Companies collect vast amounts of human resources data as people come into and leave their organizations. When combined into a complete picture, the data in HR systems can impact business decisions across the company.
“People data enables HR to talk about strategies and outcomes in a language other C-suite leaders will understand,” says Rebecca Taylor, CCO and Co-founder of SkillCycle. “Communicating people data effectively can help direct investment into the right HR initiatives.”
Data-driven HR decisions ensure organizations spend their talent development budgets effectively and establish equitable compensation practices across the company.
Failing to collect or properly use people data can result in missed opportunities for strategic decision-making and talent development, leading to inefficient resource allocation. This can hinder organizational growth, reduce employee engagement, and undermine overall business performance.
In this article on understanding the importance of people data in HR, we’ll explore:
People data must go beyond employee records and workforce numbers to be meaningful. Keeping accurate employee data in HR systems is important, as is managing the associated risk of its collection and storage.
The more employee data an organization collects, the more important it is to create proactive policies regarding transparency and risk, according to Gartner.
Protecting employee data is important, but that’s not the only reason people data should be top of mind in your organization. To leverage this data properly, you need to be able to do more than count and keep employment records for your people. Ideally, you use it to understand your people, their goals, and how they contribute to the company’s success.
“An organization should be collecting people data at all levels of the employee lifecycle,” says Taylor. “That includes hiring, onboarding, developing, and retaining.”
Collecting HR data throughout the employee lifecycle can show how HR decisions impact specific company outcomes such as productivity or efficiency. When HR teams have robust data to analyze, they can more effectively fill skills gaps, address employee concerns, and craft strategies for improvements across the organization.
To achieve these outcomes, companies should be collecting data in areas such as:
“HR teams need to be able to support the business in the most human way possible,” says Taylor. “The types of data they collect and manage can help balance goals for employee satisfaction and the financial impact of HR decisions.”
Organizations have been managing human resources data in one form or another for decades. Many effectively collect data as employees join and leave the company and how they are promoted and compensated while at work.
“Most HR teams are effectively managing people data such as time to fill positions, cost per hire, and turnover rate,” says Taylor. “These are areas where they have more ownership and access to data in order to dependably collect and manage information.”
In many cases, companies store some categories of data in their main HR system, allowing HR teams to monitor certain numbers easily and pull reports as needed. They may be able to see high-level performance data that flags average performance and top performers.
This type of data in HR is important, but it doesn’t tell the whole story of what’s happening for individual employees or within your teams, how you can influence outcomes, or how your HR strategy supports the company’s success overall.
The ability to access relevant information in order to analyze and develop insights that can be useful in future planning is vital. Still, not all forms of data are easily accessible to HR teams.
“One of the biggest challenges HR teams face is how their people data translates into dollars for the company,” says Taylor. “In many organizations, these datasets are kept separate, when in reality HR needs to be able to tie initiatives to the revenue it can bring into the company.”
When data is kept siloed in disconnected systems, it can be challenging to understand how certain types of data translate to money earned or lost by the organization. Without this connection, the datasets can exist as parallel stories that are difficult to communicate to other company leaders.
In contrast, when HR teams are empowered to connect these sources of data to produce meaningful insights, they begin to understand how to become a revenue source. HR leaders can then tie initiatives to financial outcomes to bridge gaps in understanding and gain a stronger voice in the boardroom when decisions are being made regarding budgets and investments in talent.
Understanding how people come into your company, their experience while employed with you, and why they leave will enable you to connect HR decisions to company outcomes. You’ll then be able to take actions to influence each of these areas in order to drive progress toward desirable outcomes.
Making decisions based on data can help companies prepare for the future. Two of the top priorities HR leaders readying their organizations for the future are the ability to reap value from data and the capacity to rebalance talent resources and map talent to value, according to McKinsey.
“This is the type of data that will give HR and company leadership the information they need about how and where to invest in their people,” says Taylor. “This data gets initiatives approved and can later be used to analyze and communicate their success.”
Leveraging data-driven HR insights empowers organizations to make decisions that benefit both the company and the employees over the long term. It can help HR teams show the tangible benefits of talent development programs and demonstrate the value of other investments in people throughout the organization.
Ready for a deeper understanding of how you could better leverage your people data in HR decisions? Book a demo to learn more.
SkillCycle formerly known as GoCoach featured in Forbes
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