HR Analytics and Reporting

To make tactical human resource (HR) decisions that positively shape your company, make Big Data your friend. Workforce analytics — which apply statistical models to worker-related information — give companies of all types the ability to derive insight from selected HR parameters. Big-picture planning can arise from qualitative and quantitative study of factors such as hours worked, employee status (full-time vs. part-time), employee engagement, level of performance, absenteeism, overtime, rate of turnover, and efficacy of new-hire orientation.

To get a feel for the extent to which U.S. businesses use workforce analytics, we conducted a nationwide survey in September 2016. It polled 596 HR leaders in a wide range of industries; from firms with just a few employees to very large companies with workforces exceeding 1,000. Respondents were HR managers, HR supervisors, HR directors, vice presidents of HR, or chief HR officers. The results they provided are provocative.

Bigger companies more likely to use analytics

Not surprisingly, the bigger the company, the more likely its leaders are to use HR analytics. Overall, the survey found that 72 percent of respondents use analytics to drive business decisions vs. 28 percent that said they do not. But in companies with fewer than 500 employees, 66 percent use them and 33 percent don't. For companies with 500+ employees, 79 percent rely on analytics and 21 percent do not.

The survey found that the primary reasons HR leaders crunch their data are to learn about:

• Employee status (full-time vs. part-time);
• Hours worked;
• Top talent;
• Low performers; and
• Employee engagement.

Of those who use company HR statistics, 66 percent say they use them to make more informed business decisions, 23 percent to justify HR decisions to top executives, and 10 percent to help them communicate more effectively with employees.

Data source, type vary

Companies that were surveyed obtain their HR data in a number of ways. Half report using a software platform that generates statistics. Twenty-eight percent say they manually create their data through Microsoft Excel or another program. A few respondents — 14 percent — said their company has a proprietary system that yields HR analytics. And eight percent indicated they have a vendor dedicated to providing data analysis.

But not all data are comparable. Some figures are descriptive, presenting raw numbers in summarized form. Prescriptive data provide intelligent recommendations for actions. Predictive data forecast what may happen in the future. Interestingly, survey respondents ranked descriptive data as the most important to meeting business goals. Thirty-nine percent put top value on prescriptive data, while just 15 percent considered predictive data most valuable.

Benefits of data analytics in HR

All survey respondents said they found value in analyzing HR statistics: knowledge without bias. Here's a sample of responses to the question, "What do you see as the biggest benefit of using data analytics in your role?":

• "It helps me make informed decisions in an ever-changing marketplace"
• "It makes analyzing employee trends less difficult"
• "Provides an overview of the bigger picture that's sometimes difficult to see"
• "It allows me to foresee labor needs based on factual trends"
• "Reliable information to determine actionable strategies"
• "It helps me to pinpoint problem areas and address them before they get out of hand"
• "Prove to the executives that our decisions are founded by data"
• "Understanding the direction we are moving in and seeing where we can improve"

Hard facts help HR leaders zero in on specifics. At the same time, they gain a big-picture view from which to base long-term workforce strategies.

If your company doesn't yet use HR analytics, the survey results show that it's worth considering. Analytics can guide strategic personnel decisions, give your firm an edge over the competition, and solve staffing dilemmas. In short, analytics can elevate HR's contribution to the success of the business.

HR data analytics can provide human resources departments with better data collection, reporting, and the information needed to make data-driven business decisions. Whether a business unit manager needs the latest information on time and attendance to streamline their scheduling process, or a quick payroll audit by the HR manager to address a problem, analytics help make data accessible to business leaders. Here's a closer look at how some businesses are using HR analytics to help improve the way they run their businesses.

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Recruiting Analytics

Hiring the best people for open positions is critical. When the candidate isn’t right for the position, turnover can happen, and filling open positions can become expensive and time consuming. With recruiting analytics, it's easy to see where your best candidates are coming from and which profiles tend to succeed more often over the long term. In addition, analytics may provide a helpful framework for understanding how your recruiting process is working and where there might be room for improvement. For example, if analytics show delays in candidate communication or long review times at the hiring manager level, this can provide actionable insights for making process improvements.

Time and Attendance Analytics

Whether your team works remotely from client sites, or you need to closely manage time and attendance to comply with overtime requirements, it's important to have the right tools to easily analyze work schedules. With time and attendance analytics, companies can determine patterns in their scheduling, strategically manage the scheduling process to stay in compliance with company and regulatory processes, and even identify patterns of absenteeism that could signal trouble at the individual or department level.

Benefits and Other Services

HR data analytics can also streamline the management of benefits and other services within human resources. Consider the reporting that is needed during open enrollment. With an analytics-driven reporting system, it is easy to see who is enrolled and where decisions are pending. Analytics can also help HR managers understand which benefits are being utilized and are seen as valuable by the workforce, and which ones are underleveraged. HR analytics related to benefits can also help companies gather the information needed for compliance reporting with ease.

Connecting Analytics to Business Decisions

Increasingly, companies are relying on data to make decisions about how they operate their business. For example, HR analytics can help identify areas of exposure to risk and help companies pinpoint areas of improvement, from recruiting to benefits administration. At a higher level, investing in the right technology may make it easier to take a deeper dive into the company's data and tie it back to critical decisions that managers make about staffing, compensation and benefits, scheduling, and more. In addition, stronger analytics can help HR more accurately determine what aspects of their processes are working well and where improvements could be made.

Ultimately, as today's business landscape becomes data-driven, it's important that HR adapts. HR analytics help ensure that your HR department will have the necessary workforce information on hand to be a trusted partner to business leadership, as well as to help answer any data-driven reporting needs that arise as part of larger discussions.

The end of the COVID-19 national emergency will affect COBRA extensions beginning July 11, 2023, and employers who were required to subsidize 100 percent of COBRA continuation coverage under the American Rescue Plan Act (ARPA) might be eligible for a tax credit.

In March 2021, ARPA extended the subsidy from April 1 to Sept. 30, 2021. Generally, businesses with 20-plus employees subject to federal COBRA or those who sponsor self-funded group health plans were required to subsidize the health insurance for individuals who lost their employer-sponsored health insurance due to involuntary job loss or reduced hours.

Health insurance carriers also were charged with subsidizing coverage for participants who are covered under state continuation rules (generally, fewer than 20 employees).

Note: There currently is no state continuation in Alabama, Alaska, Hawaii, Idaho, Indiana, Michigan, Montana, and Nevada. 

With the requirement to subsidize the health insurance, those same businesses and health insurance carriers also could be eligible to get reimbursed through a payroll credit.

Businesses have three years from the tax filing deadline to file an amended return. Per the IRS, Forms 941 for a calendar year are considered filed on April 15 of the succeeding year if filed before that date. So, for calendar year 2021, forms 941 are considered filed on April 15, 2022. That would allow for 941-X returns to be filed until April 15, 2025.

• Employers may not claim the COBRA tax credit on the same allocable healthcare costs as the Families First Coronavirus Response Act (FFCRA) paid leave credits or Employee Retention Tax Credit. Additionally, premiums claimed through the COBRA tax credit may not be included in Paycheck Protection Program (PPP) loan forgiveness.

FAQ guidance on the COBRA subsidy (FAQ begins on page 6) and related tax credit addresses additional questions.

Other Clarifications Related to the COBRA Subsidy

Among the additional clarifications for employers:

• Federal COBRA requirements apply if the employer was subject to federal COBRA at the time of the qualifying event.
• If an employer agreed to pay for COBRA continuation coverage as part of a severance package, the amount agreed upon is not eligible for premium assistance.
• Employers may have required individuals to self-certify they were eligible due to involuntary termination or reduced hours, and that they were not eligible for other group health coverage or Medicare.

The impact to employers relates to recordkeeping, and employers who plan to file for the tax credit should have employee self-certifications, attestation or other record of assistance eligibility saved in their records.

Doing a Lookback on Subsidized COBRA Eligibility?

Employers can only take the tax credit for the COBRA Subsidy on an “Assistance Eligible Individual” (AEI), defined as an individual who qualifies for COBRA due to involuntary termination (other than gross misconduct) or reduction in hours that resulted in a loss of employer-sponsored health insurance. The AEI could only receive subsidized COBRA by actively electing coverage.

Employers needed to determine which participants fell under involuntary termination or reduction in hours.

An employer would not be eligible to claim the tax credit for any individuals who fit under voluntary termination. For example, if an individual ended employment because their child was unable to attend school due to the COVID-19 pandemic, the termination is considered voluntary. An employer who chose to fund such an individual’s continuation coverage could not claim the credit.

There are other instances where an individual could be considered an AEI, so employers needed to base their determination on the available guidance.

COBRA Subsidy Impact on ESR Affordability

If an employer reduced an employee’s hours, the employee might no longer have met a health plan’s eligibility requirements. Loss of employer-sponsored coverage due to reduced hours would then have been a COBRA qualifying event that could have made a part-time employee an AEI.

In general, Applicable Large Employers (ALEs) are employers with an average of at least 50 full-time employees, including full-time equivalents, during the prior calendar year. When an ALE reduces to part-time the hours of an employee who is considered full-time under an ESR look-back period, the ALE would have been at risk of an ESR assessment if it didn’t offer the employee affordable and adequate health insurance coverage and the employee received a premium tax credit (PTC).

With the full COBRA subsidy, an ALE’s offer of COBRA coverage would have been affordable for ESR purposes since the employee didn’t contribute toward the premium. However, the COBRA coverage would not likely have been affordable when the subsidy expired as the employee paid the entire premium. Consequently, those individuals might have put the employer at risk for an assessment if they obtained a PTC to purchase coverage on a government marketplace.

Paychex Can Help

You might have additional questions about eligibility or have concerns about taking time away from running your business to do the due diligence required when filing amended tax returns. The interplay of various programs (PPP, ERTC, etc.) is complex. Consider how our tax services could save you time by helping to alleviate extra work.