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People Analytics: Meaning, Benefits, and More

People Analytics: Meaning, Benefits, and More
People Analytics: Meaning, Benefits, and More

People Analytics, also known as HR Analytics and Talent Analytics, can dramatically enhance how businesses and organizations identify, attract, develop, and retain top talents. Specifically, people analytics make it easier for organizations to identify the unique factors that drive high performance; streamline talent hunt and recruiting based on specific characteristics associated with successful hires; as well as harness publicly available data to improve overall hiring processes.

People analytics help HR units to gain insights into areas such as talent pipeline problems, rate the effectiveness of their retention efforts, close skill gaps, assess workforce productivity, understand employee performance, and assess which learning and development programs are working. People analytics is generally centered on the people working in an organization and is mainly used in decision-making processes to improve overall organizational effectiveness.

What is People Analytics?

People analytics simply means a data-driven approach to HR management. In broader terms, people analytics involves the collection and measurement of organizational, workforce, and talent data, as well as the application of this analysis in making data-driven decisions aimed at improving critical performance metrics.

At best, people analytics allow HR departments to develop data-driven insights for making intelligent decisions on talent management, employee experience, and workforce processes towards improving the organization's performance. Recently, people analytics forms the basis of learning what has and has not been working when it comes to analyzing workforce productivity.

Over time, there’s been an increasing adoption of people-focused data analysis in many organizations. Today, many vendors are developing people analytics tools, using technologies like artificial intelligence to improve its effectiveness. The recent Deloitte Human Capital Trend Survey draws attention to the critical importance of people analytics, especially in light of the COVID-19 pandemic. In addition to creating new revenue streams for developers of HR analytics tools, the rapid growth and industry-wide utilization of people analytics reflect its importance to HR professionals.

Benefits of People Analytics

Beyond improving organizational effectiveness, here are other reasons why HR departments should consider integrating people analytics as a core business process:

1. Strengthening decision-making and practicing evidence-based HR

People analytics not only makes data-driven decision-making possible but easier. According to McKinsey, using people analysis to analyze hiring data and then applying the insights gained in recruitment processes can increase recruiting efficiency by 80% and decrease attrition rates up to 50%.

2. Saving costs and time

Sourcing, recruiting, and training new employees often consume time and may not even contribute to critical business goals. Likewise, focusing on activities and programs that do not impact employees positively directly wastes resources and time. To reduce employee attrition, organizations can use artificial intelligence and people analytics to identify and focus on the talents and programs that are most beneficial to the organization. This, in turn, allows the HR department to spend more time on and invest in processes and people that will drive better results in the future.

3. Improved performance and productivity

The HR department can use insights from employee engagement surveys to identify and address issues that get in the way of employee engagement and productivity. The use of people analytics can help organizations highlight specific problems, such as communication, compensation, workload, diversity, inclusion, etc., that may or may not be contributing to organizational performance.

4. Closing skills gaps

One of the main benefits of using people analytics is identifying and closing up skill gaps in the workforce. An aspect of people analytics focuses on helping organizations understand workers’ bandwidth in terms of skills, what new trends are emerging, how competitors are integrating the skills into their processes, and possible skills needed in the future. This is an effective way to bridge the talent gap and build a pipeline of talent based on the current and future needs of the company.

5. Improving employee retention

In an effort to improve employee experience, people analytics can help organizations identify existing lapses in employee experience, improve on them, and create a standard for managing employees in the future. This includes skill gaps and processes that ultimately help in improving employee retention.

Important People Analytics Tools

HR analytics tools have been at the center of managing employee activities, identifying areas where HR needs to improve, and creating sustainable employee management systems.

  • Tableau

  • SPSS

  • Viser

  • Power BI

  • Python

  • Excel

Important HR Metrics to Measure

Although HR analytics and People analytics are often used interchangeably, it’s important to note that there's a fundamental difference between the two concepts. While HR analytics is limited only to human resources data, People analytics incorporates both HR data and data gathered from every aspect of the organization’s workforce, including sales, customer experience, operations, etc.

HR metrics can be measured as part of people analytics and helps keep track of the effectiveness of HR initiatives and talent management activities on overall business performance:

  • Average cost hiring, onboarding, and training of employees

  • Cost and effectiveness of employee training and development programs

  • Time-tracking metrics, such as the average weekly commitment of workers

  • Attrition rate

  • Workforce planning analytics

  • Employee engagement and employee experience metrics

  • Revenue per employee

  • Cost of HR personnel per employee

  • HR software ROI

  • Employee wellness, health, and safety analytics, etc.

Building People Analytics Capabilities

Given the vast usefulness of employee analytics, it makes sense to start building people analytics capabilities if your HR team is yet to begin. Here are some suggestions that can help:

  • Start by defining your analytics strategy. That way, you can pinpoint what you need to focus on.

  • Get an overview of your team’s current existing skillset so that you can channel your efforts in the right direction.

  • Instead of relying on gut and intuition-based decision-making, you can actively start encouraging and promoting a data-driven culture throughout the organization.

  • Building an advanced people analytics capability will take time, so HR needs to continue learning more (take certifications in HR analytics), making improvements, and so on.

The Future of People Analytics

Many organizations using people analytics are currently looking at doing more with analytics. Some have already started making highly specific and accurate decisions with analytics. For instance, using artificial intelligence, IBM was able to predict with 95% accuracy which workers are about to quit their jobs. In like manner, more organizations are pushing towards making more accurate decisions in the near future.

This growing demand will, in turn, bring about more development and growth in the utilization of people analytics in various sectors and industries. With people analytics, hiring managers will soon be able to tell — beyond resumes and skills — which candidates are worth hiring and investing in.


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