HR analytics software boosts employee retention, lifts bottom line

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Talent analytics plays a key role in motivating top performers

With the right metrics, organizations can use analytics to measure employee engagement and development initiatives as well as their impact on the bottom line.

Good leadership and interesting work can motivate top performers, but talent analytics can provide the science...

behind the art of employee engagement. According to Deloitte's "Global Human Capital Trends 2016" report, "Businesses have recognized they need data to figure out what makes people join, perform well in, and stay with an organization; who will likely be successful; who will make the best leaders; and what is required to deliver the highest-quality customer service and innovation. All of this can be directly informed by people analytics" -- also known as talent or workforce analytics.

There are a number of variables that influence employee engagement, but many top-performing employees -- particularly millennials -- tend to be motivated by personal development and career opportunities. Identifying and measuring the effectiveness of personal development programs is a critical step in ensuring that employees and the organization are deriving meaningful value and return on investment. Since personal development programs are often linked to individual goals and career development plans -- as well as training programs and learning management systems -- a significant amount of effort and cost goes into planning, implementing and managing those programs and their relationships with other business processes.

Understanding engagement

Before measuring the success of personal development programs, it's important to set out how you'll measure employee engagement. To draw a correlation between investments and outcomes, the ability to measure employee engagement and interact with it from a talent analytics perspective becomes a top priority.

Measuring employee engagement and performance

The following are some possible metrics:

  • Increase in engagement, performance and productivity versus learning and development amounts spent.
  • Cost of engagement, performance or productivity versus increase in profits.
  • A breakdown of employees with development plans or learning activities that have increased engagement, performance or productivity.
  • A breakdown of the learning and development cost of increased engagement, performance or productivity. Type of learning and development program versus increased engagement, performance or productivity.
  • Retention rate of high performers: staffing rate, termination rate and voluntary termination rate.
  • Turnover rate: tenure less than 30 to 90 days; tenure less than 6 to 12 months.
  • New hire failure factor: less than 30 to 90 days, less than 6 to 12 months.

Measuring engagement can be difficult, so you need to know the right questions and find the right medium in which to ask them. Your corporate culture will influence how that's done. A culture of continuous performance management and regular check-ins will help managers understand the engagement level of their team. That can be done through focused surveys, while productivity and overall employee attitude can be measured through regular interaction.

Understanding business priorities

What's important to your business? Return on investment, quantitative outcomes, increased productivity, greater profits and product innovation are important outcomes when you have an engaged workforce and are running career-development programs. Ultimately, talent analytics should provide key metrics that identify the success of each outcome. For example, the following questions might be important to your business:

  • How much are we spending on engagement and personal development?
  • What increases in productivity, performance and engagement are we seeing as a result of our investments in personal development?
  • For every dollar we spend on personal development, how much do our profits increase?
  • Is an increase in employee performance resulting in higher profits?
  • What percentage of employees are making year-to-year improvements in their performance?
  • Are we retaining more of our top performers?
  • Are we attracting more top performers?

Having a set of comprehensive metrics will enable you to answer these questions and make decisions about how you manage engagement issues and development programs on an ongoing basis.

Key metrics in talent analytics

There are some specific metrics you can use to measure your engagement and development (see "Measuring employee engagement and performance"). These analytics come from multiple processes: performance management, career development, learning, financials, employee surveys, manager assessments and so on.

Correlation doesn't necessarily correspond to causation -- especially given that engagement and therefore performance and productivity can be influenced by other cultural factors. But these metrics do provide some measure of a development program's effectiveness. Importantly, without using these talent analytics, it can be difficult to even understand whether the money spent on engaging and developing employees is having any impact on the bottom line.

Next Steps

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Get started with workforce analytics

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