Using HR analytics for data-driven team management

Managing a growing workforce can be overwhelming for any small business owner.

Alongside many other day-to-day responsibilities, you must track your team’s time off, performance metrics, salaries and more. There’s a lot to juggle.

Human resource analytics tools help by allowing you to collect and analyze all kinds of employee data – which you can use to make more informed and effective decisions.

In this article, you’ll learn how to use HR analytics to build a strong company culture and manage your team effectively even as your company scales.

What is HR analytics?

HR analytics involves collecting and analyzing data about your workforce to make informed assessments and decisions for your small business.

You can use HR analytics tools to assess hiring strategies, team performance, employee experience and many other key areas that impact your profitability.

Data is much more reliable than gut instinct, providing tangible insights and evidence. For example, analyzing salary data for existing staff could help you create a suitable compensation plan for a new hire with similar experience and skills.

You can also use HR analytics to monitor performance across your team. It’ll show you who needs training, motivation or recognition so you can make decisions that increase productivity.

Two simple HR analytics examples for inspiration

There are many ways HR analytics helps you make better people-related business decisions.

Here are some simple examples to show how your scaling business can benefit.

Example 1: informing compensation plans

Imagine your software-as-a-service (SaaS) business is thriving and you want to expand its sales team. You’re keen to offer a salary that attracts top talent while being careful not to stretch your budget.

Organizing current sales employees by tenure, experience, industry expertise and compensation (base rate salary plus bonuses) helps you include realistic salary ranges in new LinkedIn job ads.

Your parameters could look like this:

When speaking with a potential hire, you can align their background with your pay bands to set realistic expectations and make an informed offer.

Example 2: identifying employee turnover patterns

Analyzing employee turnover trends helps you take preventative actions to retain team members and reduce hiring costs.

For example, if your e-commerce business is experiencing high turnover among the HR team, check data on absenteeism, training, demographics and skill sets to spot patterns.

You might find that most HR staff who leave are new to the industry, whereas those who stay longer typically have prior HR experience.

It suggests that less experienced employees need extra support. Smoother onboarding and a mentorship program could improve retention for this group.

Why HR analytics is important for growing businesses

Robust HR analytics and management practices strengthen small businesses in many ways.

For example, McKinsey found that people analytics helped clients increase recruiting efficiency by 80%, grow business productivity by 25% and cut attrition in half.

Here are HR analytics’ biggest benefits in more detail.

It supports budget-friendly workforce planning

You can use HR data to plan your hiring strategy monthly, quarterly or annually. The process involves analyzing company data to predict growth (i.e., predictive analytics) and matching hiring needs to your budget.

As a result, you’ll hire the employees you need and can afford rather than stretch your budget to expand the team based on a hunch.

For example, if you’re targeting high-value deals for the upcoming quarter, allocate your budget to a highly experienced sales rep. If your team is stretched thin but experienced, you could invest in two entry-level candidates instead.

It reduces hiring costs and time frames

By analyzing data on top-performing employees, you can identify the skills and traits that most often lead to success. With this knowledge, you can create more accurate job descriptions and screening criteria to ensure better matches.

For instance, if data shows that employees who excel in sales roles have strong problem-solving skills and experience in the hospitality sector, you can focus your search on candidates with these attributes.

HR analytics also helps you pinpoint the most effective recruitment channels. Let’s say most of your high-performing salespeople came from one agency. Renewing your contract with that company will stop you from wasting time on unsuitable candidates.

It improves employee engagement

Regularly tracking employee feedback and performance metrics enables you to identify issues early. Then, you can act to keep productivity and morale high.

For example, your HR data might show that employees are less engaged during certain periods or after specific events, allowing you to address these concerns proactively and boost overall engagement.

If staff engagement drops after busy Christmas periods, you might allow team members to work remotely and spend more time with their families.

Ultimately, increasing employee engagement helps you retain staff and build a positive and productive working environment.

It aids professional development

You can tailor development programs to meet individual and business goals by analyzing performance data and career progression.

For example, if analytics show that employees in specific roles need more training to advance, you can create targeted development initiatives to address these needs. It would help your team grow and stay motivated while offering more value to your business.

The metrics you use to measure employee performance vary from role to role. For instance, you can assess salespeople based on how often they hit quotas, the number of deals they close or the revenue they generate for the business.

Commonly tracked metrics in HR analytics

When you know what you want to achieve from analyzing HR data (i.e., which benefits are your priorities), you can identify the best HR metrics to monitor in an HR or customer relationship management (CRM) tool.

The metrics you choose are your HR key performance indicators (KPIs). You can use them to measure progress toward broader business objectives.

While all small business owners’ goals are unique, the following metrics are solid starting points for those new to HR analytics.

Small business HR analytics: how to get started

Establish a clear strategy for integrating HR analytics into your decision-making so you can apply and manage it consistently.

Here are three basic steps to start using HR analytics to manage your team.

Step 1: set team management goals

Before diving into data sources, decide what you want to achieve using HR analytics. What problems are you trying to solve? What improvements are you looking to make?

For example, you might want to reduce employee turnover or improve hiring efficiency to make your small business more profitable.

Choose a goal-setting framework and put parameters in place to track your progress. Then, you can optimize your strategy instead of relying on vague assumptions and guesswork.

The SMART framework aids team management planning as it acts as a checklist, helping you choose specific, measurable, attainable, relevant and timely goals.

For example, SMART goals related to team management might look like this:

• Decrease the time to hire for entry-level sales roles by five days before September 30th, 2025

• Reduce absenteeism across all departments by 10% by the end of Q4 2025

• Identify entry-, mid- and senior-level compensation bands for prospective marketing hires within the next two months

With time frames agreed upon, you can hold yourself, your team and any other stakeholders accountable.

Step 2: identify which data to collect

Determine which metrics you’ll use to measure progress toward your goals. These will be your KPIs.

The most relevant metrics are those that align with your specific goals. However, you can check our earlier table for inspiration.

For instance, here’s how you could measure progress toward our example goals from the previous section:

Your future HR analytics strategy may involve collecting more advanced metrics to help with business growth. For now, keep it simple so you can practice analyzing HR data and build your confidence.

Step 3: set a reporting cadence

Establish a regular schedule for reviewing HR data to track progress and adjust your strategies as needed.

Based on your business goals, decide how often you need to check and report on your metrics. It could be monthly, quarterly, or biannually.

For example, if you’re hiring quickly, you might review talent acquisition and turnover data monthly. Then, checking engagement metrics every quarter would show if you’re hiring the right people and keeping them happy.

Build a consistent calendar for these reviews to ensure you stay on track.

During each scheduled review, check if you’re meeting your HR goals and identify any areas that need adjustment. It will help you make proactive, data-driven decisions instead of reacting to issues after they arise.

How to use your CRM for HR analytics: 2 simple use cases

Customer relationship management systems might be better known as sales and marketing tools, but they can also organize HR data and processes.

The versatility is valuable to your small business, as it may eliminate the need to invest in a separate HR tool.

For example, Pipedrive’s custom pipelines are ideal for organizing recruitment efforts and performance reviews.

Organizing your recruitment process

Treating each hire as its own “deal” allows you to track recruitment using Pipedrive’s customizable pipeline view. It involves four simple steps.

1. Create a new pipeline for recruitment

Start by creating a new pipeline to track candidates through your hiring process. It will help you to visualize each step.

2. Set up stages

Define stages in your pipeline that reflect each step of your recruitment process. The steps may be unique to your business, or you can use the following labels to get started:

• Application received

• Screened

• Interview scheduled

• Offer extended

• Hired

• Onboarded

3. Add candidates as deals

Treat each candidate as a “deal” in your pipeline. Then, you can track their progress and move them through different stages, much like you would with your sales cycle.

4. Use automation features

Leverage Pipedrive’s automation tools to streamline your recruitment process.

Set up reminders for follow-ups, automate interview scheduling and ensure you don’t miss any critical steps.

Automating these tasks will help you provide a smoother hiring experience for you and your candidates, saving time and strengthening your relationships.

Managing performance reviews

You can also use Pipedrive to track employee performance by creating custom pipelines for appraisals and goal progress.

It’s a simple process that involves picking your milestones and then using the CRM to record achievements and feedback.

1. Create a new pipeline for performance reviews

Set up a new pipeline where you’ll monitor and manage employee performance reviews. Each of your employees will essentially be a “deal” that flows through the stages of this pipeline.

2. Set up stages

Map your existing employee review process by creating custom stages in the pipeline view.

Once again, your exact process will be unique, but it’s logical to start with the following three labels:

• Goal-setting

• Mid-term review

• Final review

You may also include steps in between for scheduling meetings, collecting employee feedback and refining goals.

Whatever you include, clear visibility of the process will allow you to track and manage your review cycle systematically, just as you would with hiring or selling.

3. Log achievements and feedback

Record employees’ achievements, feedback and areas for improvement as they progress through each stage.

Taking notes keeps all performance-related information organized and accessible. Then, it’s easier to evaluate and give staff support or recognition.

4. Set up automations to keep employees informed

Use Pipedrive automations to send notifications and reminders about upcoming reviews or required actions. It’ll help you keep the performance review cycle moving, even when you need to prioritize other work.

Here’s what the automation setup process looks like:

You can also automate tasks like scheduling meetings and sending feedback summaries to ensure employees are always aware of their performance status and next steps.

HR analytics FAQs

Final thoughts

HR analytics might sound daunting initially, but you don’t have to be an HR professional, a data scientist or take a time-consuming HR analytics course to benefit. All you really need is the right tools and data.

If you’re not ready to invest in dedicated HR software, a CRM like Pipedrive will provide metrics and actionable insights for better hiring, training and performance management decisions.

Start by setting clear HR goals, then monitor progress and adjust your approach as needed. You’ll soon find your team is more engaged, productive and loyal.