Trend Analysis: What is it Used for in HR?

The modern HR department needs to be able to deploy data so a business can get the most from its individuals and work in the most efficient way possible. Through data, businesses can ensure they don’t need a crystal ball to be able to see where they’re heading. Trend analysis should ensure that the future doesn’t hold nasty surprises – and that a plan could be put in place to change course or maximise an opportunity.

In this guide, we look at trend analysis and how HRs use this…

What is trend analysis?

It’s 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, so a trend analysis has to reflect this.

Since, as the name suggests, human resources departments are focused on people, in HR this means spotting trends among the people in an organisation.

Trend analysis components

The process often covers certain areas:

Workforce trends – the ‘raw material’ gathered by HR professionals; this data covers areas such as job classifications, education, skills, gender, age, turnover rates and more.

Supply – 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 – analysis of demand in the market and whether the organisation’s staffing can meet them, and if the current staff can accommodate future workloads.

Gap – going hand in hand with ‘supply’ above, gap analysis 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 work the other way in that future staffing may be reduced due to changing demands and tech advances.

Whether staffing demands will increase or decrease going forward – or if certain skillsets will be required – will be addressed strategically by HR. This could be in the form of 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? Is this constant year on year and is it likely to be repeated going forward? If so, will it be at the same rate?
• Business trends – is the market expanding? Are specific skills going to be more in demand? Will new skills be required?
• Labour intensive – are current tasks becoming less labour intensive? If so, will this trend continue? This could naturally have a bearing on staff levels
• Natural staff attrition – looking ahead, are current staff likely to leave? For example, are certain staff members approaching retirement? Is there a ‘natural attrition rate’ based on numbers of people who leave the organisation over a given period?

The above are certain factors based on carefully gathered metrics; for example, staff attrition may follow a certain discernible pattern.

Perhaps higher numbers of skilled people tend to leave at a certain point so causing a need to find highly skilled staff on a regular basis. This exodus of key talent in itself is something that HR can flag up, help management determine why it’s happening, and maybe devise a solution.

Data driven

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 – based purely on data so removes much of the subjectivity from the process. Quantitative – uses a more subjective approach based on the evidence gathered – usually by way of interviews and the like more than figures.

Trend analysis keeps the focus on hard facts and removes the possibility of subjective or ‘vested interest’ remedies. For instance, management might overestimate labour needs in the pursuit of hitting targets so risking profitability.

Trends analysis for HR: Key things to consider

So, when it comes to HR, trends analysis involves using data to try to answer some key questions.

These include:

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

These sorts of questions – and tracking them over time – gives valuable insight to be used throughout the business.

The past doesn’t dictate the future

As discussed above, comprehensive trend analysis doesn’t use the past as the sole arbiter for future planning.

A basic example is the march of technology: even if the organisation is growing at a certain rate and is likely to continue to do so, it may be that advances in technology are reducing the need for commensurate levels of staffing. Therefore, company growth may not automatically signal a need for increased staffing levels as it may have previously.

A good example is customer service; the advances in chatbot tech means recruitment of customer service personnel is potentially reduced even if a company is growing. A trend analysis would take account of this.