Everything You Need to Know About People Analytics
It’s Human Resources (HR) job to manage an organization’s talent by ensuring that it has all the right people that it needs to execute its strategies and meet its goals, and that these people are happy and productive.
Your focus as a HR leader must therefore always be on making decisions that are best both for the organization and the people in it. People analytics is how you achieve this.
What is People Analytics?
People analytics, also known as HR analytics or workforce analytics, refers to the practice of using data and statistical analysis techniques to gain insights and make informed decisions about an organization’s workforce. It involves collecting and analyzing various types of data related to employees, such as demographic information, performance metrics, employee engagement surveys, training records, and more.
The goal of people analytics is to uncover patterns, correlations, and trends within the workforce data to understand and optimize various aspects of human resources management. By applying analytical techniques to this data, organizations can make data-driven decisions in areas such as talent acquisition, employee retention, performance management, training and development, succession planning, and overall organizational effectiveness.
People analytics can provide valuable insights into workforce dynamics, such as identifying top performers, predicting employee turnover, understanding the impact of different factors on productivity, determining the effectiveness of training programs, and identifying skill gaps within the organization.
These insights can help organizations make informed decisions to improve their HR strategies, enhance employee engagement, and drive business outcomes.
How Does People Analytics Work?
People analytics works by collecting and analyzing data related to the workforce to gain insights and make data-driven decisions. The process typically involves the following steps:
Data Collection: The first step is to pull data from sources such as HR systems, employee surveys, performance management systems, time and attendance records, training records, and more. The data should be accurate, comprehensive, and relevant to the specific questions or objectives being investigated.
Data Preparation: Once the data is collected, it needs to be prepared for analysis. This involves removing duplicates, correcting errors, handling missing values, and ensuring consistency and quality. Data may also need to be transformed or aggregated to make it suitable for analysis.
Data Analysis: Statistical analysis techniques, data mining, predictive modeling, and machine learning algorithms are applied to the data. Various analytical methods are used depending on the objectives, such as descriptive statistics, correlation analysis, regression analysis, clustering, classification, and more. The goal is to identify patterns and trends that can provide meaningful insights.
Interpretation: Any results need to be interpreted in the context of the organization’s goals and challenges. This involves understanding the implications of the findings, identifying actionable insights, and considering the limitations or potential biases in the data.
Decision Making: Based on the insights gained from the analysis, organizations can make informed decisions and take actions to optimize their human resources strategies, such as refining recruitment and selection processes or designing targeted training programs.
Evaluation and Monitoring: People analytics is an iterative process, and it’s important to evaluate the impact of the decisions and interventions made based on the insights. Organizations should continuously monitor the outcomes and measure the effectiveness of the actions taken. This feedback loop helps refine and improve the people analytics approach over time.
Why is People Analytics Important?
An organization’s people are at the core of the business. Employees build products, deliver services, please customers, and solve problems. People analytics helps to inform decision-making in areas that have a big impact on the overall business, including:
Workforce Planning: People analytics helps organizations understand their current workforce composition and anticipate future workforce needs. By analyzing data on demographics, skills, performance, and employee mobility, organizations can identify skill gaps, succession planning opportunities, and strategic workforce requirements.
Talent Acquisition and Retention: People analytics enables organizations to improve their talent acquisition and retention strategies. By analyzing data on candidate sourcing channels, recruitment processes, and hiring outcomes, organizations can identify the most effective methods for attracting and selecting top talent.
Performance Management: People analytics helps organizations optimize their performance management processes and improve overall employee productivity. By analyzing data on performance metrics, employee feedback, training and development programs, and other factors, organizations can identify performance patterns, assess the effectiveness of performance management initiatives, and provide targeted coaching and development opportunities.
Best Practices for Conducting People Analytics
There’s no one-size-fits-all approach to implementing people analytics. The key is finding the right balance between the tools and processes you use and the results they deliver. If you’re looking to implement your own people analytics process, consider some of the following best practice tips.
1. Source Analytics Expertise
Implementing HR analytics poses challenges for many organizations due to a lack of the necessary skills and expertise. Typically, employees in HR and even IT departments don’t have the necessary skills for effective data analytics. Consequently, organizations frequently encounter issues with improperly collected, stored, and analyzed data, leading to erroneous or irrelevant decision-making outcomes within the department.
Embrace the idea of sourcing external expertise. Leading HR teams have recognized the value of engaging data analytics consultants who provide comprehensive support throughout the entire analytics process. By leveraging their expertise, organizations can effectively define business goals, tackle challenges, and acquire the skills necessary to uncover meaningful insights for informed decision-making.
2. Use the Right Tools
You don’t need to use every single tool possible when conducting people analytics; less is always more. Finding the right mixture of tools for your organization will depend on what it is you need to measure, how often, and for what purpose.
Whatever mix of tools you settle on, however, be sure to include Organimi! Our powerful organizational reporting functionality collects vital data and generates useful metrics at the organizational level, including information related to your talent pool such as roles, skills analyses, vacancies, and more.
3. Start Small
When implementing people analytics, it’s best to start with small, focused projects that address specific business challenges or opportunities rather than immediately going all-in and trying to solve all your problems at once.
This approach enables organizations to test the waters and assess the effectiveness of their people analytics initiatives, enabling them to build a foundation upon which larger and more complex analytics projects can stand.
4. Align Vision and Strategy
Effective HR teams establish a strong alignment between their departmental strategy, goals, and the overall objectives of the organization. While setting departmental goals is crucial for fostering a cohesive team identity, it is equally important to position the team within the broader context of the business, considering the larger organization’s aims and functions.
By integrating their own goals with those of the organization, HR teams ensure a unified approach to people analytics that contributes directly to the success of the entire organization.
5. Measure and Monitor Success
Define clear success metrics and regularly monitor the performance of your people analytics initiatives to identify areas for improvement, assess the impact of analytics-driven decisions, and demonstrate the value of people analytics to the organization.
By following the tips and best practices laid out in this article, HR teams and organizational leaders can ensure the successful implementation of critical people analytics initiatives, which will help to ensure more effective employee management and performance.