How HR Analytics Boost Productivity and Profitability

Analytics in HR is quickly emerging as a trend in the corporate world due to its in-depth processes which provide the framework in formulating solutions for various issues. According to a report from Modern Distribution Management, company leaders are relying on analytics to gain more “actionable information and insights.”

If you’re looking for ways on how to start using HR analytics in your company, be sure to check out our previous post entitled ‘HR Analytics Implementation: A Step-by-Step Approach’. That being said, two of the most recurring concerns in the corporate realm are employee productivity and company profitability.

There are many people who believe that the true essence of a company is its employees. But not everyone is the same, and there are times when certain factors impact an employee’s productivity. These factors range from internal to external matters.

In addition, employee productivity is directly proportional to company profitability, hence, when one suffers, the other is affected in the same way as well. As such, the analytics to be discussed forth may apply to both facets.

Applying HR Analytics

A Forbes article tackled eight subsets of HR analytics which are crucial for every company. In summary, they form a group of six C’s: capability, competency, capacity, churn, culture, and channeling; with the remaining two being leadership and performance.

Capability identifies all the skills of an employee including non-technical skills such as maintaining strong work relationships. Once you have a good grasp of the capabilities of each employee, you will then be able to bring out their potential, which then results in improved productivity.

Competency, in this case, applies to the company. The core competencies of the organization may have lapses which then translate to decreased profitability. To understand better, take SAB Miller for example. Though it has recently merged with Anheuser-Busch InBev, today’s largest brewing company in the world, SAB Miller was the second-leading brewer globally prior to the absorption.

Among its core competencies are quality standards (QS). Upon utilizing competency analytics, it was found that a large part of the problem lies not with the formula and processing of the products, but with the QS personnel. Through analytics, the company has widened the scope of its data acquisition for one of its core competencies. Proper measures were implemented soon after – the company produced appropriate workforce programs to drive high-quality standards in its breweries around the world.

Capacity pertains to the efficiency of the employees. Simply put, higher efficiency means more work done in a set amount of time.

Churn, or employee churn, relates to the company’s turnover rates. High turnover rates could impact the business negatively as it can disrupt the flow of operations through frequent changing of personnel.

Google is a notable firm which puts emphasis on this subset of analytics. After every interview, whether internal or for fresh entry, the company evaluates the data about how the process impacted both the interviewer and interviewee. The information is used to create new ways to conduct the process, as an interview is where an employee’s tenure begins, grows and ends (job interview/promotion interview/exit interview). The company concocts ways on how to hook in the best candidates and how to keep employees who are already considered as assets to the company.

Culture, more specifically corporate culture, is an example of an external factor which affects employee productivity. Through analytics, you can evaluate which part of the company’s culture needs to be retained, changed, or abolished.

Channeling is about finding the best mediums for sourcing talents. By gathering a team with talents that complement each other, overall productivity is boosted.

As for leadership analytics, there are various ways to gather data. One good way is to conduct surveys to allow your employees to express themselves freely without relaying their identities. A post on Menlo Coaching by Alice van Harten entitled ‘Tackling the Leadership Questions on Your MBA Application’ discussed how to effectively handle the leadership element and shared questions like, “What did you do in your role to fix problems?” or “How did you work with people who weren’t members of your team?” Questions such as these will give you valuable insights on how to develop leadership qualities in your employees. Effective leaders make the company thrive, flourish and therefore profitable.

Last, but not the least, is performance. Feedback is important to give each employee a perspective on how he/she is doing. More importantly, the data you acquire through performance analytics allows you to assess which training or tools are needed by your workforce for them to maximize their potential.