Understanding and Applying People Analytics

  • Andrew
  • March 19, 2019
  • 8 min

People analytics signals a big change in how businesses handle HR-related issues and interest is growing due to the clear improvements it offers for employee engagement, retention, and overall company success. In this article, we’ll discuss what people analytics is, why it’s important and key takeaways to get the most out of it.

Reading The Numbers: What Is People Analytics?

People analytics is referred to by several different names: HR analytics, workforce analytics, talent management. However, all these terms relate to addressing Human Resource management in a data-driven manner. That is, identifying and quantifying how human factors affect business outcomes.

There are three crucial distinctions in the tools used to perform people analytics:

  1. Metrics are the specific aspects you measure. They track, compare, and analyze individual performance indicators, such as productivity or turnover within different departments of the same company.
  2. Analytics are the predictions or insights that we generate based on metrics.
  3. Data, or big data, is all the information and statistics that we unearth to inform our analytics.

It is imperative to understand the difference between metrics and data. As the Harvard Business Review put it; you can’t pick your data, but you must pick your metrics. Metrics are the important numbers selected from the seemingly overwhelming amount of data that can be uncovered.

Using sophisticated HR software, vast amounts of information regarding recruitment, training, development, employee engagement, retention, and overall performance, can be mined and analyzed to understand and improve upon how a company is functioning. The goal of people analytics is to turn data into useable information and information into actionable insight.

Adding Up: The Benefits Of People Analytics

Much can be achieved by interpreting data relevant to company goals, and when properly applied, people analytics can help…

  • …remove bias from recruiting.
    Studies show companies in the upper quartile of gender and racial diversity are up to 35% more likely to have financial returns above their national industry median. As such, there are advantages in having a diverse staff. People analytics serves as an important tool in removing unconscious bias in the recruitment process. We can, for example, inspect personal data and identify candidates who best fit a role for only the reasons that matter.
  • …achieve workplace goals.
    Software developer, SAP, sought to increase their number of female leaders from a little over 18% to 25% by the end of 2017 and, through the use of people analytics, achieved this target earlier than expected.
  • …improve recruiting decisions.
    Humans tend to focus on unimportant bits of data, which don’t necessarily reflect upon how suited a candidate is for a position. Analytics have been shown to outperform human decisions by 25% during the recruitment process.
  • …benefit acquisition and retention.
    SAP used people analytics to study the reasons why employees stay at a company and which factors make them leave. As a result, they achieved an impressive retention rate of 93.7%.
  • …make identifying talent easier.
    By sorting through multiple profiles, skills and candidate sources, people analytics allows employers to save time and find more suitable employees based on an endless combination of desired professional and personal traits.

Solving the Equation: How to Implement People Analytics

Whether you’re researching people analytics for the first time or you’re just looking to top up what you already know, you might wonder if you’re on the right track. To help you get to grips with the basics of people analytics, we suggest following this guide:

  1. Recognize issues within your company. The first step in fixing any problem is identifying it. If you already know your staff turnover is too high or employee engagement too low, then you already know what you need to work on!
  2. Prioritize your problems. Now that you’ve listed existing issues within the company, rank them in importance and identify which ones can be solved with a direct contribution from HR and people analytics.
  3. Select your metrics. There’s no point in studying data that’s not relevant to the problem at hand.  Instead, identify which business metrics are pertinent to the issues that you’ve identified (read more about good data and KPIs for measuring company culture here).
  4. Analyze the data. You must then analyze the relevant data and discover what it tells you about your company. Understanding what these numbers mean may require someone with expertise in statistics. However, new software is helping make this step achievable to those without a background in analysis.
  5. Act on your findings. The most important part of the whole process is to interpret your findings and act on them. After all, there’s no reason to spend time and effort analyzing data just to ignore the results — turn numbers into solutions!

Wrong Number: Problems And Drawbacks of People Analytics

While there’s much that we can glean from the close interpretation of data, there are some issues that should be highlighted:

  • Some problems go beyond the scope of the HR department. As Forbes notes, not all issues can be solved purely by analyzing internal data, often external — “environmental” — factors must be considered, too.
  • People analytics is still in its infancy. The Wall Street Journal claims that analytics within HR still has some growing to do until it is fully effective, with collection and integration of useful data still posing a problem for many companies. However, it’s likely to be a regular fixture within the department soon enough, leading to a better knowledge and functionality.
  • Data management is key. Some good housekeeping may be in order to make the most of your data. If data is incorrect, out-of-date or poorly arranged, it’s as good as useless. It may take time to make sure all that information is properly organized.
  • Data security is a barrier that must be respected. Keeping others’ personal data private and secure is now more important than ever and HR needs to be careful about how they collect and use it. It is imperative that personal details are not shared with 3rd parties or are utilized in ways that may make employees uncomfortable.
  • Collecting good data can be difficult. Deloitte Insights found that only 8% of businesses report having usable data. This is especially problematic for smaller companies.

Key Takeaways

  • People analytics turns data into information and information into insight.
  • There’s a huge difference between data and metrics; it’s imperative to understand which numbers are relevant to the problem at hand.
  • Utilizing analytics aids in recruitment by streamlining the selection process and removing unconscious bias.
  • There’s no point in identifying and analyzing an issue if you don’t act on your findings; use the information you’ve gathered to make positive changes within the company.

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