Why HR Departments Need to Move from Metrics to Analytics

Over the past few decades there has been a change in human resources (HR) moving from being referred to as ‘personnel’, through to ‘HR’, ‘people and culture’, and now ‘human capital’. This transition has been in line with organisations beginning to truly understand the value that employees add to the business, and HR teams increasingly using data analytics to quantify that value.

CEOs are increasingly realising that their companies’ people are the number one source of sustained economic growth. This is above other major forces, such as globalisation, technology, or innovation.

With the realisation that human capital is so important to business success comes the need to make more complex decisions about employees, such as who within a leadership team a company should spend money on for development to get the largest benefit to the organisation as a whole. Such decisions are made with the help of HR teams, which are generally in charge of complex decisions about how to get the greatest value out of employees.

Historically, HR teams have made many complex decisions using metrics, anecdotal evidence, and hunches, rather than raw facts and objective, in-depth data. Now, as data analytics becomes more widely available, this technology’s detailed analysis can help to fill a knowledge gap, helping HR make the most informed decisions possible.

While HR departments have used simple metrics in the past to identify ways to get the most from employees, data analytics provides an entirely different perspective from which to make decisions, because of the detailed insight it provides.

This detail is particularly important when considered against Chandler MacLeod research showing that 91 per cent of Australian business leaders feel they don’t have enough skills, while 64 per cent of their employees said they had under-utilised skills.1 The decision-making insight provided by analytics has the potential to effectively unlock those under-utilised skills.

This is why HR departments need to move from a metrics approach to an analytics approach when it comes to making decisions aimed at getting the greatest value out of an existing workforce. Metrics is simply a standard of measurement, whereas analytics is a systematic computational analysis of data.

Analytics, and the ‘datafication’ of HR, is letting companies find unbiased insights into their workforces. This can be difficult in a large business with hundreds or thousands of employees, and it’s very hard to know who these people are and where their strengths lie. However, if companies make the move to analytics, they can gain greater insight into their human capital.

1 Skills Utilisation: How effectively are businesses utilising the skills at their disposal?; Chandler MacLeod; December 2013.