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How big data drives strategic HR decisions

Human resources (HR) departments are the backbone of any organization. Since their roles revolve around collecting and processing information, their adoption of big data analytics makes sense. How can the average HR professional use this technology to drive decision-making?

The transformative impact of big data analytics on HR

Big data analytics provides the HR department with a massive, structured repository of relevant employee, workplace and market information, enabling data-driven decision-making. Instead of manually reviewing spreadsheets over weeks — and repeatedly missing subtle patterns — they can quickly identify a trend’s origin and significance.

This technology makes aggregating metrics on every data point, from compensation to absenteeism, feasible. HR professionals can incorporate complex factors like market trends, recent events and policy changes into their analysis. The more information they collect, the more informed their strategic decisions will be.

Companies incorporate big data into their strategic HR decisions because it helps them uncover worthwhile, business-specific insights about hiring, performance evaluations, terminations and workplace planning. Its ability to drive value in this way is likely one reason experts forecast its global market size will reach $103 billion by 2027.

Integrating artificial intelligence for complex datasets

Technologies like artificial intelligence and machine learning are necessary for analyzing vast, complex datasets to provide actionable insights. Manual evaluations would be far more error-prone and often impractical. With algorithmic processing, HR teams can generate accurate reports in minutes.

Big data analytics tools like AI can streamline various internal processes, freeing professionals to prioritize value-added tasks. Whether companies build a business-specific model or opt for an AI-as-a-service from a third party, the results are the same. Leveraging this technology for dataset analysis is a cost-effective decision.

HR teams can use their AI-driven insights for workforce management and planning. They can distribute tasks more effectively, make better hiring decisions and assign projects faster, accelerating project completion timelines and improving employee job satisfaction rates.

According to one study, most businesses have an excessive amount of unstructured information — around 81 per cent of them each manage over 1 billion files and objects. This proves that most HR departments have the basic resources needed to utilize big data analytics. Frankly, the only question that remains is how they will choose to leverage this technology.

4 ways HR professionals can strategically use big data

Talent professionals can use big data analytics in several ways:

1.   Optimize recruitment processes

Big data can uncover time-to-hire, time-to-fill and cost-per-hire trends, providing insight into the return on investment of existing recruitment processes. This way, HR professionals can determine whether they need to pivot to accommodate changing hiring expectations. It can improve the quality of their hires, optimizing their workplace performance in the long term.

2.   Analyze performance trends

This technology can summarize employee performance trends by analyzing engagement, revenue generation, productivity and absenteeism. HR professionals can present these reports to leadership to improve salary forecasting and promotion selection processes, eliminating the biases that often creep into decision-making.

3.   Recognize and anticipate trends

Many HR departments are reactive. They are less prepared to resolve pain points since they respond to events after the fact instead of anticipating upcoming changes. Big data technology can reveal subtle behavioural, hiring or turnover patterns, allowing teams to forecast and proactively address issues as soon as they appear on the horizon.

Many companies struggle with turnover. According to one survey, 35 per cent of hiring decision-makers report it increased in 2022 compared to 2021, with the average churn cost totaling $41,000 annually. Having big data tools to analyze job satisfaction, absenteeism and employee retention can help HR teams anticipate separations before they cause losses.

4.   Enhance engagement strategies

Big data can clarify the return on investment of business initiatives, enabling HR teams to make impactful decisions. For example, it may reveal meaningful recognition from higher-ups is more effective than costly team-building activities. Professionals can use these details to enhance their workplace engagement strategies.

How big data analytics will reshape the workplace

The longer talent professionals use big data analytics, the more its value will become apparent. In time, operating on data-driven decisions may become the norm, prompting talent decision-makers to explore novel use cases and more specific metrics.