What is People Analytics? How HR Can Leverage it

It’s unmistakable that data-driven insights are powering just about every decision for most organizations today. Regardless of the industry, human resource teams are also leveraging data to make informed talent decisions on everything from acquisition to workforce planning. People analytics has gained prominence in recent years because it’s playing a growing role in leveraging data from HR systems and external sources to offer essential information and more actionable talent insights for businesses.

According to a joint Deloitte and Visier survey on the topic of decision-making with data, some 70% of executives indicated they could make better people decisions with data. Without access to this data, they felt apprehensive about making the right decisions on talent.

Additionally, companies across the world are building more people analytics teams. In fact, according to Insight222’s research, companies have grown their people analytics teams by 60% in recent years. TalentNeuron data also indicates that there has been a 50% increase in the number of HR roles seeking analytics skills.  

This surge in people analytics popularity only underpins the need for HR teams to fully understand how data can not only create efficiencies but also improve their ability to hire the right people for the right positions more effectively.

Read on to learn more about what people analytics is and how HR professionals can leverage it in their day-to-day operations.

So What is People Analytics Exactly?

In an era where data reigns supreme across the business, human resources is no exception. For decades, HR departments have played a pivotal role in shaping company culture, managing employee relations, and overseeing the administrative intricacies of workforce management. However, as organizations face mounting pressures to adapt to a rapidly changing business landscape, traditional HR practices alone are no longer sufficient to meet the demands of the modern workplace.

This is where people analytics capabilities can help. It’s a dynamic tool that has emerged as a game-changer for HR professionals and organizational leaders alike. The role of people analytics is nothing short of revolutionary; it empowers HR to transcend its conventional boundaries and step into the realm of strategic decision-making with empirical evidence as its guide.

People analytics — sometimes called HR analytics — is the application of data analysis and statistical methodologies to internal, HR-related data. People analytics leverages data to gain insights into various aspects of the workforce. This can range from employee performance and engagement to recruitment, retention, and overall workforce management.

The primary objective of people analytics is to enable HR professionals and organizational leaders to make more informed, strategic decisions based on evidence and insights drawn from talent data. By utilizing analytics, organizations can identify patterns, trends, and correlations within their workforce data, leading to more effective and efficient HR practices.

Instead of making HR decisions based on anecdotal evidence, HR teams can access a treasure trove of data and skills intelligence that provide insight patterns and trends that can help predict future talent needs, identify areas for improvement in employee engagement, and uncover the factors that contribute to top performers’ success.

What Role Does People Analytics Play in HR?

The primary role of people analytics is to illuminate the path toward more effective and efficient HR practices. This is achieved by leveraging advanced analytics tools, statistical methodologies, and the vast reservoir of employee data that organizations accumulate over time. At most organizations, this data encompasses everything from recruitment and onboarding metrics to performance evaluations, employee engagement surveys, and even exit interviews.

One key factor many organizations miss, however, is the external perspective that can be gained by using people analytics alongside labor market intelligence — comprehensive data and insights gathered from diverse, global sources. Harnessing this wealth of information facilitates evidence-based decision-making in HR, enabling them to ask and answer critical questions such as:

• Which of our locations can or cannot support continued organizational growth?
• Are we sourcing for the right skill sets to attract the talent we need?
• Which recruitment channels yield the highest-quality candidates?
• What factors contribute to employee turnover, and how can we reduce it?
• What skills will our employees need in the future and are our training and development programs building those skills and driving business results?
• What are the characteristics and behaviors of our top-performing employees, and how can we replicate their success across the organization?
• How can we foster a more inclusive and diverse workplace culture that aligns with our organizational values?
  

Leveraging external data along with internal people analytics also allows teams to make more informed decisions surrounding several key areas within HR and organizational management:

• ‍Talent acquisition and recruitment: Optimize the hiring process by identifying the most effective locations for hiring different types of talent, the most effective channels for talent acquisition, assessing the success of recruitment strategies, insight into competitor branding strategies and predicting candidate success based on historical data.‍
• Employee engagement and retention: Analyzing data related to employee engagement, employee value propositions, and satisfaction can help organizations understand the factors that contribute to a positive workplace culture. This, in turn, aids in the development of strategies to improve employee retention and overall satisfaction.‍
• Performance management: People analytics can provide insights into individual and team performance, allowing organizations to recognize high performers, address performance gaps, and design effective performance management programs.‍
• Workforce planning: Monitoring key hiring trends within industry or at key competitor organizations to identify new and emerging skills, forecasting future workforce needs based on historical data, organizations can proactively plan for talent requirements, ensuring that they have the right people in the right positions at the right time.‍
• Diversity and inclusion: Data-driven DEI can help organizations set and track reasonable and achievable diversity metrics, identify areas for improvement, and measure the effectiveness of diversity and inclusion initiatives.‍
• Learning and development: Analyzing external labor market intelligence on skills along with employee training and development data can inform the creation of personalized learning paths, ensuring that employees receive the right training to enhance their skills and contribute more effectively to the organization.

Should People Analytics Be Used as a Tool by HR?

Yes, people analytics is an integral part of HR. In fact, it represents a transformative shift in the way HR functions within organizations. Traditionally, HR has been viewed as a department responsible for administrative tasks, compliance and employee relations. While these aspects remain crucial, the integration of people analytics introduces a more strategic and data-driven approach to HR.

More than 9 in 10 (94%) business leaders indicated that people analytics improves the functionality of HR, which is not to say in any way that it replaces HR professionals’ responsibilities but rather enhances their effectiveness. It empowers HR professionals with the tools and insights needed to make decisions that positively impact the organization’s overall performance and the well-being of its workforce.

What’s the Power of People Analytics in HR?

In essence, people analytics is an evolution of HR. Whether used on its own or enriched with external data, it drives a more data-centric, strategic, and forward-looking approach to workforce management in a few different ways.

• Smarter decision-making: Traditional HR practices often rely on experience, intuition, and qualitative observations. People analytics, on the other hand, leverages data-driven insights and quantitative analysis to inform decision-making.‍
• Proactivity vs. reactivity: HR practices have historically been reactive, responding to issues as they arise. People analytics enables a more proactive approach, helping organizations to anticipate challenges, plan for the future, and take preventive measures.‍
• Strategic vs. operational focus: HR traditionally focused on operational tasks such as payroll, benefits administration, and compliance. People analytics shifts the focus towards more strategic initiatives, aligning HR practices with broader organizational goals.‍
• Measuring impact: People analytics emphasizes the measurement of HR’s impact on business outcomes. It enables organizations to quantify the effectiveness of HR strategies, linking them to key performance indicators (KPIs) and overall business success.

Why People Analytics Matters to HR Professionals

The increasing adoption of people analytics isn’t merely another data trend; it’s a strategic and compelling imperative for organizations aiming to thrive in a competitive and dynamic business environment.

• ‍Informed decision-making: People analytics provides HR professionals and executive leaders with the information needed to make well-informed decisions. Whether it’s optimizing recruitment strategies or putting in place a build-buy talent strategy, data-driven insights lead to more effective choices.‍
• Enhanced employee experience: Understanding the factors that contribute to a positive employee experience is crucial for talent retention and satisfaction. People analytics allows organizations to identify areas for improvement, tailor employee experiences, and create a workplace culture that attracts and retains top talent.‍
• Strategic planning: By forecasting workforce needs and trends, organizations can engage in strategic workforce planning. This ensures that they are prepared for future challenges, have the right skills in place, and can adapt to changing market conditions.‍
• Optimized performance: People analytics enables the identification of high-performing individuals and teams, allowing organizations to replicate success factors and address performance gaps. This leads to a more productive and efficient workforce.‍
• Cost efficiency: Analyzing HR data can identify areas of inefficiency and opportunities for cost savings. Whether it’s streamlining recruitment processes or optimizing training programs, people analytics contributes to overall cost efficiency.

As organizations increasingly recognize the value of their people as a strategic asset, the adoption of people analytics is becoming not only a competitive advantage but a necessity for sustainable success.

By leveraging the power of data, organizations can optimize their HR practices, enhance employee experiences, and make decisions that positively impact both individuals and the overall business. As we move forward, the integration of people analytics into HR processes will continue to shape the future of work, driving innovation and excellence in human resource management.