Data-Driven HR Analytics: A Guide to Connecting People Strategy to Business Outcomes
It’s easy to use human resources analytics to prove that your department is consistently hiring, employees are engaged, and everyone in HR is excelling at their jobs. Connecting people strategy to business outcomes is a trickier game, but it effectively demonstrates the ROI of HR initiatives to executives and senior management.
Putting such an initiative in place means customizing reports and ensuring you’re showing that data connects HR analytics and key performance indicators (KPIs) to broader company KPIs.
1. Obtain or Establish Business KPIs
Your business should have set KPIs. They can be annual, quarterly, or even monthly. A good key performance indicator is measurable, has a target, comes from an identifiable data source, and has an owner. For example, the number of contracts signed per quarter would qualify as a KPI. If they aren’t established and measurable, or sound vague, work with senior management to refine them.
Once you have established overall business KPIs, build HR-specific goals to support them. If you want to increase the number of contracts signed per quarter, your job is to ensure the sales and support staff have the tools they need to meet that goal. This may involve hiring more sales staff, increasing employee productivity, or other measurable KPIs that will become the foundation of your department.
Actionable HR metrics that tie back to business KPIs include:
- Revenue per employee
- Training expenses per employee
- Productivity improvement by department/individual/organization
- Employee satisfaction
- Cost per hire
2. Measuring Your KPIs
A KPI isn’t a KPI without measurability. If your current HR tech solutions can’t measure things like productivity increases, find ones that do. There’s also the question of “good enough” measurement versus metrics that can provide actionable insights - clearly, actionable insights are preferable. Take a good look at your HR tech stack and ensure you’re getting actionable insights, not just surface-level data.
Human Resources Information Systems (HRIS) and human capital management (HCM) platforms will give you most of what you need, but not all of it. You’ll likely need to tie into payroll, project management software, and other solutions to measure engagement and productivity.
3. Measuring Productivity and Collaboration
According to McKinsey, enhancing employee productivity can lead to significant growth —the firm estimates between $2 trillion and $9 trillion worldwide. Because of this, productivity enhancement is likely to be a key business KPI for any company. Doing more with less without sacrificing employee satisfaction is one of the key rationales for the existence of an HR department.
Measuring productivity has always been difficult with existing HR solutions. You can generally log things like time tracking and task completion, which only provides surface-level data. Prodoscore is purpose-built to measure productivity in-depth. It acts as a light monitoring tool, collecting data about time spent in software, collaboration between employees, and much more.
Because of the analytics it collects, Prodoscore fills in many metrics gaps in the HR tech stack, including employee collaboration, employee engagement, tool adoption, and much more. In fact, if you have a KPI you’re struggling to measure with conventional tools, chances are good that Prodoscore can measure it.
4. Demonstrating ROI
Once you have your KPIs and measurement system in place, it will be easy to demonstrate the ROI of everything the HR department does. You’ll be able to show ROI of professional development initiatives, how hiring practices enable growth, and how programs designed to improve employee engagement can help enhance productivity.
Charting a clear path with approved KPIs, putting systems in place to measure performance, and tweaking your HR tech solutions to provide required data will help you be more accountable to senior leaders and do a better job of workforce planning and analysis.
