Throughout much of history, the human resources department has acted in a purely personal capacity – unconcerned with numbers. But as data collection efforts have scaled and analytics programs have advanced, the notion of data-driven HR has grown in popularity. The only question is, will your business adopt this novel approach?
What is Data-Driven HR?
In many modern companies, there are huge challenges with rallying people around big goals and getting each person to follow through with their own individual responsibilities.
According to Ridgeline Partners, “One of the five leading challenges to business growth is role and procedure confusion – in other words, there may not be any clear logic to the organization of direct reports, leading to confusion, conflict, and information siloing.”
Enter data-driven HR, which does more than just process paychecks, complete hiring paperwork, and deal with employee conflicts. The goal of data-driven HR is to leverage the massive amounts of data organizations now have available, and to use it to produce sound, objective decisions.
“The goal is not to slightly change HR, but instead to strategically and measurably improve the people management results that are derived from the largest corporate variable expenditure (labor costs),” business advisor John Sullivan writes. “Under the new approach, HR is not merely expected to be ‘aligned with corporate goals’ but instead, to directly and quantitatively impact corporate goals.”
With access to robust data – and advanced dashboards and systems to interpret this data – HR leaders can now do a better job of understanding who employees are and how they’re impacting the business. They can then do a better job of telling a story that aligns with the data and helps the business move towards the right corporate goals.
How You Can Adopt a Data-Driven Approach
Data-driven HR is no longer something that’s reserved for Fortune 100 corporations. Data can be collected and analyzed with relatively little expense (compared to 10 years ago), which means any small or medium-sized business can take advantage of a data-driven approach. Here are some specific examples of what this looks like in practice:
1. Enhance Development and Training
In a marketplace where skilled professionals are in high demand, you won’t always have the opportunity to hire the perfect candidate. But with data-driven HR, it’s possible to develop advanced development and training programs that quickly equip new hires and increase the speed at which they’re able to provide a positive return for your organization. Ultimately, this opens up new doors for more flexible and cost-effective hiring.
2. Prevent Skill Gaps
“Taking an inventory of which individuals are nearing viable retirement age over the next five years and which skill sets they will take with them can help prevent skill gaps and can spur conversations about training and recruiting employees to fill retirees’ shoes well before they step down,” HR professional James Bowley explains.
With a data-driven approach to HR, you can tap into metrics and trends that impact employee decisions and make more accurate predictions about when employees will move on.
3. Develop Better Benefits Packages
Instead of relying on basic market salary surveys and information that’s dated by the time it’s published, use a data-driven approach to identify which rewards and benefits actually have the highest measurable impact on retention and productivity. This will allow you to develop benefits packages that are tailored to the needs and desires of your team.
Putting it All Together
Data-driven HR is the way of the future. Businesses that want to experience significant growth in the coming years will do well to adopt some of these best practices and shift towards a more data-centric mentality.