In this blog post, we’ll dig deeper into how to leverage human resources (HR) data to achieve your organization’s goals. Using a data-driven approach, your organization can measure the impact of a range of HR metrics – from employee recruitment and retention to compensation and benefits.
Here, we’ll explore how to ensure you’re using quality sources, how to prepare your data, and how to leverage that data to enhance your compensation strategy.
Good Sources
Before you start collecting data, make sure it is coming from a reliable source that serves to answer the hypothesis you’re testing. Start by asking questions to flesh out the specific business objectives you are aiming to achieve through your analysis. Consider which stakeholders will ultimately use this data, and what their specific information needs and preferences are.
Data quality is crucial for making informed decisions. There are countless metrics that could feasibly be analyzed, so starting with a narrow lens with clearly defined parameters can help not to overwhelm your findings.
Some commonly used sources include:
HR Information System (HRIS): A central repository for HR data, including employee records, payroll information, and performance evaluations
Payroll Systems: Payroll data provides critical insights into salaries, bonuses, benefits, deductions and more
Performance Management Tools: Performance evaluation data can help determine merit increases, bonuses, and promotions
Market Surveys: External compensation data from market surveys, industry benchmarks, and salary surveys offer valuable insights into market trends and competitor compensation practices
Employee Surveys: Regularly gather feedback from your employees on compensation and satisfaction
Exit Interviews: Exit interviews provide insights into a plethora of issues that may drive employee turnover, and can help you identify compensation-related concerns
To ensure data accuracy and relevance, these sources are regularly updated with the most current employee and industry data. Implement systems and processes that enable real-time integration from HRIS, payroll, and other sources, and conduct regular audits to identify discrepancies.
Preparing HR Data
Once you’ve collected your HR data from reliable sources, it’s time to start your analysis. Set out a clear plan to guide your data exploration in the right direction. Before diving in, make sure to consider any legal and privacy concerns, such as HIPAA. Safeguarding sensitive HR data is paramount to maintaining employee trust and compliance.
When visualizing the data you’ve collected, always consider the “why.” Reference the questions you laid out before starting this process and consider what types of charts, graphs, or dashboards will most effectively convey the answers and insights you’ve generated to decision-makers.
Selecting the right tools and software for your data analysis can also make all the difference (e.g., Excel, HR analytics software, business intelligence tools). Ensure that your HR team has the necessary training to use the tools effectively and present the data in a way that is actionable for stakeholders.
Using HR Data to Support Your Compensation Strategy
As demonstrated, HR data provides insights into market salary trends, internal pay equity, and employee satisfaction. Leveraging this data to support your compensation strategy can yield substantial benefits and help the organization budget for payroll-related expenses and properly allocate resources.
Data empowers HR managers to make informed decisions regarding compensation adjustments and strategies, as well as address any gender, racial, or other pay gaps to ensure fair compensation practices.
By analyzing turnover rates and exit interviews, HR managers can make adjustments to compensation packages to attract and retain top talent. And using performance evaluation data, they can better determine bonuses, merit increases, and incentives.
HR data is a powerful tool for business owners and HR teams, enabling them to make data-driven decisions that benefit both the organization and its employees. Not sure where to start? Let NB Business Solutions help you select the right sources, prepare your data, and use it to effectively support your compensation strategy.