Since 2014, McKinsey have released a series of reports that explore the importance of diversity and inclusivity in the workplace. In their latest report, “Diversity Wins”, they found that the top-quartile of companies who have a diverse and inclusive workforce outperformed those in the fourth quartile by 36 percent in profitability. 

Continue reading to discover why diversity within businesses, paired with data analysis, is a winning combination to achieve better performance within your organisation.

What is data analytics in HR?

Human resources (HR) data analytics is the practice of using data to understand and improve HR processes, programmes, and outcomes. HR analytics can help organisations make data-driven decisions, measure the effectiveness of HR initiatives, and improve employee performance and engagement.

HR analytics, or sometimes known as people analytics, involves collecting, analysing, and interpreting data related to human resources. Data can come from a variety of sources, such as HR information systems, performance evaluations, employee surveys, and exit interviews.

The importance of data analytics in HR

HR data analytics can help organisations identify areas of improvement and opportunities for growth. For example, you might use analytics to identify skills gaps in the workforce, and determine the best ways to close those gaps through training and development initiatives. HR analytics can also help organisations improve retention by uncovering the factors that contribute to employee turnover.

And HR analytics can help organisations make more informed decisions about recruitment and talent management. By analysing data on recruitment sources and methods, organisations can determine which sources are most effective at attracting top talent. Analytics can even help organisations identify high-potential employees and develop succession plans to ensure continuity in key roles.

The importance and benefits of diversity in the workplace

Promoting diversity in the workplace is simply the right thing to do. In a world that is increasingly diverse and interconnected, it is important for organisations to create environments that are inclusive and welcoming to all employees. By promoting diversity in the workplace, organisations are taking a stand against discrimination and creating environments that are respectful to all.

Apart from the moral argument for it, diversity in the workplace has many benefits to an organisation and its employees:

1. Better decision making: A diverse workforce can bring a wide range of perspectives, experiences, and ideas to the table. This can lead to more creative problem-solving and innovation, as employees are able to approach challenges from different angles and offer unique solutions.
   
   “A diverse mix of voices leads to better discussions, decisions, and outcomes for everyone” - Sundar Pichai, CEO of Google 
   
   
2. Better connection with clients and customers: A diverse workforce can help organisations better understand and connect with a diverse customer base. As businesses become more global and interconnected, having employees with diverse backgrounds and experiences can help those organisations better understand more diverse customer bases.
   
   
3. Attracting and retaining top talent: Employees are increasingly looking for workplaces that are inclusive and welcoming to people from all backgrounds. A diverse workforce can signal to potential employees that the organisation values diversity and inclusivity.

Benefits of using HR Data Analytics to promote diversity and inclusion

Using HR data analytics to promote diversity in the workplace offers numerous benefits to organisations, such as: 

Improving the hiring process

Data analysis can help HR professionals to analyse candidates' resumes and job applications to identify the best fit for the job. It can help in shortlisting candidates more efficiently based on their skills, qualifications, experience, and other relevant factors. Using data analysis can also automate this process and save time, as opposed to a slower, more traditional, manual process. 

Predictive analytics can also help HR professionals forecast future hiring needs, identify potential candidates, and analyse their fit for the organisation. It can identify factors that lead to employee turnover, allowing organisations to take proactive measures to limit the effects of turnover.

Identification of bias in hiring, promotions, and performance evaluations

HR data analysis can play a critical role in identifying bias in hiring, promotions, and performance evaluations. By analysing quantitative data on factors, such as demographic representation, performance metrics, and candidate selection criteria, HR professionals can identify patterns and trends that may indicate the presence of bias. 

For instance, if employees from certain groups consistently receive lower performance ratings than others, this may suggest a bias is present in the decision-making process. By identifying these patterns, HR professionals can take steps to address bias. They can then ensure that their hiring, promotions, and performance evaluation processes are fair for all employees. This may involve implementing changes like removing identifying information from resumes or providing unconscious bias training for decision-makers. 

Increased employee engagement and satisfaction

HR data analytics can help organisations identify factors that contribute to job satisfaction and employee turnover. This information can be used to develop initiatives to improve retention and promote a more inclusive workplace culture. 

Enhanced decision making

HR professionals with data-driven insights can provide decision makers with the concrete evidence they need to be able to make more informed HR decisions. This can also be an effective way to communicate with stakeholders and other departments when proposing new initiatives. Data analysis can provide the supporting evidence needed to have new initiatives approved.

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Key metrics to track for diversity and inclusion with the workplace 

There are several key metrics that organisations can track to assess the effectiveness of their diversity and inclusion efforts. Here are some of the most important metrics:

1. Diversity representation: This metric measures the percentage of employees from different demographic groups within the workforce, including gender, race, ethnicity, age, and other factors. Tracking diversity representation can help organisations identify areas where underrepresented groups may need additional support or resources.
   
   
2. Turnover rates: Turnover rates can provide insight into whether certain demographic groups are leaving the organisation at higher rates than others. High turnover rates among underrepresented groups may indicate that additional efforts are needed to improve diversity and inclusion within the organisation.
   
   
3. Employee engagement: Employee engagement surveys can provide insight into how employees feel about their workplace, including factors such as job satisfaction, inclusion, and opportunities for growth and development. Tracking employee engagement can help organisations identify areas where they are excelling and areas where they may need to improve.
   
   
4. Promotion rates: Promotion rates can provide insight into whether members of certain demographic groups are being promoted at rates similar to those of other groups. Disparities in promotion rates can indicate the presence of bias in the promotion process and may require more efforts to improve diversity and inclusion.
   
   
5. Employee feedback and complaints: Employee feedback and complaints can provide valuable and in-depth insight into how employees feel and whether they feel that their concerns are being addressed.

Challenges of using data analysis in HR and ways to overcome them

Below are some common challenges HR departments may face when using data and best practices to overcome these challenges:

1. Data quality: HR data may be incomplete or inaccurate, making it difficult to draw accurate conclusions. To overcome this challenge, organisations can implement data governance processes to ensure that data is accurate, complete, and consistent across all departments.
   
   
2. Data privacy and security: HR data may contain sensitive information, such as employee salaries or personal information, that needs to be protected. To ensure that data privacy and security is maintained, organisations should implement appropriate security measures and comply with relevant regulations like GDPR regulations.
   
   
3. Limited resources: Many organisations may lack the resources or expertise needed to conduct in-depth data analysis. To overcome this challenge, organisations can consider partnering with external consultants or investing in training programmes to develop in-house data analysis capabilities.

Best practices for using data analytics in HR for diversity and inclusion

Using data analytics in HR is pivotal to getting a better understanding of your team. However, there are ways to use data analytics within HR to make the most of your data and its capabilities. 

Here are some best practices of using data analytics in HR:

Establish clear goals and metrics

Establishing clear goals in HR data analysis is crucial for several reasons. Firstly, it ensures focused and meaningful insights. Clear goals enable HR professionals to extract relevant information and make informed decisions. 

Secondly, it helps align HR strategies with organisational objectives. By setting specific goals, HR data analysis becomes a powerful tool for driving performance and achieving desired outcomes. Clear goals facilitate effective communication and collaboration within HR teams. They provide a shared understanding of what needs to be accomplished and promote cohesive efforts. 

Include diverse perspectives in the data analysis process

Including diverse perspectives in the data analysis process brings unique interpretations of the data, uncovering patterns and trends that might otherwise go unnoticed. This enriches the analysis and leads to more comprehensive and accurate findings. 

Secondly, diverse perspectives help mitigate biases that can inadvertently influence data analysis. By including individuals from different backgrounds, experiences, and viewpoints, organisations can challenge assumptions and ensure a more objective analysis. Incorporating diverse perspectives also fosters a sense of inclusivity and belonging amongst employees, leading to increased engagement and retention.

Regularly review and update diversity and inclusion initiatives

Societal norms and understanding of diversity and inclusion are constantly evolving. By regularly reviewing initiatives, organisations can ensure that their practices remain relevant, aligned with current best practices, and responsive to emerging issues and challenges. Secondly, employee demographics and needs change over time. Conducting regular assessments helps organisations identify emerging trends, allowing them to tailor their initiatives to meet the evolving needs of their workforce. 

How Google is using data analytics in HR to better promote diversity and inclusion

In their 2023 Diversity Report Google said: “Informed by rigorous analysis, we built our most representative workforce yet.”

Thanks to comprehensive data analysis, Google “doubled down” on initiatives that were proving successful in increasing diversity within their workforce. In 2022, they met their Racial Equity Commitment of increasing leadership representation of Black+, Latinx+, and Native American+ Googlers by 30%. 

Google developed a number of initiatives that have enabled them to diversify their workforce. For instance, in 2021 they trialled “The Collective” , an onboarding process specifically designed to support black employees and their managers. The initiative was launched across 8 countries with 93% of people taking part saying it was worth their time, giving them deeper connections in the workplace. 

Onboarding processes are a crucial part of the hiring process to retain new employees. And data analysis allows companies to identify areas of hiring processes that can be improved to promote diversity and inclusion within their teams. 

Looking to improve diversity and inclusion in your workplace using data analytics?

At Cambridge Spark, we upskill your team to harness the power of your data through government- funded apprenticeships. In fact, you can enrol yourself or your team in an HR-specific programme developed with a People Analytics Pathway, with content from the Chartered Institute of Personnel and Development (CIPD). Delve into the data surrounding your workforce and learn data analysis skills that allow you to enhance your organisation’s diversity in the workplace. 

Get in touch with us below to start your digital transformation.