At the Core of HR Analytics

01 December 2016

We were pleased to take part in the recent Chartered Institute of Payroll Professionals Conference, not only to learn about the latest developments in technology, but to take the opportunity to gather the opinions of payroll professionals. Our interest is in the hot HR topics of the moment: big data and HR analytics.

Much is being written about predictive analytics and the role of big data in recruitment, development, and even in predicting leadership succession. While organisations get to grips with how to collate their amassed training, leadership and recruitment data, it’s easy to overlook the most reliable source of big data an organisation has – its payroll.

Why should payroll get involved?

Payroll is a simple and reliable starting point from which to grow an organisation’s HR analytics. A vital source of data in every business, payroll provides a monthly snapshot of the health of the organisation forming the bedrock of any businesses’ data - as it’s refreshed regularly and kept up to date for compliance purposes. Through the sheer volume of data, and the timeframe over which it’s collected, payroll is a great place to start looking for trends.

As we heard at the CIPP conference, the data that payroll holds can inform broader analysis of employee engagement. Research shows that engaged employees can improve business performance by up to 30 per cent. And whilst most other data about engagement is qualitative, payroll can bring a quantitative perspective. In this instance payroll can underpin more complex analytics.

Alone, payroll is purely transactional data, but combined with data from elsewhere in the business it can help to build a picture. For example, employee turnover can be plotted against data from HR on recruitment activity and business performance to yield deeper insight.

What payroll professionals said

We asked the audience at the CIPP conference about attitudes to using payroll data in their own organisations: ‘Many organisations are considering gaining insights from their Payroll and HR data to help make strategic decisions. How will you in your role address this organisational need?’

The good news is that only 4% of people felt that they don’t have the ability to do this internally and that they will need to seek external advice to make use of their big data.   Meanwhile, 7% said it was not a strategic priority for them and their teams and felt that their organisation doesn’t require that type of information. It will be interesting to see how these organisations fare over the next three to five years given they may be under-utilising a key source of strategic data and insight.

While it’s disappointing that some delegates feel it’s not a strategic priority, that’s not to say that they don’t believe in the power of that data. It could be reflective of the level of knowledge about analytics within the business, and perhaps a lack of knowledge about the role payroll can play as a source of big data.

Most positively,   89% said they have the systems in place and that they also have know-how internally to extract the data and highlight useful insights. Which is great news so let’s ensure it has the right internal audience; that it feeds into management reporting at the right level, and that it’s not used in isolation, but used to its full extent in conjunction with other internal and external data sources.

What to interrogate

To begin making sense of the vast volume of data, there are some key metrics you can interrogate:

  • Turnover: payroll is the ‘front-line’ in terms of tracking new joiners, leavers and length of service.
  • Absence: levels of absence, types of absence and reasons for absence can all help to build a picture of organisational health.
  • Accident rates: in sectors where this is unfortunately a business metric, fewer accidents are correlated with higher levels of engagement, enablement and productivity.
  • Overtime: can be used to take the pulse on productivity and working patterns.

These key metrics also demonstrate the need to pair the data - can it be referenced against performance reviews, KPIs, customer satisfaction data for example? Stay mindful of the bigger picture and work with colleagues in other departments but don’t undervalue the accuracy, durability and objectivity of payroll data.

HR analytics is about providing business insights through data and payroll might be the biggest source of data you have!

If you’re interested in catching up on some of the tutorials about interrogating payroll data you can view the conference presentations here.

If you’re interested in finding out more about the Analytics services that Capita provide take a look here.