Trend Analysis: What is it Used for in HR?

Lizzie Buxton

Written By Lizzie Buxton

23rd June 2023

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The modern HR department needs to be able to use data to help businesses get the most out of their employees and work in the most efficient way possible. By analysing data, businesses can see where they are headed without needing a crystal ball. Trend analysis can help businesses avoid nasty surprises in the future and ensure that they are prepared to change course or maximise opportunities.

In this guide, we look at trend analysis and how HR leaders use this.

What is trend analysis?

Trend analysis is the process of examining past data to predict future demands. By collecting and evaluating data, patterns can be identified that may affect future needs. However, trend analysis is not as simple as saying “this is what happened before, so we’ll plan the future accordingly.” Things change, as do organisations and the market they operate within. Therefore, a trend analysis must reflect these changes.

In HR, trend analysis involves spotting trends among the people in an organization. This could include things like employee turnover rates, skill levels, or demographics. By understanding these trends, HR can better predict future staffing needs and make informed decisions about hiring, training, and development.

Trend analysis components

The trend analysis process often covers certain areas:

  • Workforce trends: This is the “raw material” gathered by HR professionals. It includes data on job classifications, education, skills, gender, age, turnover rates, and more.
  • Supply: This involves assessing the organisation’s labour supply based on workforce demographics. Is there a ready supply of staffing available to the organisation now and in the future?
  • Demand: This involves analysing demand in the market and whether the organisation’s staffing can meet it. Can the current staff accommodate future workloads?
  • Gap: This is where supply and demand are compared. It identifies whether existing staff skills and abilities will be able to meet future needs. A change of direction by the organisation, or technology advances, may require the recruiting of staff with particular skills or retraining certain members of the present workforce. The identified gap could also work the other way in that future staffing may be reduced due to changing demands and tech advances.
  • Solution: This is where strategies are developed for addressing the findings of the above. This may involve recruiting, training, or redeploying staff. It may also involve outsourcing or automating certain tasks.

HR will strategically address whether staffing demands will increase or decrease going forward, or if certain skillsets will be required. This could involve recruitment, retraining, or a combination of both.

The past is an indicator, but other factors play a significant role in trend analysis. These could include:

  • Company growth: What growth has the organisation experienced in recent years? Is it constant year-on-year, and is it likely to continue at the same rate? If not, what are the factors that could affect future growth?
  • Business trends: Is the market expanding or contracting? Are there any new trends emerging that could affect the organisation’s business? Are there any specific skills that are becoming more or less in demand?
  • Labour intensity: Are current tasks becoming more or less labour-intensive? If they are becoming less labour-intensive, could this lead to job losses? If so, how can the organisation mitigate the impact of this?
  • Natural staff attrition: How many employees leave the organisation each year? Is this rate constant, or does it fluctuate? Are there any factors that could lead to an increase in staff attrition in the future?

The above are certain factors based on carefully gathered metrics. For example, staff attrition may follow a discernible pattern, such as higher numbers of skilled employees leaving at a certain point in time. This can lead to a regular need to find new, highly skilled staff. HR can flag this exodus of key talent to management, who can then investigate the reasons for it and develop solutions.

Data-driven HR data

In general, trend analysis as used in HR is based on hard data – it’s a qualitative process as opposed to a quantitative one.

What’s the difference?

Qualitative – Uses a more subjective approach based on the evidence gathered , usually by way of interviews and the like more than figures.

Quantitative – Based purely on data so removes much of the subjectivity from the process.

Trend analysis focuses on hard facts and removes the possibility of subjective or “vested interest” remedies. For example, management might overestimate labour needs in order to meet targets, which could jeopardise profitability.

trend analysis in HR

Key HR trends to consider:

When it comes to HR, trend analysis involves using data to try to answer some key questions. These include:

  1. What is the absence rate of each team in my organisation?  
  2. What are the most common causes of absence? 
  3. What is the level of training of each line manager?
  4. What is the workload capacity for each team member?

The following are some specific examples of how trend analysis can be used in HR:

  • To identify areas where employee turnover is high and take steps to address the issue
  • To determine which training programs are most effective in improving employee skills and performance
  • To forecast future staffing needs and make strategic hiring decisions
  • To identify potential risks to employee health and safety and develop preventive measures.

By using trend analysis, HR professionals can gain a deeper understanding of their workforce and make more informed decisions that benefit the organisation as a whole. Tracking these questions over time provides valuable insights that can be used throughout the business.

Click here to see how much is absence costing your business.

HR trend analysis and employee relations analytics

HR trend analysis and employee relations analytics can be linked together in a number of ways. For example, HR trend analysis can be used to identify potential employee relations issues.If HR trend analysis shows that employee turnover is increasing in a particular department, this could be a sign that there is a problem with employee relations in that department. Employee relations analytics can then be used to investigate the issue and identify the root cause.

Once the root cause of an employee relations issue has been identified, HR trend analysis can be used to track the effectiveness of the interventions that have been put in place to address the issue. For example, if an organisation has implemented a new training program for managers in order to prevent discrimination and harassment, HR trend analysis can be used to track the number of discrimination and harassment complaints that are filed after the training program has been implemented.

Overall, HR trend analysis and employee relations analytics can be a powerful tool for improving employee relations. By collecting, analysing, and interpreting data related to HR trends and employee relations issues, organisations can identify potential problems, track the effectiveness of interventions, and identify best practices.

Read the People Analytics Series to learn more:

  1. Colleague spotlight: meet Nina Ryan, Insight Analyst at AdviserPlus
  2. People analytics: Revolutionising HR with data-driven insights
  3. ER data insights: Reveal the root cause of issues affecting ED&I
  4. Is employee relations data the window to organisational health?

The past doesn’t dictate the future

As discussed above, comprehensive trend analysis does not use the past as the sole basis for future planning. For example, even if a company is growing at a certain rate and is likely to continue to do so, advances in technology may be reducing the need for commensurate levels of staffing. This is because technology can automate tasks that were previously done by humans, freeing up employees to focus on more strategic or creative work.

A good example of this is customer service. In the past, companies needed to hire large numbers of customer service representatives to handle calls and inquiries from customers. However, with the rise of chatbot technology, companies can now automate many of these tasks, reducing the need for human customer service representatives.

A forward-thinking organisation will need forward-thinking HR. This means using trend analysis to identify and plan for future changes in the workforce. By understanding how technology is changing the way work is done, HR can help organisations make informed decisions about staffing, training, and development.

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