What's the Difference Between HR Analytics and HR Metrics?
There tends to be some confusion around HR analytics and HR metrics and the difference between the two. While each provides incredible value to any organisation, the terms are often used interchangeably when there’s actually a fundamental difference between them.
So – getting right to the point – what’s the difference between HR analytics and HR metrics?
What are HR analytics?
Defined as the process of collecting and analysing HR data in order to improve workforce performance, HR analytics – also known as people analytics, talent analytics, or workforce analytics – provides organisations with continuous feedback on how HR initiatives are contributing to their operational goals and strategies.
By implementing analytics, businesses can develop their internal and external measures and predict future outcomes, allowing leaders to anticipate the impact of individual decisions in advance.
In other words, this business intelligence software helps identify patterns and behaviours that may otherwise stay under an organisation’s radar, focusing on variables to guide business development decisions.
A company, for example, may use analytics to find similarities between employees who chose to leave the company, creating an opportunity to plan strategically and fix the issues for current and future staff.
HR analytics provides data-driven insights into what is and isn’t working so that organisations can make improvements. This improves productivity and efficiency in the workplace, generating increased revenue for your organisation.
Why do we need HR analytics?
While organisations routinely collect data, the need for HR analytics is becoming essential. Yes, all businesses have their own collection of raw data, but without organisation, analysis or deeper understanding, data on its own isn’t useful. Once organised, however, comparing and analysing data provides powerful insight.
Questions HR analytics can help answer include:
- What are the patterns in employee turnover?
- What level of performance should I expect from new hires?
- Which employees are likely to leave within the next 6-12 months?
- What salary should be provided for a new job role?
- How much investment is needed to enable employees to be fully productive?
HR analytics look beyond the numbers to extract crucial information for organisations to use to their benefit. Without it, companies risk losing sight of the bigger picture and losing potential business revenue.
What are HR metrics?
HR metrics are specific indicators that allow businesses to measure performance, efficiency, and the impact of business processes and changes.
Metrics are based on measurable, hard data – or numbers – and they tell you what’s happening since they’re often defined by an objective. Metrics are essential in determining the value and effectiveness of HR initiatives in a factual way, tracking and presenting past data to influence future decision making.
For example, if a company is looking to understand more about their employee turnover in a particular department, it can be calculated as a percentage based on the department’s staff count, turning that result into a metric.
Why do we need HR metrics?
HR analytics uses HR metrics to help leaders better understand how to move forward with business decisions.
It’s necessary to study HR metrics to help quantify the costs and impacts of HR and business processes as metrics provide the straightforward informational data that leaders need to make immediate and pressing decisions for their business.
HR metrics track activity and report numbers on areas such as:
- Recruitment and onboarding costs
- Training and development
- HR operations
Metrics provide an inside perspective of organisations because they use data from internal business sources. While this information is useful, it’s still important to remember that these metrics give only the basic insights into functional areas.
The Difference: Made Simple
Both HR analytics and metrics are influential tools, and when used together they create a powerhouse of information and feedback for individual organisations, ultimately saving them time and money.
The great thing about metrics is that they can act as a barometer for businesses, indicating which areas of the business are performing as needed and pointing out any potential pitfalls. Though metrics on their own don’t provide the in-depth information needed to uncover areas of improvement and shape future objectives – they can only track activity.
That’s where HR analytics comes in.
HR metrics feed into HR analytics, and together they pave a road towards potential solutions when HR analytics utilises the concrete data that HR metrics provide.
So, to recap:
- HR metrics support HR analytics
- HR analytics provide direction on how to improve HR metrics
- HR metrics give insight into whether the results of the HR analytics is correct
Now that you can be sure of the difference between HR analytics and HR metrics, you can also see why the two concepts work better in conjunction with one another.
Reliable, high-quality data is essential in solving business problems and for providing opportunities to predict future outcomes and plan accordingly. This data is important for companies because it provides insights that lead to action and continual improvement, ultimately making for happier and more efficient employees.
Want to find out more about HR analytics and HR metrics? Sign up for our online 'Introduction to HR Analytics Masterclass’ to learn more about how they work together to benefit organisations.
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