Importance of HR Analytics in an Organization: Role and Its Benefits


The field of human resource management has changed dramatically over time and continues to evolve rapidly. In addition to the “human” side of running an organization, HR professionals are increasingly relying on technology and data. Human Resource analytics emerge as a result of the increasing usage of data in HR processes. A key part of an organization’s success is making data-driven decisions with HR analytics. More than 70% of executives prioritize people analytics. In three years, HR analytics will grow by 90%. 

The purpose of this article is to explain what HR analytics is, its benefits, and its critical role in HR. 

What Is HR Analytics? 

HR Analytics are specialized forms of data analytics that use employee-related data and analytical processes to improve HR performance levels and employee retention. Management can use the collected data to make informed decisions about attrition rates and employee retention. 

HR analytics is important to address the following questions: 

  • How do you measure employee value and retention? 
  • How many employees leave the company each year? 
  • Which employees are eligible for promotion? 
  • How often do employees turnover? 

HR analysts study and analyze various types of datasets to answer these questions. A company that engages in HR analytics for its employees’ benefit deeply collects HR data and draws insights from it. 

Role of HR Analytics in Organization 

The use of analytics is revolutionizing HR just as it has revolutionized marketing. HR analytics aims to provide insights into how to manage employees and reach business objectives. The availability of so much data makes it imperative for HR teams to determine which data is most relevant and how to utilize it best. It can be achieved with HR data analysis 

The role of HR Analytics in an organization is: 

  • Identify underlying causes and trends of employee attrition by analyzing past data 
  • Collect data on HR productivity and engagement 
  • Using data analysis to understand new employee behavior 
  • Identify insights from the data and report them to management 
  • Understanding patterns behind important concerns like low employee performance, compensation revisions, etc., through the correlation of various types of data 
  • Developing predictive models to understand employee behavior and performance 
  • Making decisions and developing HR strategies to improve overall performance and employee satisfaction 

Benefits of HR Analytics 

This benefits both the organization and the employees. 

For an Organization 

  1. High-Quality Recruitment: Tracking data on recruitment metrics such as cost per hire, application completion rates, quality of hire and source, and candidate experience provides the HR world insights into the hiring process. Making changes based on these findings will positively impact the business. Using algorithms, HR analytics can identify the best potential candidates based on their skills and abilities. As a result, the recruiters will save time and money while increasing the chances of making the right hire the first time.
  2. Decreased Attrition Levels: There is a trend among employees these days to leave organizations within a short period. With HR analytics, you can identify your organization’s hidden patterns and trends by using employee-related data to discover what drives employee retention. HR analysts also offer suggestions for decreasing attrition rates based on various data points.
  3. Achieves Employee Trust: When you implement a new strategy and want to know what employees think, HR analytics can assist by collecting data about employee reactions. The HR management can boost employee satisfaction based on the data and analysis. In addition to helping formulate effective HR policies, this creates a sense of belonging in employees and makes them start trusting their employers.

For the Employees 

  1. Healthy Work Culture: This data analysis helps to create a healthy work environment for employees and prevents workplace misconduct. HR Analytics provides useful information on trends or frequent occurrences of misconduct. With this information, you can identify areas where training can prevent misconduct in the future.
  2. Ideal Work Opportunities: Employees can search for a job on the organization’s website based on location, skills, and interests. HR analytics collects all the information regarding the above criteria and displays it on the website’s dashboard. These data help job seekers to find a relevant job at their desired location.

Impact of HR Analytics on Business 

HR Analytics impacts businesses in the following ways, 

  1. As everything becomes digital, prioritized, and managed through data, HR management can demonstrate how it directly impacts strategic business objectives
  2. It helps in the Identification of productivity-enhancing factors
  3. Business can only succeed in a rapidly changing and volatile world if it adapts quickly. To assist in this effort, HR can use analytics to develop a hiring process that selects individuals with these two key skills
  4. HR can effectively attract innovators by using analytics
  5. In talent management, the ability to predict trends and upcoming problems or opportunities is one of the most impactful aspects of data-driven decision-making
  6. With the more precise allocation of HR budgets and staff, HR leaders can maximize the impact of their programs

Examples of HR Analytics 

Here are some real-life examples of how analytics are used in HR management: 

HR will use analytics to gain deeper insights into employee engagement’s contribution to the organization’s overall financial performance. The employees’ performance data will be collected for a given period, as well as the financial performance data of the organization. By analyzing the data, HR can formulate more effective employee engagement and performance management policies in the future. 

Analytics assist HR teams in hiring and recruiting. To hire for a particular role, the candidate details and data related to that role will be fed into the system. A pre-programmed algorithm will provide HR teams and recruiters with shortlisted candidates whose profiles match the job description. Through this method, we can hire the right candidates as well as save a lot of time by eliminating multiple interviews. 

For example, let’s say an organization’s department is experiencing an increase in employee attrition. HR analytics can help identify the root cause of the problem by analyzing historical data on ex-employees, ex-employee feedback, and employee profiles. The candidate hired might not have matched the job role, which led to him/her leaving the organization. HR analytics can identify a variety of reasons. 

HR Analytics Tools 

R is the most used HR analytics tool. Other tools are Bamboo HR, Sage HR, Picked, Tableau, etc. Investment in human resources can be implemented effectively using such HR analytics tools. The initial cost of deployment of such tools may seem significant, but analytics tools save you a lot of time and other resources in the long run. 


Many business objectives can be leveraged using analytics. For example, business analytics is used to determine pricing in a department store based on past and present information. In this way, business analytics is used in today’s business scenario.  

With HR Analytics, you can monitor and improve employee engagement, retention, wellness, productivity, experience, and work culture. This analytics also helps in hr training and development. 

Jigsaw Academy offers the most comprehensive interactive learning programs across various emerging technologies in the industry. Jigsaw Academy provides 3-month certification in People Analytics & Digital HR course in collaboration with IIM, Indore.

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