In a global survey conducted by KPMG, it was found that 82 percent of the companies plan to make datafication (using scores of data to report, analyze and predict) as a tool to drive human-capital-related strategic decisions.
R professionals’ state that over the next 2-3 years, the industry will use data as a guide to strategic planning. Talent analytics is the trend of using data-driven insights for human resources. It has the power to gather and analyze data from a company’s current and prospective employees. The primary goal of using analytics in HR is to optimize the organization’s spend on its employees.
Here are the three areas where data analytics can make a huge difference in the world of Human Resources:
Smarter recruiting processes
Using analytics and big data reduces the possibility of hiring the wrong person for the job, and can save the company significant amounts of money in the long run. With a specialized set of products that are particularly designed to draw closely aligned candidates from the big data pool, organizations such as Riviera Partners and Gild are leveraging the power of big data to sharpen their hiring processes. According to the Harvard Business review, 80 percent of employee turnover is due to bad hiring decisions. Also, based on the numbers drawn up by the US Department of Labor and Statistics, the average cost of a bad hiring decision can equal 30 percent of the individual’s first-year potential earnings.
A valid case in point is that of retail giant Sears, which has entirely restructured its hiring and screening processes. They are exploring the potential of data analytics to the fullest, to identify the right prospects from its huge job applicant pool. With the help of big data, Sears has devised a video-game, replete with simulated interactions mimicking customer interactions, to test the applicants. This has helped the organization to cull out the terrible choices from the most suitable prospects.
With human capital being the driver of economic change in an organization, every other industry is looking to use the capabilities of big data analytics effectively. In 2016, Deloitte identified immense potential for global spending on integrated talent management systems, so much so that it significantly grew to the tune of 17 percent by year-end.
Better insights leading to even better decision making
Data analytics is that tool that marks the difference between decisions based on sheer guessing and those that are based on facts. Using data analytics to guide more focused and data-driven business decisions in prominent HR areas such as performance and talent management, can result in a distinct lead over peers in the market, creating the much elusive competitive edge. A case in point is how the restaurant chain, McDonald’s, harnessed the power of big data.
The fast food chain realized those stores performed better where they had at least one employee over the age of 60. The group’s HR used this valuable information in assisting its further staffing plans, boosting profits across the organization.
Significant employee retention
Organizations can use big data and analytics to analyze employee reviews, promotions and pay histories to determine trends on employee turnover. According to the Harvard Business Review, Credit Suisse analyzes data to explain reasons for employees leaving, and take corrective action by proactively offering those most likely to leave new career growth opportunities.
Using historical and current data, organizations gain huge competitive advantage, by finding patterns that could explain future employee behavior. As the data changes, new insights can be discovered and acted upon more quickly.
What’s the business value that big data adds to HR?
According to industry experts, talent acquisition, learning and development and employee engagement are the three core areas that significantly add to business value of an organization. Deriving immense value from analytics, big data is considered as an asset that comes with the promise of improving every aspect of business, if companies are willing to take the time and effort to figure out how.