What is People Analytics?

Updated on June 10th, 2021
What is People Analytics?

The uncertainty that businesses had to face in 2020 is no news to us. It was the biggest challenge of the year. Despite making life miserable for us, COVID has taught us that we can't predict what's about to happen and that we must stay strong even when there is less hope.

Moving into 2021, each organization knows people are their most important asset, and they need careful consideration for it to grow.

As they try their hardest to come out of this situation, they look for a strategic solution for improved actions and decision-making. 

The Deloitte 2020 study found that 52% of surveyed companies plan to invest in tools for people-data collection and analysis within the next 12 months. 

People analytics is a data-driven technique that will help them make more informed decisions about their workforce, which is an integral part of any company's success (and failure).

What is People Analytics?

People analytics is the study of statistics and data about people to make better business decisions. It could mean understanding how a company culture contributes to driving organizational success.

The key to people analytics is data.

Every company wants to have the best employees possible, but what differentiates a good employee from an excellent one? To answer this question, we need hard evidence of how well they are doing their job and understanding where these employees fit within the context of their organization as a whole. 

This information can be found in the form of data, which many companies use for measuring success - with so many metrics available, it's hard to know which will contribute most significantly towards organizational goals (and there has been much heated debate about whether any single metric should justifiably dominate). 

In order to make better decisions when hiring and managing staff members that will enable growth, many organizations are turning to closer analysis into all of their departments. Employee experience, before anything else, is the differentiating factor in retaining them.

People analytics or HR analytics helps companies understand their performance across various metrics, including working hours per week; the number of days missed due to illness or disability; how many promotions an individual has received in a given time frame; and, transfer rates.

How to Get Started with People Analytics?

Now that we know a bit about people analytics, let's move to the part where we'll know how to get started with it. The first few days into a data-driven approach may feel overwhelming to the core; however, persistence is key that should help you tap into organizational success mode.

Sophisticated data science is the phenomenon in charge; it provides you with actionable insights to understand your company's objectives and how they align with individual performances. Discover and bare knowledge against talent management in a way the quality of work remains top-notch.

You want data as a business driver, but not just any old type of data! You need relevant data that can be used for determining what is going on in your organization.

1) Are You Ready or Not as an Organization?

The first step to consider before diving into people analytics is whether or not your enterprise is ready for this change. If you're already feeling overwhelmed, don't even think about starting this journey.

If your business is not ready for data-driven insights, it will be difficult to make the most of people analytics. The good news is that there are several different ways to use analytics without completely sinking into the deep end with complex tools and complicated processes.

Whether or not people analytics is for you, you should try considering what stage your organization currently occupies on an organizational maturity scale.

A cross-functional team can help assess where your enterprise stands and how they might align their objectives as new goals emerge from early stages to optimize performance at each level of maturity. 

In contrast, if you feel like everything's more than a little "too much" and not really sure where you should start, it might be time to call in a people analytics team - evidence-based data handlers, big data specialists, legal experts - and use their expertise to break the ice.

On the whole, analytics is more about change management and less about tools, technology, or statistics. 

2) Look for People Who Know the Value of Data

The next step is to look for people within your organization who want to see better business outcomes. 

It means you need to find people who love data, as they are the ones most likely to be able to take on these new responsibilities. 

Leverage their drive and passion for analytics by working with them in a cross-functional team that can assess where your enterprise stands in terms of its performance management. The new role of an HR department and HR professionals, in general, is to become data-driven and find relief in quantifiable information. It is the job design that has to change to produce employee productivity.

Like-minded people willing to take the plunge could be in other departments, managers, supervisors, C-suite, or board members.

It could be a game-changer in executing HR functions. The HR function that works on the hiring front could use insights to figure which areas to focus on in new hires. For example, does the organization need academically strong candidates from reputable institutes or not? 

3) Focus Your Attention on Questions

What kind of questions are we talking about? The kind that aligns with your business goals head-on. 

For example, when looking to cut your workforce cost, you'll have to figure out where you are losing money first.

Therefore, the right questions to ask would be:

  • Are you spending more on compensation or overtime?
  • Are the rewards able to retain employees?
  • Can you reduce expenses by giving them fewer benefits while keeping them happy at the same time? 

The answers to these questions are going to help you build a strong people analytics business case. It allows you to dig deeper into the "why" and find the root problem.

Some more questions that may need answering are:

  • What are the right questions to ask your employees? 
  • Why do you want a new job again?
  • Are there any gaps in skills that need addressing as soon as possible before they become too wide a gap and it becomes difficult for them to be filled by other people in the future? 

All HR responsibilities are in for an upgrade with such a practice in action. Leaders should be aware and ready for that. 

The Emergence of New Roles 

HR is struggling to meet the needs of its employees at a time when they experience rapid transformation. Traditional people analytics or reporting capabilities can't keep up with this demand, and HR leaders are searching for new roles that will help them better address these challenges, as well as emerging ones like strategic and ethical.

1- HR Practitioners, Business Leaders, and Data Scientists

All have different needs which should be considered when it comes to the future workforce. HR may want to think about defining skill sets that are in demand, while a company's analytics team might focus on R-squared or unstructured data analysis. Meanwhile, the top management needs their questions answered by all of these people, so they know what will impact margins for their organization. 

There is an immediate demand for translators who can take into account both strategic business as well as technical talent requirements before coming up with accurate models based on real-life scenarios like how many employees at any given time would receive benefits if health insurance premiums went down 20%. 

The output of this people analytics project holds the key to achieving your business goals. Thereby, data analysis rescues stakeholders from a difficult point in time.

2- People's Data and its Ethical Usage

The last decade has been a time of great change in the field of analytics. Organizations are not sure how to react, and there is an ethical dilemma that needs addressing: what are some possible consequences for using employee data? For example, without any technical advisory involved during the buying decision, algorithms have gone unchecked with little scrutiny thus far.

With data becoming a currency in the future, organizations will need people to oversee it. They'll also have greater control over how they use the personal information of people who work there.

3- The Algorithmic Experts

What is troubling is the role black-box machine learning plays in deciding the fate of workers, especially when executives have little understanding of what these algorithms actually do. Data scientists can develop solutions to organizational needs, but they may not be able to explain how their code works or defend why it’s the best solution for an organization's problem.

Organizations are increasingly dependent on data to drive better decisions. To ensure that the algorithms they use to lead them in a direction of success, organizations should implement algorithm auditing roles and determine whether or not their outcomes align with what is expected.

Managers may find it difficult to convince investors against trusting their own insights. Here we find the term algorithm aversion useful. It refers to the concept that evidence-based algorithms predict the future better than humans.

Talent Analytics

It is closely related to people analytics. Talent analytics can help organizations better understand what their competitive advantage is and how to retain top talent.

It is a blend of people analytics and HR technology. It can help managers better understand the needs of their workforce, improve how they measure performance, reduce turnover rates, and, more importantly, provide tools that will allow them to attract rising talent in an increasingly competitive marketplace.

Technology Application Areas

While we know that people analytics is a strategy, a phenomenon that guides an organization to make better workforce decisions, most companies provide capabilities with their reporting tools to produce and utilize insights.

However, there is more to it than just viewing reports and results. It is the intelligence of HR departments that benefits and quantifies outcomes for ultimate success. It is time to retain talent using the latest recruiting practices.

There are data transformation, data mining, and visualization features all available in one useful platform - software - to bring your people analytics in motion. Software with additional features requires rigorous manual manipulation to translate data.

One-liner Benefits

A true analytics tool goes one step ahead, enabling you to:

  1. Connect recruitment practices and talent management with evidence-based data
  2. Obtain clear and concise insights
  3. Reduce time to make strategic HR decisions
  4. Increase engagement with employees
  5. Upgrade HR capabilities
  6. Resolve turnover rates
  7. Set your vision into a diverse and communicative workforce
  8. Improve talent acquisition processes
  9. Lessen staff attrition rates

Conclusion 

People analytics is the application of data and statistical analysis to understand people’s behavior in organizations. It can help companies better predict what their customers want, how they will react to changes in products or services, and even identify potential staff members who may be likely to quit. 

Many benefits come from implementing a strong people analytics strategy, but there are also challenges like privacy concerns with regard to collecting personal information about employees without consent. 

If you were considering doing some research into this area for your organization, here are some questions to get you started: 

  • What do you think makes your company an ideal place for people analytics?
  • What are some benefits of implementing a strong people analytics strategy? 
  • How can you research this area for your organization, and what is the best way of doing so? 
  • Where would implementation be most effective? Who should have access to it, if anyone at all?