What Data Does an HR Analytics Tool Need?

Broadly, the data required by an HR analytics tool is classified into internal and external data. One of the biggest challenges in data collection is the collection of the right data and quality data.

Common data sources HR analytics solutions

I. Internal data

Internal data specifically refers to data obtained from the HR department of an organization. The core HR system contains several data points that can be used for an HR analytics tool. Some of the metrics that an HRIS system contains includes:

  1. Employee tenure
  2. Employee compensation
  3. Employee training records
  4. Performance appraisal data
  5. Reporting structure
  6. Details on high-value, high-potential employees
  7. Details on any disciplinary action taken against an employee

The only challenge here is that sometimes, this data is disconnected and so may not serve as a reliable measure. This is where the data scientist can play a meaningful role. They can organize this scattered data and create buckets of relevant data points, which can then be used for the analytics tool.

II. External data

External data is obtained by establishing working relationships with other departments of the organization. Data from outside the organization is also essential, as it offers a global perspective that working with data from within the organization cannot.

1. Financial data: Organization-wide financial data is key in any HR analysis to calculate, for instance, the revenue per employee or the cost of hire.

2. Organization-specific data: Depending on the type of organization and its core offering (product or service), the type of data that HR needs to supplement analytics will vary.

For example, says Collins, “HR leaders at a global retailer should power their analytics engine with store revenue and costs and customer experience data, whereas HR at a construction company might pursue operational – health and safety – data and data related to contingent labor costs.”

3. Passive data from employees: Employees continually provide data that is stored in the HRIS from the moment they are approached for a job. Additionally, data from their social media posts and shares and from feedback surveys can be used to guide HR data analysis.

4. Historical data: Several global economic, political, or environmental events determine patterns in employee behavior. Such data can offer insights that limited internal data cannot.

For example, the recession in 2008 was a global event that changed the way employees perceived jobs or “work.” The freelance, start-up and gig economies took off as people continued to lose their jobs. Data from such a critical historical event can help predict how the workforce may react to similar shifts in the future. It can then be used to identify trends in the current workforce and predict voluntary and involuntary turnover.