We would all agree with the fact that the world is more data-centered than ever before. In fact, a new data revolution is complementing the ongoing digital revolution to perfection. Having said that, the corporate world is leaving no stone unturned to reap the benefits of data and HR analytics.
Today, companies are applying data across all verticals to optimize business processes and outcomes. Speaking of human resource management, HR analytics is transforming hiring, talent management, and employee engagement scenarios in unthinkable ways.
To elucidate, HR analytics refers to the collection, assessment, and implementation of talent data to optimize business decisions. In the usual sense, these decisions correlate with HR policies. HR analytics define a new norm in the enterprise world that big enterprises and small businesses are equally excited about.
In this blog, we specifically shed light on how HR analytics can propel small businesses to the next level. So, let us get started without further ado.
Amazing Merits of HR Analytics for Small Businesses
1. Improved hiring decisions
With HR analytics in place, you can track various metrics that define the efficiency of your recruiting practices. To elaborate, these metrics include cost per hire, time to hire, source quality, offer acceptance rate, and so on.
Through analytics and metrics, you can foster greater transparency in the overall hiring process. This transparency will imply that you can enhance the hiring processes and talent acquisition efficiency by a great deal.
Needless to say, hiring decisions are among the critical success factors for any business. If you can improve that, you can take your small business to the next level with greater momentum.
2. Enhanced cost benefits
One of the greatest advantages of data analytics is the high return on investment it offers. When you make decisions based on data, there is minimal wasteful expenditure. To explain, with data, you can segregate what is essential and what is not.
Let us try to understand this through an example. Let’s say you randomly decide to offer paid Netflix subscriptions to each employee. If you have around 100 employees, the expenditure is certainly going to be huge. However, let’s say not more than 25 employees are into binge-watching. So, in the ultimate sense, the decision does not result in anything more than wasteful expenditure.
Now, if you would have taken a data-driven approach to deciding employee rewards, things would have been different. Maybe more than 80 percent of your employees see workplace flexibility as the biggest motivator rather than Netflix subscriptions. You would have certainly saved a lot, right?
This is just one example of how HR analytics can offer cost benefits in terms of talent management and performance management. The more you rely on data, the better the cost-effectiveness of your decisions.
3. Higher employee engagement
Did you know that companies with high engagement can generate 21 percent higher profits? Well, this insight from Forbes explains why businesses lay great emphasis on fostering engagement. In fact, contemporary organizations try every possible trick to enhance employee engagement such as by providing employee rewards and appreciation.
However, driving high employee engagement may be as simple as getting HR analytics on board. The key to cultivating high employee engagement is to enhance employees’ experience. For that, you need a better understanding of what your employees expect. For instance, you need to determine which compensation policies work best to engage your employees. Similarly, you need to understand their anticipations of learning, flexibility, rewards, and so on.
The more you know your employees the more you can optimize their experience. But how are you going to keep a track of what hundreds of employees desire or anticipate? Of course, you would need a data-driven approach. In other words, you can bank on HR analytics to boost employee engagement.
HR analytics will give you a clear idea of what your employees anticipate and what works best to inspire them. Subsequently, you can create HR strategies to improve employee engagement and performance management scenarios incredibly.
4. Optimized determination of skills gaps
Small businesses give fierce competition to MNCs when their employees manifest exemplary skills. In fact, in the modern corporate world, it is all about skills. Having said that, building a highly skilled workforce is similar to building a competitive advantage. This explains why organizations need thoughtful skill development programs.
However, it makes complete sense that these programs are aligned with the exact skill deficits in your workforce. How are you going to identify the skill gaps? The answer is HR analytics and you should definitely make the most of it. With HR analytics, you can get insights into the kind of skills your employees bring to the floor and where they lack.
Consequently, you can develop upskilling and reskilling programs that are best suited to your organization. Besides, narrowing down on skill development programs that serve the need of the hour will also offer cost benefits. Otherwise, you may simply be spending on professional development programs that are not even close to the skill deficits.
5. Better planning for mentoring programs
Mentoring programs narrate a new trend in the corporate world. In fact, more than 80 percent of Fortune 500 companies now have mentoring programs. For small businesses, mentoring programs can be a great way to facilitate practical and wholesome learning. Besides, a survey by Deloitte concludes that companies with mentoring programs have 25 percent higher employee retention rates.
Clearly, there is every reason why your small business should introduce thoughtful mentoring programs. For that, you first need to arrange your employees into different levels of qualifications and professional expertise. This will help you to ascertain the verticals of learning you need to offer via mentorship.
Again, this is where HR analytics comes into the picture as a game changer. With HR analytics, you can keep effective track of your employees’ qualifications, previous work experiences, and expertise. Ultimately, you can have a more thoughtful approach to introducing mentoring programs.
6. Reduced employee turnover
For small businesses, employee turnover costs can be quite overwhelming. Forbes reveals that employee turnover costs can be as high as 33 percent of an outgoing employee’s annual remuneration. As a business leader, this is something you should keep in mind at all times.
So, what is it that you need to decode the complex challenge of employee turnover? The initial step is to understand the reasons why employees leave in the very first place. HR analytics will give clear insights into why your employees leave. Here, you can apply the collected talent data to find the gaps between what employees expect and what organizations deliver.
Further, you can devise more improvised employee retention strategies keeping these insights in mind. When you eliminate the reasons why employees leave, the fear of turnover will no longer loom.
7. Better tracking of diversity goals
There is a lot more to diversity and simply being a thriving corporate trend. Mckinsey & Company reveals that diverse organizations have 36 percent higher prospects of outdoing their rivals. This is exactly why organizations are keen on hiring diversely and managing diverse talents in an effective way.
People analytics will give you the perfect opportunity to track your organization’s diversity goals in a consistent and proficient manner. You can then ensure that diversity and inclusion grow in an incremental way in your organization and add massively to the business outcomes.
8. Worthwhile change management
Change is a sign of progress and as a small business, you have a long way to go. To compete with big corporations, change management is something you need to embrace at all times. You need to look at every challenge as an opportunity.
However, the ultimate success of a change will depend on whether your employees are aligned with the idea of change or not. Practically speaking, you cannot successfully implement a change leaving your employees behind.
The application of talent data via HR analytics will help you determine if a change idea is feasible or not. Further, it will help you understand which change processes you need to outsource. Besides, as mentioned above, if a change requires your employees to develop new skills, HR analytics can be a great approach to developing training programs.
All in all, the conceptualization of a change, its feasibility, implementation, and success depend on your people. This is where people analytics of HR analytics will prove to be so vital.
9. Effective delegation of tasks
As a small business owner, you would want to take care of all responsibilities on your own. However, that would not be a very prudent thing to do. As a leader, you need to effectively delegate at least some important tasks to your team members. In fact, your decisions in terms of delegating work will have a massive impact on the success of your business objectives.
However, to delegate efficiently, you need to be sure of your employees’ abilities. This is where HR analytics can be of great help yet again. With HR analytics, you can track your employees’ skills, certifications, and training history in real time. Having said that, you will have a clear idea of which employees are the best suited for each task.
10. Better informed disciplinary actions
Addressing ethical issues in the workplace can be quite challenging. However, it is also true that disciplinary issues or ethical issues can be detrimental to the future of a business. Hence, as a leader, you need to be quite proactive in taking disciplinary actions when needed.
With analytics, you can track your employees’ records and know if they have been involved in workplace misconduct previously. In the case of first-time offenders, you can issue a subtle warning. However, for repeat offenders, you can initiate stern actions. HR analytics will make this segregation very convenient.
To encapsulate, businesses are now increasingly integrating HR analytics given the host of benefits it offers. In fact, small businesses, in particular, have a lot to gain from HR analytics. HR analytics can help companies hire exceptional talents and manage them in exceptional ways. The sooner you invest in HR analytics the better it is for the future of your small business.