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HR Analytics

What is HR Analytics? | Definition, Functions

February 2, 2023

By Team tawgl

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What doesn’t get measured, doesn't improve. HR analytics are quantitative measures to evaluate various functions within HR. Keeping a constant watch on these numbers helps organizations optimize their processes and scale rapidly. Here are the functions where a lot of numbers get generated:

1. Recruitment

2. Compensation and Benefits

3. Learning and Development

4. Employee Engagement

1.  Recruitment

Analytics in Recruitment can either be Recruitment operations or Recruitment Strategy.

Recruitment operations or Funnel consists of a series of analytics used to determine the success of a recruitment process. Each number refers to a stage of the recruitment process. Like a funnel, the inputs are more than the outputs.

A recruitment strategy is a well-planned approach to structuring the recruitment processes. These analytics need to be looked into to get a clearer picture of the campaign's performance.

1.1. Recruitment Operations/Funnel Metrics

Analytics that companies usually track for Recruitment operations are

1.1.1. No. of Candidates Applied - This is the total number of candidates across all sources who applied for the job. This is a great indicator of how many applicants you have been able to sell your job offer to. The strategy should be to get the right candidates in the funnel, not volume. So, advertise the job at the right places and analyze the results

1.1.2.  Application to Shortlist Ratio - This is an indicator of how many applicants are actually relevant for the role. A good applicant-to-shortlist ratio would be upwards of 70%. For roles that are open year-round (Volume roles), try and get that number to at least 40%.

1.1.3.  Shortlist to Schedule Ratio - During the process of shortlisting and scheduling, some candidates drop out. The typical behavior with candidates is to check Glassdoor, talk to friends, and understand more details once they are shortlisted. Building a strong employer brand keeps the candidates invested.

1.1.4.  Schedule to Offer Ratio - By the time the candidates get an offer, they may drop out due to multiple reasons. This makes candidate experience a very critical parameter. In a survey that conducted, one of the top reasons for candidates dropping out was having a bad interview experience (55% of applicants)

1.1.5.  Offer to Join Ratio - A key reason why the offer to join ratio is usually low is counter offers from other companies. In such situations, we believe that one can negotiate a bit, but this is not a long-term strategy.

1.1.6. Drop Out Ratio - This gives us an understanding of what percentage of candidates dropped out after accepting an offer. For tech, this can be as high as 60%-70%. For non-tech, a drop out ratio of more than 25% means a check is needed.

1.2. Recruitment Strategy Metrics

Here are a few recruitment strategy analytics that would help you strengthen your current outlook on Recruitment.

1.2.1.  Source Efficacy and Mix - HR Professionals typically put up job openings on various platforms such as the company website, third-party marketplaces like IIMJobs,, etc, and social media sites like LinkedIn, etc. This metric helps evaluate how good each source is, and where the best candidates come from.

1.2.2.  Attrition Ratio - It measures the percentage of employees who leave the organization in a period of time. If an employee leaves on their own accord, it's called Voluntary Attrition. If the company asks them to leave, it's called Involuntary Attrition. Tracking them is very important.

1.2.3. Quality of Hire (QoH) - It is typically measured by taking the average of various parameters and arriving at a combined QoH value. Parameters such as new hire performance, new hire engagement, and culture fit are used for this purpose. A % weight is given to each parameter and employees are rated on a relative scale between 1 to 5 or 1 to 10. This can be a goldmine of great insights.

1.2.4. Cost Per Hire (CPH) - A good recruitment strategy needs to be cost-efficient. It tracks the relationship between the cost and the output of the campaign which are hires. CPH accounts for all the costs such as sourcing, recruitment marketing, referral fee, etc, and therefore is one of the most widely used analytics in recruitment strategy.

2. Compensation and Benefits

Compensation and Benefits refer to the monetary (e.g salary) and non-monetary (e.g Company health Insurance) benefits that employees receive from their organization. They are one of the top decision drivers for job seekers.  Some important analytics that should be tracked:

2.1. Benefits Spend Rate - This is the percentage of total compensation spent on employee benefits. The rule of thumb is that it should be between 15-30% depending on the industry.

2.2. Base Salary Increase Rate - It is the percentage change in an employee’s base salary over a period of time. This is also tracked by employees during their appraisals.

2.3. Pay Range - Range between the minimum and maximum compensation for a pay grade. In some cases, it is also mentioned in the job posting. This is usually set basis pay studies across industries. Specialized reports allow employers to understand where they stand in the industry vis a vi their competition.

2.4. Market Ratio - The ratio between internal pay and how much the market is paying for the job. Analyzing this helps keep the pay competitive and therefore attracts top talent. If the ratio is not healthy, the company is at a constant threat of losing employees to competition.

2.5. Target Percentile - The percentage paid above/below the market rates expressed as a percentile. Eg: if you pay employees at P75 it means that you are a better paymaster than 75% of the market. Companies that are at P50/P60 are those with strong brand names or provide great benefits to reduce the perceived gap with the market.

2.6. Compa-Ratio - It is the comparison of the employee’s salary with the midpoint of the pay range. It helps understand if the salary is greater or lesser than the midpoint and by how much it differs.

3. Learning and Development

Learning and Development refer to the various programs and activities that facilitate the growth of an employee. Employee Learning & Development programs play a key role in scaling organizations. They improve employee productivity and also impact how an employee views their organization. The top analytics here are mentioned below:

3.1. Completion Rate - It measures the number of employees who complete the course compared to those who started. It is an indicator of how engaging the training program is. This can be improved by understanding the current level of participants better and keeping modules short and focused.

3.2. Pass Rate - The number of employees who pass the course compared to the total participation. A low pass rate implies that the training program needs to be reassessed and improved.

3.3. Participant Engagement - This is a measure of the level of engagement that the employees have shown in the training program. It is usually measured by the survey methodology.

3.4. Training Cost per Employee - It is the cost incurred on average by the organization to train each employee. This gives us an understanding of how much is being spent on training one individual and can be compared to other metrics such as the value generated by each employee.

3.5. Change in Operational Efficiency - This is a good way to measure the impact of a training program on an organization-wide level. A training program that does not result in higher operational efficiency, in the long run, needs to be relooked at.

3.6. Assessment Scores - This refers to the scores that employees receive in the assessments conducted during their training program. This is a key indicator to evaluate the effectiveness of the learning and development program.

4.  Employee Engagement

Employee Engagement refers to the level of enthusiasm, involvement, and interest the employees of an organization have toward their organization and its role. Organizations conduct frequent employee engagement activities to ensure this. Here are some of the top Employee Engagement analytics:

4.1. eNPS - The employee Net Promoter Score is used to measure employee loyalty toward your organization. Employees are asked how likely they are to recommend the organization to others. eNPS = % of Promoters - % of Detractors where promoters are employees that would recommend your brand to others.

4.2. Employee Performance Rates - There is a strong relationship between employee engagement and performance. This can be calculated by using PMS (Performance management system) ratings as the base and building on it. The quality of their work can be measured through manager surveys.

4.3. Glassdoor Scores - A great way of understanding how your employees feel towards your organization is by looking at the scores and ratings they post on employer review sites such as Glassdoor.

4.4. Internal Promotion Rate - Good growth opportunities act as motivation for employees to engage more and perform better. Internal Promotion Rate is the percentage of employees who get promoted as compared to the total number of employees. High employee performance leads to an increase in this metric.

4.5. New Hire 90-Day Failure Rate - Companies utilize a lot of resources in their talent acquisition process and new hires dropping off within the first 90 days implies a loss of time and money. This helps track the percentage of employees that drop off in 90 days and accordingly address a high failure rate.

In conclusion, every organization has its own set of analytics that they track. These are some of the most commonly used across industries. Therefore, they can form stepping stones to better HR analytics over a period of time.

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