Every HR department is sitting on a goldmine of information with their workers, from compensation numbers to recruiting data, performance measurements and more. With the right HR system, collecting and storing this data has never been easier—even for the smallest of businesses.

And yet, it's not enough. In order to optimize your workforce effectively, you need to take the next step to understand what all of this data means and how it can help you make better business decisions. It's a monumental task, and one that spreadsheets and elbow grease simply can't handle alone.

Which is why if you're sitting on a mountain of employee data, but have no idea how to interpret it properly, you should consider investing in HR analytics software. These platforms are designed to help HR practitioners make sense of their disparate workforce metrics and turn that information into action.

If you've never researched HR analytics software before, we're here to help. In this Buyer's Guide, we'll go over everything you need to know about HR analytics software to help you find the right system for your needs and budget.

Here's what we'll cover:

What Is HR Analytics Software?

Common HR Analytics Software Features

Benefits of HR Analytics Software

Key Considerations When Purchasing HR Analytics Software

What Is HR Analytics Software?

HR analytics software is a type of business intelligence (BI) software designed to help HR departments uncover important insights in their data and make better, data-driven decisions with their workforce.

These are powerful tools that can aggregate massive amounts of data from your disparate systems (e.g., payroll software, performance management software, an LMS, financial reporting software etc.), process it and analyze it for meaningful trends. These trends can then be visualized using easily interpretable charts and graphs and shared with stakeholders.

If you're an HR manager struggling to understand how much employee training is impacting revenue, why turnover is higher than usual or what applicant qualities best predict future top performers, HR analytics software can help.

Employee turnover dashboard in

Common HR Analytics Software Features

HR analytics software products share a ton of functionality in common. Here is a list of features you should expect to find in most systems:

Because HR analytics software products tend to have similar functions, vendors will often differentiate themselves in other ways such as cost, customer support or their user interface.

Benefits of HR Analytics Software

One of the most significant benefits of HR analytics software is that you get access to advanced business intelligence functionality without needing the knowledge and expertise of a data scientist. HR analytics software has become incredibly user-friendly in recent years to allow HR practitioners to slice and dice their data as needed. Many systems are cloud-based, so you don't even need your own server.

Here are a few other benefits this type of software offers:

• Cross-functional data analysis. It's become pretty common for core HR software to have functionality for analytics already. The problem though is these systems are rarely able to incorporate data from other non-HR platforms. HR analytics software can though, allowing you to see how workforce trends are impacting things like sales and revenue.

• No more tedious double-entry. Updating numbers manually in an HRIS or other system is painful enough. Having to update them again in an analysis tool, like a spreadsheet, just adds insult to injury. With HR analytics software, any integrated data sources that get updated will automatically update the data in the analytics too.

• Company-wide applications. Though there are some systems that only focus on HR (e.g., Visier), there are also a ton of products that can be used for other purposes too, such as sales, marketing, distribution or financing. If executives are bullish on spending money for a one department tool, there are systems that cater to all kinds of company data.

• Better workforce decisions. This is the most significant benefit of all. Any edge you can get in hiring great talent and keeping them happy, motivated and productive is worth the effort. HR analytics software can help you uncover meaningful trends you wouldn't have noticed otherwise to improve your workforce.

Key Considerations When Purchasing HR Analytics Software

When confronted with so many options, it can be tempting to simply find the HR analytics software system with the best reviews within your budget and sign a contract. Do that though, and you're likely to end up with a system that doesn't live up to expectations.

As you start researching options and talking to vendors, here are a few key things to keep in mind:

• Is the system agile enough to adjust with your workforce strategy? At the drop of a hat, businesses can go from prioritizing upskilling current workers to cost optimization. Talk to vendors to make sure that any data models are flexible enough to adjust or reuse when you change course.

• Will the system play nice with your current software stack? HR analytics software relies on data from existing systems to fully function. If your current software can't integrate properly or corrupts data as it's being transferred, that will make your new purchase worthless. Ask vendors if they have any preferred software partners.

• What support options do they offer? I mentioned support earlier as a critical differentiator for a reason. Besides asking about phone or email support (preferably both are local and available 24/7), also ask vendors if they'll handle implementation and data migration for you. This can be especially beneficial if you're lacking in dedicated IT personnel or resources.