (Internal costs + External costs) / Total number of hires

Here are some examples of internal and external costs:

3. Quality of hire

Quality of hire measures the value a new employee brings to an organization. This metric assesses the effectiveness of the recruitment process and the long-term impact of new hires on company performance.

Quality of hire is typically evaluated based on several criteria, including the new employee’s job performance, their contribution to achieving team or organizational goals, how well they fit with the company culture, and their retention rate over time.

4. Early turnover

Early turnover – the percentage of recruits leaving in the first year – is arguably the most important metric to determine hiring success in a company. This early leaver metric indicates whether there is a mismatch between the person and the company or between the person and his/her position.

New hire turnover is also very expensive. It usually takes 6 to 12 months before employees have fully learned the ropes and reach their Optimum Productivity Level. The cost of replacing an employee can be as much as 1.5-2x the employee’s annual salary, especially for more senior roles.

You can calculate early turnover as follows:

Early turnover rate = (# of new hires who have left the organization during period / # of new hires who from that same period) x 100

5. Turnover

This metric, usually expressed as a percentage, shows how many workers leave the company in a given year. When combined with, for instance, a performance metric, the turnover metric can track the difference in departures of high and low performers.

Preferably, you would like to see low performers leave and high performers stay. This metric also provides HR professionals with a great amount of information about the departments and functions in which employees feel at home and where in the organization they do not want to work.

Turnover is very useful data to know when shaping recruitment strategies. Additionally, it could be a key metric in measuring a manager’s success.

Here’s how to calculate employee turnover rate:

Turnover rate = (# Terminations during period / # Employees at beginning of period) x 100

6. Time since last promotion

This rather straightforward metric is useful in explaining why your high potentials leave. It looks at the average time in months since the last internal promotion.

HR metrics examples related to revenue

7. Revenue per employee

The revenue per employee metric shows the efficiency of the organization as a whole. It is an indicator of the quality of the workforce.

The metric looks at the ratio of the organization’s total revenue divided by the current number of employees and is usually calculated on an annual basis:

Revenue per employee = Total revenue / Number of employees

It’s useful for comparing the year-on-year development of your revenue per employee, as well as comparing your organization to your competitors.

Another related metric is revenue per FTE.

8. Performance and potential

There are many qualitative and quantitative ways to measure employee performance. Metrics include Net Promoter Score, management by objectives, number of errors, 360-degree feedback, and forced ranking.

Another useful tool is the 9 box grid, which assists in measuring and mapping both an individual’s performance and potential in three levels. This model shows which employees are underperformers, reliable team players, high potentials, or exceptional talent:

This tool is great for differentiating between, for example, wanted and unwanted turnover.

9. Billable hours per employee

This is the most concrete example of a performance measure, and it is especially relevant in professional service firms (e.g., law and consultancy firms). Relating this kind of performance to employee engagement or other input metrics makes for an interesting analysis. Benchmarking this metric between different departments and managers/partners can also provide valuable insights.

This metric also relates to employee utilization rate, which refers to the amount of working time an employee is spending on billable tasks.

Other HR metrics examples

10. Cost of HR per employee

The cost of HR per employee is calculated by dividing the total cost of HR operations by the total number of employees in the organization. It is usually expressed in dollars and calculated per specific period, for example, on an annual basis.

Total HR costs refer to all expenses related to HR functions over a specific period. This includes salaries of HR staff, costs of HR systems and software, training and development expenses, recruitment costs, benefits administration, and any other HR-related expenditures.

Cost of HR per employee = Total HR costs / Total number of employees

11. HR to employee ratio

HR to employee ratio is another measure that shows HR’s efficiency. It indicates the number of HR professionals in an organization relative to the total number of employees.

Our State of HR research showed that the typical HR to employee ratio is around 1:50 or 2%, which means that there are 2 HR professionals for every 100 employees.

HR to employee ratio = Number of HR employees / Total number of employees

The ideal HR-to-employee ratio can vary significantly depending on the industry, the complexity of HR needs, the level of automation in HR processes, and the specific responsibilities handled by the HR department.

12. Ratio of HR business partners per employee

This metric is similar to the HR to employee ratio but looks specifically at HR business partners. This ratio is crucial for understanding how equipped the HR department is to provide strategic support and partnership to the business units it serves.

13. Effectiveness of HR software

The effectiveness of HR software is a more complex metric. The effectiveness of, for instance, learning and development software is measured in:

• The number of active users
• Average time on the platform
• Session length
• Total time on the platform per user per month
• Screen flow, and
• Software retention.

14. Absenteeism

Like turnover, absenteeism is also a strong indicator of dissatisfaction and a predictor of turnover. Absenteeism rate can give information to prevent this kind of leave, as long-term absence can be very costly.

Again, differences between individual managers and departments are very interesting indicators of (potential) problems and bottlenecks.

This is how you can calculate your absenteeism rate:

Absenteeism rate = (Number of absent days / Total working days) x 100

15. Training expenses per employee

Training expenses per employee is a metric that quantifies the average amount of money an organization spends on the training and development of each employee over a specific period, typically a year. This figure is key for understanding the investment an organization makes in enhancing the skills, knowledge, and competencies of its workforce.

You can calculate training expenses per employee as follows:

Training expenses per employee = Total training expenses / Total number of employees

16. Overtime expenses

Overtime expenses refer to the additional costs incurred by an organization when employees work beyond their regular working hours and are compensated at a higher rate, as mandated by labor laws or company policies.

These expenses are a form of direct labor cost and can significantly impact an organization’s payroll budget. That’s why it’s important to keep track of them.

Here’s an overtime expenses calculation formula:

Overtime expenses = Total overtime hours worked x Overtime pay rate

Soft HR metrics examples

Soft HR metrics refer to the qualitative aspects of HR management that focus on measuring intangible elements related to the workforce’s attitudes, behaviors, and perceptions.

Unlike hard HR metrics, which are quantitative and directly measurable (such as turnover rates or cost per hire), soft HR metrics delve into the subjective experiences of employees within an organization. These metrics typically assess employee satisfaction and engagement levels, leadership effectiveness, and the impact of training and development programs.

17. Engagement rating

An engaged workforce is a productive workforce. Engagement might be the most important ‘soft’ HR outcome. People who like their jobs and who are proud of their company are generally more engaged, even if the work environment is challenging and pressure can be high.

Engaged employees perform better and are more likely to perceive challenges as positive and interesting. Additionally, team engagement is an important metric for a team manager’s success.

Engagement rating is often expressed as employee net promoter score (eNPS). This measures how likely your employees are to recommend your organization to their friends or family as a good place to work on a scale of 1-10.

18. Employee satisfaction

Employee satisfaction metrics help you evaluate how happy and content employees are with their job roles, work environment, and the organization as a whole.

This soft HR metrics is often measured through surveys and questionnaires that ask about various aspects of the job and workplace, including work-life balance, management effectiveness, and job security.

19. Leadership effectiveness

The leadership effectiveness metric gauges the impact of leadership on employee performance, morale, and overall organizational climate.

It can be measured through 360-degree feedback surveys, where employees rate their leaders on a range of leadership competencies, such as communication, decision-making, empathy, and the ability to inspire and motivate.

Over to you

When starting to work with HR metrics, you need to evaluate which metrics are the most relevant for your organization. Selecting the right metrics for your organization depends on numerous factors, like the size of the company and the budget available.

Combining insights from multiple metrics is vital for making substantiated decisions with a proven impact on business success.

FAQ

The post 19 HR Metrics Examples: Making Data-Driven Decisions in 2024 appeared first on AIHR.

In this guide, we’ll explore what an eNPS is, types of employee net promoter score questions, and examples that you can include in your next survey.

Contents
What is an eNPS?
Types of eNPS questions to include
Employee net promoter score scale
19 employee net promoter score questions to include
FAQ

What is an eNPS? 

An eNPS is a metric employers use to measure employee engagement, satisfaction, and loyalty, and how likely your employees are to recommend the organization to their personal network as a good place to work. It is based on the net promoter system created by Bain & Company in 2003, which measures customer satisfaction and loyalty and helps companies determine how likely their customers are to recommend their products or services to their friends and family. 

Types of eNPS questions to include

There are different types of eNPS survey questions that you can ask employees and include in your eNPS survey. Let’s explore these below:

• Rating questions: These questions typically have an answering scale of 0-5 or 0-10 and help to gather quantitative data about your employee’s experience. For example, “On a scale of 1-10, how likely are you to recommend working at this organization to your friends and family?” Each number in the rating scale should be given an equivalent value, e.g., 0 = “not at all likely,” while 10 = “very likely.” Some rating questions avoid using numbers and will instead provide 3-5 options for the employee to select from, such as “strongly agree, agree, neither agree nor disagree, disagree, strongly disagree.”
• Open-ended questions: These questions don’t use a rating scale and allow employees to give a more detailed explanation, which provides rich and valuable qualitative data. Open-ended questions are often asked after a rating question so that a reason can be given for the previous response. 
• Yes/no questions: These questions give the respondent an option of answering yes or no and typically help an employer evaluate the employee experience. For example, “Are you happy with the recent training on sales and negotiation provided to all trainee buyers?” This provides quantitative data. An open-ended question can follow this to help you understand the reasoning behind the employee’s answer. 

Employee net promoter score scale

Based on the answers employees give to the eNPS survey questions, every employee has a score between 0-10, which puts them into one of three categories:

Category 1: Promotors (score of 9 or 10)

Promoters are the most loyal employees of your organization and, therefore, your brand ambassadors. They are happy, engaged, and motivated at work, keen to grow in the company and help drive the business forward. 

Category 2: Passives (score of 7 or 8)

These employees are neutral. Perhaps they have neither a positive nor negative experience with their employer. While they may be happy and content in their role, they are often open to new and exciting opportunities that arise elsewhere. 

Category 3: Detractors (score between 0-6)

Detractors are employees who are unhappy with their role and/or employer, often due to negative experiences at work. They tend not to have many positive things to say about their organization and are likely to express negative opinions to colleagues and within their broader personal network. Once all the responses from your survey have been collected, an employee net promoter score can be calculated. 

Calculating the eNPS score

The formula for calculating eNPS is:

eNPS = % promoters – % detractors

Your eNPS score can range from -100 to 100. Scores that range from 10-30 are deemed good, those from 50-70 are seen as excellent, and anything over 80 will likely place you in the top percentages of your industry. 

HR tip

Rather than getting caught up on the number of your eNPS score, strive for a consistent improvement in your eNPS score over time.

19 employee net promoter score questions to include

Asking the right questions in your employee net promoter score survey can help you uncover critical information relating to the strengths and weaknesses of your business. From here, you are in a solid position to address what’s not working and improve employee engagement, loyalty, and retention, all of which help you meet organizational goals. 

Here are some eNPS example questions and the purpose behind each one. 

1. On a scale of 0-10, how likely are you to recommend this organization as a good place to work to people in your personal network? 

This is the primary eNPS question that typically starts off any eNPS survey. Your eNPS score is calculated based on the results of this question. The answer to this question tells you whether your employee’s experience in the workplace is positive enough that they would recommend it to their family and friends. 

However, asking additional questions can be really helpful in gathering more details on the employee’s reasoning for their rating and give you valuable insight on how to do better.  

2. What is the primary reason for your score?

This is a great follow-up question to your primary eNPS question. It’s an open-ended question that allows employees to freely voice what they’re happy or dissatisfied with. It gives you more insight into their most notable experiences before giving them specific prompts that target certain aspects of the employee journey.

3. What would lead you to give our organization a higher score?

If you want to know what’s most pressing to your employees in terms of improvements and making your company a great place to work, this is a suitable question. Do your employees want more support from management, better compensation and benefits, or more flexible working arrangements? 

4. Would you recommend our company to a friend or colleague as a good place to work?

This is a yes/no question that can help you cement whether an employee has, on the whole, had a positive or negative experience with the company. This is especially helpful if you’re looking for quantitative data and a set of results that help you to easily evaluate the employee experience in your organization. 

5. Why would you recommend or not recommend our company to a friend or colleague as a good place to work?

This is another great follow-up question from the one above. It’s an open-ended question that helps you understand the specific parts of your organization that have contributed to a positive or negative experience for your employees and in turn, affected their desire to recommend you. 

6. What do you like most about working for (your company name)?

Ask this question if you want to know specifically what you’re doing well as an organization that is keeping your employees happy and motivated at work. 

7. What do you like least about working for (your company name)?

To get straight to the weaker areas of the experience you’re creating for your employees (consciously or unconsciously), include this question in your next eNPS survey. Knowing what’s leaving your employees most dissatisfied or disengaged at work may be tough to hear, but this knowledge allows you to take action and improve. 

8. Over the past 6 months, has your experience at our organization improved or worsened?

This is a great question if you’re constantly making improvements within the organization. It’s also a good question for organizations that have consistently had high eNPS scores and want to make sure that things are going in the right direction. 

9. What is the main factor that has contributed to this change in your experience?

This is a strong follow-up question to the previous one. It’s an open-ended question that helps you gather more detail on the recent positive or negative changes in your workplace and can help you pinpoint problems and address them before they worsen. 

10. Do you see yourself still working with our company in five years?

This can be a simple yes/no question with a follow-up for more information afterward, or you can add “Why or why not?” at the end and turn it into an open-ended question. If you’re looking for reasons why you’re losing your top performers or experiencing high turnover rates, ask this. 

11. Do you feel supported by your manager? Why or why not?

eNPS survey questions are designed to give you a glimpse into the minds of your employees and understand why they hold the views they do. If you have a low eNPS score, and a lot of employees report they don’t feel supported by management, this is a concern, and open discussions should be had with all your leaders. 

12. Do you think that our organization takes care of its employee’s health and wellbeing? Yes or no?

Do you want to know how your employees feel about the company’s approach to looking after employees’ physical, mental, and emotional health? This quantifiable question can help you see what percentage of your employees believe their wellbeing is a priority and what percentage don’t. 

13. On a scale of 0-10, how engaged are you at work? 

Employee engagement is directly linked to business performance, which is why knowing how engaged your employees are is critical. A good follow-up question would be to ask, “Why or why not?”

14. Why did you choose to work for this company?

This question helps you uncover common reasons why candidates are attracted to your organization and, potentially, what stands out about you against your competitors. It could be your generous compensation and benefits, your unlimited vacation policy, or the career progression you offer to all employees. 

15. Has this organization met the expectations you had of your role and what working here would be like? Yes or no?

Do your job descriptions, employee testimonials, and information on your company website and social channels align with the experiences that employees have once they set foot through the door and start working for you? If many employees don’t feel they have had their expectations met, it’s a sign that you’re not being transparent enough or communicating clearly from the outset. 

16. What would be the biggest driver in you accepting an opportunity to work with a different company? 

This open-ended question allows employees to share what they find most attractive in a job or workplace, gives you insight into what could lead your employees to jump ship, and helps you prevent it. 

17. Following the changes we made to our organization in the past 6 months, has your experience at work improved, worsened, or stayed the same?

Suppose you have made a specific change (or changes) in your workplace, for example, team restructuring, or gone in a different direction with your product or service offering. In that case, this question can help you see how this change has affected employees.

18. What would you most like to see improved at this organization?

A direct question that will help you see if there’s a common theme amongst employees regarding improvements they’d like to see in the workplace that would boost their experience and loyalty. 

19. On a scale of 0-10, how much does this organization prioritize the growth and development of its employees? 

Personal growth and career progression are critical factors for many employees when choosing an organization to work for, and they play a key role in how engaged and motivated they are at work.

HR tip

Select your eNPS questions based on specific challenges in your organization and what you most want to find out.

To sum up

Selecting the right eNPS questions for your next survey and regularly surveying employees will help you gauge how satisfied, motivated, and loyal your employees are to your company. Employees who demonstrate high levels of engagement and loyalty to the company will likely be ambassadors for your brand and help you attract and recruit more top talent. 

When you know what’s not working in your company, you can take action and make improvements that help you boost engagement, retention, and loyalty to your organization. 

FAQ

The post 19 eNPS Questions To Ask in Your Next eNPS Survey appeared first on AIHR.

This guide will detail how to calculate attrition rate, factors that impact attrition, and how to analyze your company’s attrition rate score. 

Contents
What is attrition rate?
Difference between attrition and turnover
Types of attrition
Factors impacting attrition
How to calculate employee attrition rate
Is a high attrition rate good?
How to conduct an employee attrition analysis
HR strategies for reducing attrition rate
FAQ

What is attrition rate?

The attrition rate is a measure of the rate at which employees leave an organization without being immediately replaced over a specific period of time. It is usually expressed as a percentage.

Attrition can adversely affect the company, so it’s essential to know your company’s attrition rate. Tracking attrition rate is helpful to monitor if the number of people leaving is growing or declining so HR teams can improve workforce planning and people management. The changes in attrition rate can signal the management to the root cause(s) of employee exodus. 

Difference between attrition and turnover

Employee attrition and turnover are two different concepts that describe the departure of staff from organizations, and they can have different impacts on the business. 

Attrition occurs when employees leave the workforce much quicker than the rate at which they can be replaced. Vacancies stay open for more extended periods. Sometimes, they are eliminated because skills are currently unavailable in the job market. It is also a long-term issue. A high attrition rate can have positive and negative impacts, depending on the circumstances. Addressing it requires business and HR strategies and interventions. 

Employee turnover refers to the rate at which new hires replace employees who leave their companies. This concept tends to reflect more short-term changes within the company. High turnover rates can negatively affect businesses as hiring and training new staff can be expensive. In addition, it can lead to a loss of institutional knowledge and experience, which also impacts creativity and innovation.

Here are some examples to illustrate the differences: 

Types of attrition

Voluntary vs. involuntary attrition

Voluntary attrition takes place when an employee decides to leave the organization. It’s important to assess who is leaving your company, as the departure of star employees can affect your productivity in the long run. For example, if you are a tech company and face a number of resignations from your software developers, this would be a high business risk. 

Meanwhile, involuntary attrition occurs when an organization lets go of an employee. Usually, this happens because of company restructuring, economic conditions, or trends in the industry or workforce. 

Functional vs. dysfunctional attrition

Dysfunctional attrition refers to the loss of valuable employees to the company because of reasons such as toxic work culture, mismanagement, and low employee morale. This type of attrition can impact an organization’s profitability, morale, and productivity, which results in the company losing experienced staff that’s difficult to replace.

Functional attrition is a term that describes the loss of employees due to incompetence. It could be due to an employee being unable to meet the job demands as they lack the essential skills or experience. Similarly, these employees may be unmotivated or disengaged, which could lead to them being laid off. 

Factors impacting attrition

Internal factors 

1. Compensation 

Compensation plays a factor in whether an employee remains or chooses to leave for a higher-paying job. Compensation also covers other financial incentives like bonuses, commissions, and annual increases. Most people will choose a company with higher compensation if both offer the same responsibilities and job titles.

2. Job satisfaction

Aside from compensation, job satisfaction also influences whether employees remain or choose to search for another job. People spend a significant amount of their lives at work, so it’s critical to feel fulfilled from performing their jobs.

If employers fail to recognize and reward their employees for good performance or when the work environment is too restrictive (not allowing flexible work schedules when it’s feasible), employees are more likely to look for other employers. 

3. Learning and development 

It’s human nature to desire growth and improvement. We want to work with companies that give us purpose and something to look forward to. If management doesn’t provide the right L&D programs to cultivate their employees, they will seek these opportunities with other companies. 

External factors 

1. Workforce demographics

A company with a large percentage of employees set to retire in a few years should take drastic steps to avoid high attrition in the coming years.  Employers can choose to redistribute the responsibilities to other team members. If the position is no longer relevant, they could wait for the senior employee to retire and eliminate the position rather than retrain other staff or pay severance. 

2. Industry shifts

Changes within the business landscape can change staffing requirements. For example, the decline in brick-and-mortar shops means you would need fewer retail employees. And the continuous growth of e-commerce and online services means hiring more individuals to perform online and logistic support. 

3. Economic conditions 

Companies can afford to hire more people during times of economic growth because business is booming. Likewise, they can also offer higher salaries and more work perks to retain top employees. In contrast, during the recession, people are not spending enough, affecting businesses. In such a scenario, companies are more likely to cut back on salaries and hiring people. 

How to calculate employee attrition rate

The attrition rate formula is: 

Attrition rate = (Number of employee departures) / (Average number of employees) x 100

To calculate the employee attrition rate: 

1. Start by calculating the average number of employees. Add the number of employees at the beginning and the end of the specified period divided by 2.
2. Then, divide the average number of employees who left the company over a specified period by the average number of employees in that period and then multiply by 100. 

Here are examples of calculating the attrition rate annually and quarterly: 

Example 1

Suppose an organization had 200 employees at the beginning of the year and 30 employees left during the year. Let’s have a look at how to calculate the attrition rate for the year.

Step 1: Calculate the average number of employees during the year

200 + (200-30) / 2 = 185

Step 2: Calculate the attrition rate

30 / 185 x 100 = 16.2%

Therefore, the attrition rate for the year is 16.2%.

Example 2

An organization had 150 employees at the beginning of the quarter and 10 employees left during the quarter.

Step 1: Calculate the average number of employees during the quarter

= (150 + (150-10)) / 2 = 145

Step 2: Calculate the attrition rate

10 / 145 x 100 = 6.89%

Therefore, the attrition rate for the quarter is 6.89%.

Example 3

Suppose an organization had 1,000 employees at the beginning of the year, hired 200 new employees during the year, and had 50 employees leave during the year. Calculate the attrition rate for the year.

Step 1: Calculate the average number of employees during the year.

(1,000 + (1000+200-50)) / 2 = 1,075

Step 2: Calculate the attrition rate.

50 / 1075 x 100 = 4.65%

Therefore, the attrition rate for the year is 4.65%.

Is a high attrition rate good?

In general, high attrition rates signify that employees are leaving the organization quicker than you can replace them. For example, your company may experience a high attrition rate if a large number of your employees simultaneously retire. This can potentially lead to:

• Increased costs and efforts: Replacing lost employees means you have to spend time and money completing the hiring process  (posting job ads, reviewing CVs, screening candidates, scheduling interviews, onboarding, and training). Moreover, there are also costs and paperwork associated with employees resigning. 
• Decreased productivity: There is a drop in productivity from the time employees leave until the new hires step in. According to People Sphere, it takes 43 days to recruit a software engineer, resulting in a productivity loss of almost a month and a half, which may cost up to $33,251. 
• Negative impact on employee morale: Constant staff changes can affect employee collaboration. It’s hard to build good relationships when employees come and go.

Experts say an attrition rate of more than 20% is considered high. In addition, if the rate of new hires leaving the company within the first six months of their employment is above 15%, it may indicate problems with your onboarding process.

However, there are some instances where attrition can actually be good for business for the following reasons: 

• Attrition can lead to reduced labor costs, as the organization may not immediately fill vacated positions, thereby saving on salaries and related expenses. This can be beneficial when the company needs to be conscious about its spending,
• When the company is restructuring to pursue a new direction and needs to reduce staff or eliminate certain roles. This enables the company to realign its workforce more efficiently according to changing business needs without resorting to layoffs.
• By not immediately replacing old positions, attrition can open opportunities for bringing in new talent with fresh ideas and skills, fostering innovation and keeping the company adaptable and competitive.

How to conduct an employee attrition analysis

1. Gather your headcount data and calculate the attrition rate

Gather detailed headcount data from your HRIS or personnel records. This includes specifics on employee departures, new hires, and current staff.

After that, apply the attrition rate formula discussed above to find out what the state of attrition is at your organization. If you want to make comparisons to previous time periods, you might need to collect historical data, too.

2. Look for signs of a high attrition rate

Once you have calculated your current attrition rate, compare it to industry benchmarks, past attrition rates, or internal targets to determine if the rate is unusually high.

It’s important to look for patterns or trends, such as a sudden increase in departures over a short period or consistently high attrition in certain departments or roles. Understanding these patterns can help pinpoint potential issues within the organization that may be contributing to the high attrition rate.

3. Identify risk factors for employee attrition

There are signs to help the HR team identify whether the company is at risk of high attrition that can potentially be detrimental to the business: 

• Declining employee engagement: Employee disengagement plays a huge role in employee attrition. When employees lose interest in their jobs, they become disconnected from their peers and managers and are less productive. Left unchecked, disengagement can motivate employees to search for alternative employment opportunities. 
• Increased absenteeism: If you have a lot of employees calling in sick all the time, they frequently show up late, leave work early, or take extra long breaks, your company may be experiencing employee disengagement, which could result in attrition. 
• High turnover in specific departments: High turnover in departments can be taxing for managers. They might have to find additional staff to cover shifts during vacancies or perform lower-level worker tasks to cope with understaffing. Critical incidents may also occur resulting from team members’ mistakes that tie up the manager’s time in remedying these situations.
• Difficulty in filling vacant roles: An increasing trend in roles remaining vacant for longer periods, especially critical positions, can signal an unattractive workplace or a lack of necessary skills among existing staff.
• Increased retirement rates: A surge in retirements can indicate an aging workforce, requiring strategies for knowledge transfer and succession planning.

4. Use additional metrics to track attrition

It is also helpful to track and analyze additional HR metrics in addition to the attrition rate. These include: 

1. Employee retention rate: This rate measures the percentage of employees the company has retained over a specified time. Low employee retention could mean your company has a high attrition rate. 
2. Employee performance metrics: This metric tracks and measures staff performance – the quantity, quality, and efficiency of work. Low employee performance indicates disengagement and demotivation and if organizations are not careful, they could face massive employee resignation
3. eNPS: Focus on detractors and passives to determine their sentiments about the company. Analyzing their feedback is crucial in minimizing employee attrition.
4. Exit interview and survey data: Encourage honest feedback to learn their reasons for leaving the company. Analyze your exit interview data and employee responses to detect potential issues that increase employee attrition.

5. Compile an attrition report and prepare a plan of action

Consolidate all the gathered data, analyses, and insights into a comprehensive report. The report should clearly outline the attrition rate, identify trends, and highlight any specific areas of concern, such as departments with unusually high turnover or roles that are consistently difficult to fill.

In this report, it’s crucial to present the findings in an accessible and actionable manner. Use visual aids like charts or graphs to illustrate key points and make the data more digestible. Include a section that interprets the data, offering explanations for why certain patterns may be occurring.

Develop a plan of action based on the insights gained in your attrition analysis. This plan should address the identified issues and aim to reduce harmful attrition. It could include strategies like improving employee engagement, revising hiring practices, enhancing training and development programs, or changing management approaches. We’ll look at some tips below.

The plan should be specific, with clear objectives, timelines, and assigned responsibilities to ensure effective implementation. This step is critical because it moves the process from analysis to action, enabling the organization to tackle attrition proactively and improve its overall workforce management.

HR strategies for reducing attrition rate

Here are tips and actionable advice on how your HR can reduce your organization’s attrition rate: 

• Focus on employee wellbeing: Employee wellbeing is becoming a significant factor in a healthy workplace. Employees give their best when they feel their best. They are productive, engaged, and more likely to stay loyal to their employers. 
• Boost learning and development: Offering different learning and training programs makes employees feel that the company is interested in their development and potential. That makes them think twice about leaving their employers because they could see themselves growing and advancing with the company.
• Implement cross-training programs: Cross-training is about equipping your employees with the skills to perform multiple roles. This approach not only improves workforce flexibility but also ensures that if a role becomes unfilled, other employees can step in to cover the responsibilities temporarily. Cross-training helps in maintaining operational continuity and reduces the immediate pressure to fill vacancies urgently, allowing for a more thoughtful recruitment process.
• Developing succession plans: Anticipating and planning for retirements and, in general, for employees leaving your company is crucial in reducing attrition impacts. Succession planning involves identifying potential retirees in advance and preparing other employees to take over these roles. This proactive approach minimizes disruption and retains critical institutional knowledge within the company.
• Offer competitive compensation and benefits package: Salary is a significant factor in the worker-employer relationship, according to a survey conducted by Workable. It’s also vital in providing a good employee experience. So if you don’t want to lose your prized employees to another company, compensate them well. 
• Work-life balance: A healthy work-life balance lets employees enjoy their professional and personal lives. They are happier and more satisfied at work and are unlikely to apply for another job.

A final word

Understanding and managing the attrition rate is a critical aspect of effective human resource management. A balanced attrition rate can signal a healthy workforce, but excessively high rates can indicate underlying issues that need addressing. Through careful attrition analysis and strategic planning, organizations can identify the root causes of attrition and implement tailored solutions to mitigate its negative impacts.

FAQ

The post Attrition Rate: How To Calculate and Analyze the Key HR Metric appeared first on AIHR.

Companies are more likely to retain employees when they feel engaged, productive, and understand how their job plays a role in the company’s overall success. According to Deloitte, companies that thoughtfully deploy “people analytics,” (use employee data to help optimize business and management decisions,) achieved a three-year average profit 82% higher than other companies. 

When employees leave at a high rate, it increases cost for the company and creates a gap in knowledge transfer which can ultimately have a negative impact on employee morale and work environment. As a result, this can also have a detrimental impact on the company’s financials or “bottom line”.

The terms “turnover” and “attrition” are often used interchangeably, but there are key differences. Let’s explore what these differences are and what their impact may be on an organization. 

Contents
What is turnover?
What is attrition?
Key differences between employee turnover and attrition
How to calculate turnover rate vs attrition rate
Tips to reduce attrition and turnover in an organization
FAQ

What is turnover? 

Simply put, employee turnover reflects how many employees end their employment with a company, whether they leave by choice, “voluntary”, or at the direction of the organization, “involuntary”. 

Turnover is the number of employees who leave during a particular period of time, typically over a one year period. Turnover can also be measured by individual departments, demographic groups, and other subcategories within an organization. 

When turnover occurs, the company often backfills the position and it is not left vacant long-term.

There are many reasons why employees leave an employer, including:

Voluntary turnover

• Compensation and benefits that are not in line with the market
• Ineffective management/leadership
• Poor work/life balance 
• Job scope and content
• Work schedule
• Difficult co-workers/negative work environment
• Personal reasons
• External factors, such as the job market, the economy, etc.

Involuntary turnover/terminations for cause

• Policy violation
• Poor performance
• Excessive absenteeism
• Job abandonment.

What is attrition? 

Employee attrition is another HR metric that reflects the number of employees who leave an organization. It can be voluntary or involuntary.

With involuntary employee attrition, an employer discharges an employee in order to reduce labor costs. In these scenarios, the employee does not initiate the separation of employment – the company initiates it. Employees terminated by involuntary attrition are not terminated for cause, such as a policy violation, etc. Rather, it occurs for circumstances outside of the employee’s control, such as layoffs, reorganizations, merging or elimination of positions, etc. 

Voluntary attrition can include retirement, employee relocation, acceptance of a new job with a different company, lack of growth or promotional opportunities and personal reasons, just to name a few. Companies typically do not replace or backfill jobs affected by attrition, regardless of whether the attrition was voluntary or involuntary. 

The job is sometimes left vacant long-term, combined with other positions, replaced with a brand-new position, or even eliminated. As such, attrition typically leads to a reduction in a company’s overall number of employees.

Additional examples of attrition Include:

Involuntary attrition

• Layoffs
• Elimination of positions 
• Merging of positions.

Voluntary attrition

• New job, career changers
• Retirements
• Employee relocation
• Personal life changes.

Key differences between employee turnover and attrition

Employee turnover and attrition both occur when an employee leaves the company. With turnover, it appears as a result of several different actions such as discharge, termination, resignation, or job abandonment. Employee attrition often happens when an employee retires or when the employer eliminates the position. 

The major difference between the two is that when turnover occurs, the company backfills the job. In the case of attrition, the employer may choose not to fill the vacancy for an extended period of time or eliminate the job altogether.

If the turnover at a company is high, it often indicates that a large number of employees are leaving, whether voluntarily or involuntarily. High turnover rates could be a sign of a disengaged workforce, limited growth opportunities, or even poor hiring decisions. Companies will ultimately need to address the root causes in order to control turnover over the long-term.

With attrition, employees are retiring or resigning, but usually are not replaced. If a company’s attrition rate is high, then its overall workforce is getting smaller. It could indicate an aging workforce, which means being proactive about succession planning and knowledge transfer. 

A term related to turnover and attrition is “employee churn”. Employee churn is the combination of all turnover and attrition cases combined. Employee churn is another metric that should be monitored.

How to calculate turnover rate vs attrition rate

Calculating the turnover rate

Companies often measure turnover rate as a percentage. It’s calculated by dividing the total number of employees who depart in a year (or another time period) by the average number of employees at the organization during the same period. For instance, if an organization with 100 employees experiences 10 departures over a year, your turnover rate would be 10%.

Calculating the attrition rate

To calculate the attrition rate, take the number of employees that left/were eliminated during a specified time period and divide that by the average number of employees during that time frame. Then, multiply the result by 100 to achieve the attrition rate. For example, if 25 employees in one year left by attrition, and the average annual headcount was 2,000, then 25 divided by 2,000 is 0.0125 times 100 is a 1.25 attrition rate. 

Tracking turnover metrics can help companies make more informed and proactive decisions about ways to change and improve retention and ultimately reduce employee churn. 

Tips to reduce attrition and turnover in an organization

According to the U.S. Bureau of Labor Statistics, the average annual turnover rate in the U.S. stands at a humbling 47.2%. This means nearly half of the workforce is in a state of constant flux, with employees leaving and new ones coming in. The implications of high turnover can be profound. Being proactive is critical. 

1. Hire the right people: Job descriptions need to provide an overview of actual job duties and responsibilities so candidates have a good idea of what the job entails. This will help build a strong, diverse, and qualified candidate pool from which the hiring manager can choose.
2. Compensation: It’s crucial to keep up with the market rate by providing competitive compensation packages. Pay and benefits are the primary motivator for individuals to accept job offers and show up for work every day. It’s also a top reason why professionals switch roles.
3. Employee appreciation and recognition: Employee appreciation and recognition: Expressing gratitude through simple gestures, such as verbal or written thank-you notes for the work employees put in every day can go a long way. Providing new challenges and opportunities is another great way to recognize them.
4. Offer flexibility: Employees are increasingly concerned with job flexibility for a better work/life balance. This may include telecommuting, compressed work-week, part-time, or flex scheduling. The type of flexibility will vary based on the nature of the job, but consider flexible options when the business can accommodate them. 
5. Develop career paths and opportunities to grow: One of the major factors driving people to leave organizations is lack of career growth. Employees should receive and provide input on annual career development plans. This helps employees see their long-term growth potential and allows them to take ownership of their careers by providing their input into the process.
6. Focus on onboarding: First impressions are everything! Develop an inviting and structured onboarding process so employees feel welcome and see that the company is organized and ready for them to begin. 
7. Be transparent: Communication can “make or break” any relationship, personal or professional. Companies that have open communication and cultivate that environment can help with employee retention. Communication could take on forms like departmental meetings, one-on-one meetings between managers and their team members, employee engagement surveys, and a consistent reinforcement that open communication is encouraged. Communication, and cultivating a work environment where employees feel it is “safe” to share ideas and be heard may be one of the most important factors in employee satisfaction and retention.
8. Conduct exit interviews: Conducting exit interviews to solicit employee feedback is critical when trying to determine why employees are leaving and if there are any patterns. 
9. Analyze existing turnover to find issues: The ability to collect and analyze turnover and attrition data is critical to finding, developing, and retaining your best employees. It’s becoming significantly important for HR professionals to have data analysis skills to help interpret the metrics to communicate and summarize the data results to upper management and executives. This will also help HR develop recommendations on how to reduce turnover and attrition and help facilitate a long-term plan to help do so.

Key takeaways

Turnover and attrition are human resource terms that are oftentimes confused. Employee turnover and attrition both occur when an employee leaves the company. Turnover, however, is from several different actions such as discharge, termination, resignation or abandonment. Attrition occurs for voluntary and involuntary reasons as well, such as when an employee retires or when the employer eliminates the position. 

As outlined in this article, the big difference between the two is that when turnover occurs, the organization looks for someone to replace the employee. In the case of attrition, the employer leaves the position unfilled long-term or eliminates the role.

The challenge for employers is to keep attrition and turnover rates low. Success lies in knowing the employees’ values, aspirations, and motivations, and running the company with a human touch. A valued and rewarded employee is happy, satisfied, and less likely to leave. 

FAQ

The post Turnover vs. Attrition: Key Differences Plus How To Calculate Each  appeared first on AIHR.

Flexible and comprehensive HR upskilling

Meet Diego: a dedicated HR professional with an eagle eye for progress. Being well-versed in HR, he noticed the rising value of HR analytics and decided to develop his skills in order to deliver better and faster results.

AIHR was offering exactly what Diego was looking for: a data analytics course designed specifically for HR professionals, and a flexible learning experience he could tailor to his own pace and schedule.

“The learning experience was great. It’s down to being persistent when you take self-paced courses. So I always try to set aside time to study and to make progress.”

Once he started following the People Analytics course, Diego found out that AIHR was offering more value than he’d realized.

Bringing value to the business

Within the AIHR platform, Diego spotted new opportunities to develop his skills as an HR Professional. Not only did he learn about HR Analytics and how to make impactful, data-driven decisions, but he also discovered the power of connecting HR processes, models, and activities to tangible business outcomes. 

By applying his new knowledge to the challenges in his work and proactively thinking about how to contribute to his company’s success, he became an invaluable member of his team.

“It’s not always an easy task trying to link your processes with the business, but I think it’s a key factor to success as an HR professional.”

And there was still more for Diego to discover.

Fast impact thanks to templates

Armed with a new perspective on HR, Diego was ready to implement new frameworks and processes within his HR team. To hit the ground running, he took advantage of the Resource Library, a collection of readily available resources, playbooks, and tools. 

With pre-existing frameworks at his fingertips, Diego no longer had to build from the ground up. This enabled him to focus on delivering faster and better results.

“With the [existing] framework you’re not going in blind: you know how to begin, what to do next, and when to finish.”

Community was key

Yet, what surprised Diego the most was the value of an engaged and global HR community and live events that provided him with current insights on pressing matters. Witnessing how HR professionals worldwide navigated local challenges and embraced global trends proved invaluable. 

This helped empower Diego to foresee his company’s needs, positioning him as an HR expert and valuable business partner.

“There is that common ground and we as HR professionals have the opportunity to take advantage of it. There are a lot of changes coming, and I think that we have the opportunity to lead those changes and to help the organizations to adapt and be part of them.”

A trusted partner for your development

After enrolling with AIHR, Diego not only reached his upskilling goals, but he also found and accomplished a new goal along the way: becoming a more well-rounded HR professional, who always has the right tools and insight for any job.

“I strongly recommend the AIHR platform. Why? Because from my point of view, AIHR is like a trusted partner that’s always facilitating you.”

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In this article, we’ll explain how to use ChatGPT to analyze and interpret people analytics data for improved HR strategies and decision-making. Let’s get into it!

Contents
ChatGPT for people analytics: 9 use cases
The dos and don’ts of ChatGPT data analysis
How to use ChatGPT for people analytics

ChatGPT for people analytics: 9 use cases

Data analysts are using ChatGPT to quickly process large quantities of unstructured data. It helps them generate code snippets in Python, R, and SQL, as well as analyze datasets, visualize data, and more.

HR and people analytics professionals can also benefit from the tool when working with data. In addition to using ChatGPT for general HR work or recruiting, it can also simplify the understanding and interpretation of complex datasets and other people analytics-related tasks.

Here’s a look at ways to unlock ChatGPT’s capabilities with examples of how to use it in the following people analytics situations:

1. Exploratory data analysis (EDA) and data visualization

Data analysis with ChatGPT makes it easier to gather information for decision-making and create visual representations of the data. 

Instead of having to write code to analyze the data or build formulas in Excel, you can ask ChatGPT to summarize it and describe the insights it reveals. Data visualization, such as charts and graphs, can clarify the main patterns in the data. ChatGPT can generate ideas for the best methods of demonstrating the relationships within the data in a visual format.

We provide practical examples of this below in the How to use ChatGPT for people analytics section.

2. Data summarization

Summarizing content from certain data sources, such as performance reviews, can be a time-consuming task. However, ChatGPT can help make it much more efficient and provide summaries.

3. Employee survey creation

ChatGPT can generate employee survey questions for collecting data on job satisfaction, engagement, or workplace culture.

4. Employee feedback analysis

ChatGPT can also help you analyze survey responses, including the qualitative data from open-ended questions. You can perform quick analysis of feedback from sources such as pulse surveys to make responsive, data-driven decisions. It becomes easier and more productive to collect feedback frequently.

By taking action and making changes based on survey results, HR can create a more transparent and supportive work environment.

5. Hypothesis testing

You can save time articulating potential explanations for certain challenges with ChatGPT. It can help formulate hypothesis statements to test your assumptions against the data.

6. Generation of sample data sets

If you’re learning how to analyze different types of HR data but you don’t have such data at your disposal at your organization, you can use ChatGPT to generate sample data sets for you. You can then put your people analytics skills to work with them.

7. Collaboration analytics

Data is needed to assess the effectiveness of collaboration efforts within the workplace. For example, HR professionals can use ChatGPT to analyze patterns in the timestamps of messages on Slack or Teams.

When are most conversations happening? Are there any obvious lulls in communication that might indicate a lack of collaboration or engagement? For instance, Microsoft analyzed Microsoft Teams data and uncovered that many people’s activity increased outside of a regular workday.

8. Sentiment analysis

ChatGPT can help businesses gauge the general sentiment of employees towards the organization, management, or specific initiatives. It processes content from sources such as internal communication platforms, social media, and anonymous feedback systems and assigns it a sentiment score.

9. Generating Excel formulas for analyses

When you want to get the most out of data contained in an Excel spreadsheet, ChatGPT will do part of the work for you. You just have to describe what you want to do and have it generate the right formula for you.

The dos and don’ts of ChatGPT data analysis

While ChatGPT certainly has many useful applications for people analytics, there are certain factors to keep in mind to ensure it works to your benefit. 

Below, we have listed what you should and shouldn’t do when interacting with ChatGPT:

Do: 

• Prioritize data privacy by understanding and complying with applicable laws and regulations. 
• Use detailed prompts and provide context to get more specific and accurate information. ChatGPT is based on natural language, so avoid using elaborate phrases and technical jargon.
• Try different types of questions and refine your prompts to learn which wording results in the most relevant and insightful responses. Pose follow-up questions and ask for clarification when necessary.
• Fact-check the results against the data for any anomalies, especially when the results seem doubtful. ChatGPT is a great tool for gaining quick insights, but make sure to double-check the results before presenting them to the team or leadership.
• Regularly check ChatGPT to stay updated on any changes, advancements, and new features.

Don’t: 

• Input personal or confidential employee information. Anonymize any personally identifiable information about your employees and sensitive details about your business.
• Accept interpretations as absolute truth. These are observations made from the available data without the ability to consider every possible contributing factor or sentiment.
• Rely solely on ChatGPT insights for complex decision-making. Be sure to enrich its recommendations with human judgment, critical thinking, and discretion.

Note: Because of the strides taking place in technology, it’s foreseeable that companies will soon have their own ChatGPT-like tools that can be tailored to ensure data privacy and security.

How to use ChatGPT for people analytics

Here’s a step-by-step guide on how to utilize ChatGPT in analyzing people-related data.

Step 1: Enable the right features

To get the most out of ChatGPT for people analytics, you need to use ChatGPT Plus. That will enable you to install plugins, upload files, and create data visualizations.

Enable experimental features:

1. Go to Settings & Beta and click “Beta features”.
2. Enable the features.

Now, you can upload, for example, Excel files with data you want to analyze.

3. Explore ChatGPT’s Plugin Store. There are tens of plugins available to install that you can play around with. ChatGPT will automatically apply the suitable plugin for the task you’re giving it. Note that these are third-party plugins, and ChatGPT may share information with the external plugin providers. New plugins are being added frequently. You can find a list of plugins for data and research here.

Step 2: Upload data to ChatGPT

Let’s have a look at a practical example of using ChatGPT for people analytics. We’ll work with a sample data set in .csv format, which you can download here. This is what its first rows look like:

We will start by loading this file into ChatGPT. To do that, select “Advanced Data Analysis” in the ChatGPT-4 tab and click on the Upload (+) button.

Then, you can start giving instructions to ChatGPT.

HR tip

Acknowledge ChatGPT’s limitations. You can only enter a certain number of queries within a certain time period.

The chats with experimental features are also timed out, so you might not be able to go back to the conversation after some time.

Furthermore, you need to verify the results ChatGPT generates, as there can be mistakes and wrong interpretations.

Step 3: Provide data analysis prompts and utilize visualizations

Let’s say that we want to see the average salary by department, using a prompt: “Create a graph showing average salary by department.” You’ll get a simple bar chart without much effort:

You can follow up by looking into contract distribution in a certain department. (Prompt: “Create a pie chart showing the distribution of contracts in the HR department.”)

You can also get a quick insight into the average salary by education level. (Prompt: “Create a box plot showing salary by education level.”)

If you’re unsure what type of visualization would be most helpful, you can ask ChatGPT for advice. (Prompt: I want to visualize salary distribution by performance score. What type of graph or visualization would be best for that?”)

With our sample data set, you can go more granular and compare the salaries of men and women on a 100% contract per seniority level. This would help you understand the state of pay equity in your organization. (Prompt: “Create a table showing average salaries by gender and seniority for employees on a 100% contract. Include a column with a percentage difference between genders.”)

Step 4: Interpret the results and get further recommendations

The table above shows that women earn less on all levels except for the Director level. In your analysis, you might want to dive into the details – Are there differences in performance, education, or tenure that could explain this disparity? Then, you can start making changes to rectify the pay differences within your organization.

As you can see, ChatGPT can be helpful in gaining quick insights into your people data. That gives you a good understanding of what you need to focus on in your further analysis.

If you’re not sure what you can do with your data, you can ask ChatGPT for ideas. (Prompt: “Are there any particular analyses that you would recommend doing on this data set?”)

Key takeaway

Machine learning and AI are playing a crucial role in transforming HR into a force for data-driven strategizing and decision-making. ChatGPT provides HR professionals with an easy-to-use tool for understanding and utilizing people analytics data to its full potential.

With the insights compiled by ChatGPT, HR can efficiently access more detailed information, focus on the right metrics, and organize and justify new initiatives. This makes HR more relevant in achieving business goals and driving success for the organization.

The post ChatGPT for People Analytics: A Practical Guide With Examples appeared first on AIHR.