Why You Need Shift to Data-Driven Human Resources Decisions

Constantly upgrading technology provides businesses with heaps of information like useful metrics and statistics that can be deployed in many ways. The human resources segment is no exception. 

HR needs to shift to data-driven decisions to gain better insights into employee engagement, satisfaction, and organization in general. In addition, data-driven human resources decisions can increase HR’s measurable impact on business. 

In this article, we will dive into the importance of data for HR, how it can help businesses improve, and explore the main reasons why data should drive all HR decisions. 

Why data-driven companies succeed

Data-driven benefits are massively recognized across many global organizations. As per the recent New Vantage Partners report, almost 92% of companies reported increasing data investments. In general, the global market of data analytics will be worth dozens of millions of U.S. dollars. 

To be more specific, those organizations with implemented HR data analytics report an 82% increased profit, not to count improved decision-making, better accuracy, more efficient scalability, and continuous innovation. 

Data-driven companies use insights to make their departments more analytics-driven, employees – more analytics-friendly. Then, all the received data is used for building effective business strategies.

Besides, according to McKinsey’s recent take on the keys to building a future-ready organization, data-rich tech platforms are one of the imperatives to separate progressive companies from all the others. 

Future-ready organizations take data analytics seriously. The latter is not simply about answering questions and reporting internal business processes. Data embodies business. Utilizing data to collect and scale, such companies will get an opportunity to develop business in fast cycles. 

Hard decisions for HR executives 

Let’s face it — being an HR executive means making hard decisions daily. Be it an unsuccessful hunt for talent, tough recruitment, downsizing, or dealing with hard employees, it doesn’t get any easier. 

While HR analytics will not save you from hard decisions, it will help make them more rational and clean. For example, analyzing employee data might deliver meaningful insights into why people leave the company or, vice versa, why they decide to accept the offer. Such data can ease the recruiting process as HR executives will better understand how to drive talent and make the hiring beneficial for both sides. 

On another note, when it comes to dealing with hard employees, things might get tricky due to the lack of information. Communicating with other team members, sharing personal surveys, and conducting one-on-ones might help clear out the situation and base hard decisions on data rather than wild guessing. 

What data should the HR department collect? 

In general, the HR team and executives both agree that collecting and measuring HR data and its impact is crucial for the companies. Besides, only things you can measure can be improved. 

When it comes to collecting data, foremost, it is important to measure employee satisfaction and turnover rate: 

• how comfortable they feel in the team 
• why they choose your company over another one
• why people leave 
• what makes them stay

Besides, employees’ feedback on new policies, training sessions, education video materials, team events, and more should be regularly collected to understand if the company is moving in the right direction. 

It’s important to collect data from different departments, from different employees, including applicants and new team members. For this purpose, there is a lot of performance management software, onboarding services, surveys, questionnaires, feedback-collecting, and data analytics solutions. 

You can use data integration tools to collect HR data from different platforms if you prefer collecting information in various spreadsheets, set up a simple Airtable to Excel connection. However, in case you collect data from CRMs, data warehouses, and other platforms, you’ll require more advanced export/import options.

All in all, gather all possible performance and satisfaction data related to your employees. At the same time, collecting data is only half of the process. It’s critical to use this data correctly – to make your decisions in human resources.

Five reasons to make HR decisions driven by data

Let’s view five reasons why you need to empower your HR decisions with data.

1. You’ll boost recruitment

If you want to create a place to attract top talent, you need to foster an inclusive experience for employees. The latter will influence whether candidates stay at your company and feel valued or leave for good. 

Over 40% of people, according to McKinsey, turned down a company’s offer due to the organization’s lack of inclusion and engagement. 

Using data, you can understand ways of improving these engagement rates starting from the early stages of hiring.

Data analytics is a lifesaver for an optimized recruitment process, better candidate selection, and onboarding. 

For recruitment, data can provide insights into:

• what reasons make candidates choose your company
• what grabbed their attention in your vacancy description, ad, offer
• what policies and benefits they value the most
• what makes candidates leave their previous jobs
• what worked for candidates during the selection process and onboarding 

Moreover, analyzing reasons and cases in the previous recruitment process is a way to boost future campaigns and get rid of those deteriorating factors that influenced your hiring success before. 

Empowered by data, you’ll pass bottlenecks and be able to deal with recurring problems once and for all. For example, you evaluated a group of candidates that declined your offer due to a small number of day-offs per year. Isn’t it the way to reconsider your day-off policy or emphasize stronger sides of your company during the interviews to lower the number of declines? 

2. You’ll understand core problems 

Having data analytics at hand, an HR team will understand the critical factors and improve those initiatives, policies that are not performing well to boost their effectiveness. 

On the other hand, the more you look into data and analyze it, the more insights you can get in terms of employee productivity, engagement, burnout rates, and general company success. 

Suppose there are problematic zones in different departments (high turnover rate and dissatisfaction rates, poor engagement, and other issues). In that case, you should gather all this information to work on it and come up with relevant solutions. 

With data, you can see the essential issues of a department or within the organization. For example, while you may have a hypothesis that productivity drops due to high burnout rates, the data from surveys and one-on-one feedback sessions may show that the low work ethics of certain employees is the core problem.

Use data to identify the real issues and start dealing with them. But, of course, it is always better to solve the problem at the very beginning to eliminate downsizing, dismissals, and other unpleasant situations.

3. You’ll help executives to organize business processes better 

As a continuation of the previous point, data-driven human resources improve collaboration with company executives. You help them to understand issues within a company and to improve these issues. 

With data, you can provide analytics on which initiatives work and which don’t, what areas require improvement, and offer solutions for different departments to enhance their processes. 

Data will help choose the right vector for company development and better support the marketing department’s target campaigns. 

If you have real numbers and feedback of employees on a separate event, you should share it with C-board and executives. If the data shows real problems, you must deal with them. In this way, executives receive a valuable source of information from HR data that help them reorganize inner processes, impact business growth, and follow a business objective, say, attracting investors monthly.

4. You’ll be able to build healthier company culture 

Source: The Pennsylvania State University

People are the main drivers of every business. Hence, if you can put the right person in the suitable role, not only the productivity levels will rise up high, but the entire company culture will win. However, it may not be enough to sustain company culture in the long term.

A data-driven approach here is to gather all the information about employees’:

• work ethics
• relationships within teams and between departments
• communication and collaboration abilities
• feedback about team members and team leads
• hobbies and interests 
• personal growth and development
• stress-resistance and conflict management

These valuable insights allow you to understand what your company lacks in culture, team spirit, and a healthy environment. HR teams are also able to increase engagement and employee satisfaction as they get.

The best way to gather such insights is to send regular feedback surveys or forms or initiate one-on-one sessions.

Such data will also show areas that need improvement and help build a healthy company culture. Knowing what works for people in the company and what doesn’t, it is easier to decide and offer solutions to maintain a healthy work environment.

 5. You’ll have better team spirit 

Team buildings, training, and knowledge-sharing sessions have become an integral part of any company. HR teams are working hard to offer new initiatives to educate employees and provide them with events to increase their team spirit. 

However, all the offered initiatives are usually based on trends in the industry rather than people’s preferences. If you provide something that has nothing to do with employee requests, you will hardly receive positive feedback with little or zero engagement. 

Every new activity of such type should always be based on collected data to have a solid effect on employees. Simultaneously, gather feedback after each event. 

While you can do this with a qualitative approach and get thoughts by hosting webinars internally with each department in your organization, it’s likely better to take a quantitative approach and use a survey instead. 

If your company is planning to conduct training, organize surveys and ask people what they think, what topics are of the most interest to them, and what core problems they are looking to solve. 

You will make decisions on such activities supported by real feedback. As a result, employees will grow trust towards a company that listens to their preferences, understands their weaknesses, and helps find the best solutions to cover them. 

Wrap up

In the new technological reality, it’s all about data now. When it comes to human resources, it’s no less important to utilize data for making valuable decisions. 

You’ll be able to make better decisions in recruitment, identify core problems and solve them, boost team spirit, and improve company culture. All these will have a solid impact on business performance.

This is a guest post by Dmytro Zaichenko. He’s a Marketing Specialist at Coupler.io, a data integration tool. He has 6+ years of experience in content making. Apart from writing, he’s passionate about networking and the NBA.