For the first time in history founders can make talent decisions based on data analysis instead of “experience-based” decision-making, personal relationships and risk avoidance. This data-driven approach to managing people in a workplace is famously named as people analytics.
Like the rest of the corporate world, chief human resource officers (CHROs) and their teams are realising the need to focus on their analytics capability to better prepare for the data-driven world. Andrew Marritt CEO of OrganizationView puts it precisely: Modern HR leader needs to know not only what has happened, but what is likely to happen.
"CHROs have said that they feel [pressured] as the only ones not bringing data to the table. The business is expecting HR to have similar numbers to marketing, though maybe not finance or operations."
Human resource analytics is a matter of gaining advanced business results with insights from rapid measurement, analysis and reporting of a huge workforce-related data. It uses data analysis to improve HR functions, such as recruitment, retention, employee engagement, and performance management. Also, involves collecting and analyzing data related to employee behavior and productivity to make data-driven decisions and improve organizational outcomes.
The goal of this article is to offer an overview of people analytics, and how & when it is applied in different areas like recruiting, performance evaluation, workforce planning and engagement. This will enable HR specialists of all experience levels become fluent in the language of data & more at ease using data to shape daily decisions.
By the end of your read, you'll have a better understanding of how to position yourself as a strategic partner in your company's people management decisions.
Why you should you care about people analytics
Talent analytics explore hundreds of variables to spot unseen patterns of organisation's functions. Let us better understand the truth behind ‘Why People Analytics’ with one such example of the popular American information & market measurement firm, Neilsen.
According to a report by Deloitte, more than 70% of organisations are investing in talent analysis services to integrate this information into their decision-making.
Why? Data are based on facts, and as such, they can be used to construct an unequivocal and reliable argument. They take the place of opinions, judgements, and interpretations when it comes to making decisions. In a nutshell, they are a source of quality information.
Business environments are constantly changing, and decision making is a relentless undertaking. Organisations with an eye on the company goals have converted data into an essential tool. It has penetrated all areas: sales, marketing, management, and of course, HR.
Businesses that have integrated data into their decision making processes have improved their performance levels in many ways: increased productivity; reduced costs; improved customer satisfaction ratings; increased revenue generation; etcetera.
Case Study: How Neilsen used people analytics to solidify employee retention
One of Nielsen's businesses took the help of its people analytics team to figure out why it was losing talent. They found the hidden line strongly connected with attrition using 5 years of people data in a large spreadsheet.
The most important finding? Employees who had a job shift because of promotion (or lateral movement) are less likely to quit.
Because of this discovery, Nielsen's leaders decided to make it easier for employees to apply for internal roles in order to identify at-risk top performers and deliver opportunities in front of them, ahead of time.
“This was the furthest thing from an academic exercise. This directly impacted the business. Everybody feels retention. The data let us make solid recommendations that the company could take action on immediately.” - Chris Louie.
An article in Harvard Business Review (HBR) states that using analytics in HR makes human resources management more “deliberate and systematic,” which indeed makes an organization “more evidence-based, talent-centric, and meritocratic.”
Benefits of Using People Analytics
Not only can people analytics provide insights that help organisations improve productivity and performance, it also gives managers the information they need to make better informed decisions and supports efforts to improve employee experience and well-being. - David Green
1. Fosters a data-driven culture
A culture that recognises the value of data-driven insights and supports evidence-based decision-making is by far the most potent driver of success. High-performing organisations have the following characteristics as compared to low-performing businesses:
- HR data and analytics are 2.6x more likely to be seen as basic assets that provide a competitive advantage.
- 2.1x more likely to stress the significance of data-driven decisions
2. Magnifies focus on the organisational future
What could happen is just as crucial as what has happened when it comes to turning data into action. That's why future-focused practises and methods like workforce planning are such effective drivers of organisational readiness and resilience.
- High-performing firms are 6.6x more likely to employ data-driven scenario modelling than low-performing organisations
- 3x more likely to see workforce planning as an ongoing process
3. Builds trust and transparency between employers and employees
Effective data management (e.g., accuracy, transparency, security, legal, and regulatory compliance) is critical to the success of people analytics. High-performing firms go a step farther by focusing on ethics and what they should do rather than what they can do.
- High-performing firms are 1.6 times more likely than low-performing organisations to communicate with employees regarding the acquisition and use of their personal data.
- 3.5x more likely to share the insights and value they've gained from their data
4. Assists in promoting DEI in the workplace
People analytics can be used to support organizations' efforts to promote diversity, equity, and inclusion (DEI). By analyzing data related to hiring, promotions, pay, and employee experiences, organizations can identify potential biases and areas for improvement. For example, people analytics can be used to analyze the diversity of applicant pools and hiring outcomes, identify pay gaps between different groups, and monitor employee engagement and satisfaction levels. This information can then be used to inform DEI strategies and initiatives that promote fairness, equity, and inclusivity in the workplace. Ultimately, people analytics can help organizations to create more diverse, equitable, and inclusive workplaces, which can lead to better business outcomes and improved employee well-being.
5 Ways to Use HR Analytics in the Workplace
Advanced HR metrics and analytics trained on thousands of historical data spot facts that humans miss: Leaders may not be able to notice unsupportive management, talent gaps, inadequate hiring and onboarding or other HR challenges. A more data-driven approach makes it easier to measure the effect of key functions, leading HR to win executive support needed from the C-suite for organisational success.
One may employ HR data analytics to find hidden qualities linked to successful hires. And then use rigorous methods to screen new applicants for those qualities. This way, the hiring process is more streamlined, diversified and speedier with a higher chance of success.
1. Applicant source: Track where your best candidates come from to, for instance, use your recruitment marketing budget more intelligently.
2. Quality of hire: Analyse candidate qualities (personality, talents, and expertise) that make up a fantastic hire for a certain role at your organisation.
3. Time-to-hire and cost-per-hire: Calculate the money and time saved by using automated people analytics instead of manual hiring methods to prove your ROI.
4. Employer branding: Measure what attracts and resonates with today’s job seekers.
5. Workforce diversity: Analyse demographic groups to measure and increase workplace diversity.
6. Shortlisting candidates: Use talent analytics to find the most qualified individuals for the interview stage.
2. Performance Management
Workforce analytics help firms in spotting ingredients that contribute to overall performance. Predictive analytics is used to discover traits/patterns that account for poor or high performance on both individual and team level.
1. Performance gaps: Leaders use this HR data and analytics to improve their talent development efforts, and address individual performance gaps.
2. Succession planning: Using people analytics for appraisal and performance evaluation also means that HR can use the same data to anticipate promotions, transfers, altogether succession planning beforehand.
3. Real-time feedback: Real-time evaluations, unlike annual performance review, estimate performance more extensively and help recognise red flags to predict which employees come under the flight risk category.
4. Biased-free feedback: Since people analytics is entirely data-backed, appraisals and feedbacks will be free from personal biases and human errors.
3. Retention & Turnover
Agile HR analytics combine data from across hundreds of employee variables that go beyond spotting trends in why employees leave and who is the most likely to quit. HR can fight turnover with a razor-sharp focus on the issues at hand, armed with personnel data, much needed for retention success.
1. Finding out the ‘what’ behind the drivers of resignations: After using the resignation rate as a starting point, conduct an analysis using a clustering method to determine what factors influence resignations.
2. Finding out the ‘who’ behind drivers of resignations: This form of predictive analytics identifies which employees are on the verge of quitting before they submit their resignation letter.
3. Understanding the correlations of resignation: Find out how things like compensation ratio, promotion wait time, salary increases, tenure and training chances affect resignations. You can offer employees the information or compensation they're looking for before they resign and once you've identified these links.
4. Determining who is in a position to be saved: Implementing a one-size-fits-all retention programme is the antithesis of strategic HR. Not all turnover is undesirable, especially when it occurs among low performers in non-critical roles, but large turnover rates may be prevented.
4. Employee engagement
Engagement data won from people analytics transforms figures and reports into insights, and removes the guesswork from determining employee engagement. For example, managers may believe that their values are representative of or even understood by their employees, but a simple report from their recognition system may reveal that the employees' values do not align.
Passive data collection, which discovers trends and actionable insights by monitoring how employees interact via communication systems like Slack, Teams, or Kudos, is one way to measure employee engagement with people analytics.
5. Workforce Planning
Workforce management analytics refers to the process of using data to determine if you have the proper number of people with the right skills in each functional area. Forecasts on workforce planning helps assess turnover and market conditions to identify and predict the ideal moments to ramp up or cut down on recruitment or other areas.
People analytics software is a powerful tool for monitoring, measuring, and analysing employee data in order to enhance business outcomes and launch new projects.
4 steps to getting started with people analytics
1. Instil a data-first mindset in your employees
Changing your business culture is the first step toward creating a data-driven organisation, one that relies on analytics area. Data-driven thinking must be acknowledged and appreciated in your company culture, and this transformation must come from the upper management roles.
2. Define the most vital aspects of the business to focus on
It's critical to analyse which areas to focus on when bringing analytics to the HR function. Using an analytical strategy to handle critical business concerns will yield better results than trying to apply analytics across the board. For instance, if the final goal is to improve employee retention, metrics like employee satisfaction, turnover, and resignation rates etc., must be measured.
3. Invest in a people analytics team
Top HR analytics give global assistance, not just technical analysis. It requires the support of the CHRO, senior executives, technical team and a strong business-focused leader. Even if the responsibility spreads over time, the earliest phases of an analytics project should be owned by a single team and leader.
4. Identify your future requirements
Where does your company stand on the scale of people analytics? In a year, three years, and five years, where does it want to be?
Understanding your future requirements for people analytics is the fourth step that will impact your short long-term data needs. It comprises determining the analytics required to achieve your people analytics vision from the standpoint of your company today, as well as the business concerns and optimization opportunities identified in the second step.
In the end, these future requirements will result in actionable, relevant insights that will provide executives a measurable business impact and more confidence in their decision-making. It's vital for a business to establish visionary use cases as part of the requirements gathering phase if it wants to keep moving up the people analytics maturity curve.
5. Make accurate use of the data provided.
Why do you organizations need to make use of data? Models and algorithms can be applied to relevant data once it has been collected to produce reports, graphs, and other visual representations of insights.
Thus, interpreting data accurately in people analytics is essential because it forms the basis for making informed decisions that impact an organization and its employees. If the data is misinterpreted, decisions can be made based on incorrect assumptions or biased perspectives, which can lead to ineffective or even harmful outcomes.
For example, if an organization relies on people analytics to determine pay raises, but the data used to make the decision is flawed, the result could be unfair and demotivating for employees. Similarly, if recruitment data is misinterpreted, it can lead to biases in the hiring process, resulting in a less diverse and less qualified workforce.
Interpreting data accurately requires a strong understanding of statistical methods, an awareness of potential biases, and a willingness to question assumptions and seek out alternative explanations. By investing in accurate data interpretation, organizations can make better decisions that benefit both the business and its employees. Employee feedback is vital for this. Conduct regular checks to ensure that the changes remain consistent and new errors or risks don’t crop up. This will also help you identify if additional amendments are required.
How to choose the right people analytics software?
1. Find your North Star
North Star means your firm's ultimate goal of using People Analytics.
It could be retention, the ability to gain insights on keeping the top performers on board.
It could be engage, the ability to understand how the rest of the workforce feels about the firm, and to assist the CEO in making a decision that improves employee well-being.
It could be planning, the ability to assist recruiters in better forecasting and filling tomorrow's talent demands.
Whatever the use case, people analytics’ business-centred North Star gives you the clarity you need to look beyond HR solutions and promises to your organization's needs.
2. Assess your pain points
This step includes recognising present HR priorities, pain points and possibilities for durable insights that align with your business strategy. Examine your people analytics needs with these five areas:
- Strategy: Your analytics vision, value drivers, required use cases, etc.
- Data: Your data sources, quality, ethics, and compliance concerns
- Technology: Your tech architecture, security, dependability etc.
- Process: Your agility, scalability, and governance
- People: Your organizational design, leadership, talent management, and knowledge management
3. Make a shortlist of vendors
You're ready to start examining your possibilities in depth once you've defined your needs and made a list of specific requirements. The next stage is to compile a shortlist of vendors and look out for features that align with your needs.
The "right" people analytics tool will be determined by your requirements. If you want to gather the data to boost engagement, for example, you'll need a people analytics software that measures important engagement drivers. Or if you want to use people analytics to overhaul your hiring procedures, you'll need to adopt a people analytics platform that collects data throughout the recruitment process and helps you to determine where and how you can improve.
4. Attend demo sessions
After your selection team whittles down a list of potential software vendors, look out for demo sessions that will give you a personal walk-through the application. Attending demos is important in choosing a people analytics solution because it allows you to see the product in action and get a feel for how it works. Demos provide an opportunity to ask questions and get clarification on features and capabilities. By attending demos, you can also compare different people analytics solutions and evaluate which one best meets your specific needs and requirements.
When it comes to talent decisions, the best HR analytics integrates the platform, practises and people to unearth real-time insights that leaders may come to know, not just guess.
peopleHum’s HR analytics software allows organisations to discover solutions they can act on right away, deploy, and track over time for sustained success. Work with your existing data to know the key causes behind your setbacks. Monitor, analyse, and collet organisational data in an intelligent and sophisticated manner.