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What Is People Analytics?: Process, Benefits, And Tools

Asavari Sharma

November 07, 2022

It was not too long ago when the term "people analytics" met with blank stares and head-scratching in the workplace. Was there value to be fetched from data? Yes, of course! Fast forward to the 2020s, people analytics forms the core of the HR department.

You see, the world is becoming largely data-driven, and people analytics enables a new way of ensuring optimal performance and satisfaction of your workforce. From increasing job offer acceptance rates to optimizing compensation, it helps you make the most of your HR data.

That is necessary for the department to transform into a strategic business partner and take on a more critical role in human capital management. In this article, we take a look at the definition, process, benefits, and tools for people analytics in HR:

What is people analytics?

Also known as "talent analytics," "workplace analytics," and "HR analytics," people analytics is the process of gathering and assessing data of employees.

The application of advanced statistical and data interpretation techniques helps you improve critical talent and business outcomes.

Studying people's data and applying analytical processes for better decision-making ensures you unlock the maximum potential of your human capital.

HR professionals use people analytics to improve employee retention, provide better training opportunities, and optimize employee productivity. In a nutshell, people analytics is a powerful tool that helps improve HR processes by providing better insight.

How does it work?

The first step towards using people analytics in HR is collecting and analyzing data about your employees. This includes everything from the employment details of your workforce, what they are working on, how satisfied they are, and their performance levels.

The next step is mapping this information together with pre-existing metrics and comparing it with the organization's financial performance.

Managers can analyze the data and make more informed decisions. To draw the most accurate inferences, you must gather data on a regular basis or at least once every year to be used for future predictions.

5 HR analytics every manager must know

Recruiting the best talent is crucial for ensuring long-term organizational success as only the right people can generate the highest value for your business. That is why managers need to be aware of the following five HR analytics to optimize the performance of their teams:

1. Employee churn

While it is essential to track how many people are a part of your organization and how many more are needed, you must also know how many are keen to leave. Employee churn analytics assesses the turnover rate of your workforce.

Basically, it helps forecast personnel needs with predictions on the employees who might leave in the future. You can study the historical data of each candidate to understand their journey with your organization.

2. Capability analytics

Assigning the right task to the right employee ensures better performance and satisfaction. Capability analytics helps you identify the core competencies of each member of your team.

The data can be studied to measure any gaps in the overall performance and ensure each employee reaches their full potential at the workplace. You can also understand the capability of each person to upgrade their skill set.

3. Organizational culture

This refers to collecting values, expectations, and practices that guide and inform the employees' actions. Culture is often difficult to change, but organizational analytics can help you identify the scope of improvement.

Assessing your company culture makes you understand the behavior of your employees in a particular situation. You can study behavioral patterns to take necessary actions against problematic or underperforming employees and foster a culture that matches your organization's core values.

4. Capacity analytics

It is an analytics approach for determining the operational efficiency of each individual of your team. Analyzing performance data helps you understand the aspects on which your teams spend maximum time.

For instance, you may want to cut down the time spent on meetings and discussions to ensure more profitable work gets done. Capacity determines whether you are operating within budget limits or exploiting every last penny out there.

5. Leadership analytics

Poor leadership costs money and time for your organization. It may even be a prime reason for higher employee churn rates. Leadership analytics evaluates the impact of leadership decisions on the business. You can identify gaps, assess ROI, and get a better understanding of the impact of each leader in the progress of the organization.

The process of people analytics in HR

Today, the majority of large organizations have people analytics teams. In fact, 70% of company executives cite such people analytics as a top priority. Even though you can approach it in different ways, build your people analytics functions or simplify them for your organization by following the steps mentioned below:

1. Identify relevant data

Data is essential for any business, and a lot of it is generated each day. You must pay attention to information relevant to your organization's growth and create strategic value based on that. It is also crucial to analyze the data when setting key performance indicators (KPIs) and deciding how much time should go towards each area.

2. Find the best fit

The market has no shortage of analytics tools with data mining, data transformation, and visualization features. One of the most important aspects to consider when choosing the right tool for your organization is exploring different options. You can experiment and analyze as many tools as possible to find the one best suited for you or build one for your needs.

3. Define your strategy

To build a successful plan of action, you must analyze the pros and cons of your data. As a next step, process the relevant data sets to determine if they meet your goals.

Look at all options to identify and shortlist the ones that will best serve your organizational needs and help you create an informed decision-making model using big data analytics. You should tailor the predictive capabilities of your tools specifically to meet your business goals.

Complying with the ever-evolving data protection laws and privacy regulations is necessary to avoid penalties. To ensure compliance, legally vet all data sourcing techniques, treatment, and publishing processes.

5. Simplify the system

Regardless of the complexity of your projects, you must ensure that all analytical processes follow a simple strategy. Keeping the people analysis process simple makes it easily accessible for anyone who wants it.

The right balance of steps is key to streamlining the process and applying quality controls. Defining a simpler analytics workflow for your organization will make it easier for everyone in your team to use it.

6. Make it measurable

You must figure out ways to avoid functional silos by defining clear KPIs and ROI for your people analytics approach. That will help you ensure an effective plan of action is defined and measurable results are achieved.

7. Use technology to your advantage

Real-time data processing and advanced data mining techniques simplify accessing data and molding it into comprehensible versions. Using the right technological tools, you can make informed decisions just in time to derive maximum business benefits.

Companies using people analytics: Real-life examples

Many popular brands apply people analytics in HR for optimizing their daily operations. Here are three people analytics examples:

1. NASA

Finding the best talent is not always easy in an organization like NASA, where hardcore data science skills are required. The independent agency creates knowledge grapes through talent mapping to show the relationship between people, skills, and projects.

This project analytics project enables employees to understand their career path better and connects them to relevant training sessions for greater alignment of people strategy across the organization.

2. Uber

The global mobility service provider achieved high employee engagement levels and improved business outcomes with people analytics. Firstly, the company ensured managers had access to the necessary data and dashboards related to employees, not only the HR.

Second, Uber's HR department asked the managers what they needed in their user-oriented solution and then designed a solution based on the feedback.

That way, all unnecessary visuals and data sets were removed from the dashboard, with it only providing clear insights into a specific question. This allowed the managers to make timely decisions and improve their effectiveness.

3. Microsoft

The tech giant has launched a tool called "Manager Hub," a one-stop platform for managers to get information for taking specific actions. The hub comprises timely prompts based on data and is managed via push notifications linked to the work calendar.

Benefits of using people analytics in HR

There are several reasons why organizations should leverage people analytics across the employee lifecycle. Here are the top five:

1. Improved hiring processes

Finding new talent is a challenging but mandatory process. Analytical data helps you make important decisions, such as the minimum number of candidates you must reach out to, which job boards work the best and the type of candidates who accept the joining offer.  

2. Reduced attrition

To retain your employees, you must identify and address why they are leaving. People analytics can help you plan and take remedial measures to lower attrition rates.

3. Optimal employee experience

Each employee's tenure in an organization is mainly dependent on their satisfaction rates. Collecting and analyzing employee opinions is crucial to delivering an experience that your workplace enjoys and appreciates.

4. Higher productivity levels

Several factors influence employee productivity. You can make structural and functional changes across teams to ensure each individual performs to the best of their capacity with the help of people analytics in HR.

5. Optimized talent processes

HR should constantly monitor their talent processes, including training, performance reviews, recreational activities, and counseling. People analytics enables you to identify the challenges and bottlenecks in the existing processes to improve them.

6. Greater employee trust

Using people analytics efficiently and bettering processes that directly impact employees help gain their trust. Effective analytics provide enough actionable insights, and if implemented well, it shows your employees their data was used positively.

7. Time saved

Focus on the people and programs that are most beneficial for your organization. Eliminate or automate repetitive tasks to improve the employee experience by providing them with better career prospects.

8. Boosted productivity

You must use data from employee engagement surveys in people analytics to understand areas where employees need help. They could require handy tools and resources to do their job or mental and emotional support. People analytics throws light on such elements and nudges organizations to do the needful.

Four people analytics tools to know about

Many organizations leverage essential data analysis tools, such as spreadsheets, for managing, tracking, and analyzing metrics such as cost-per-hire, employee engagement, gender pay equity, employee attrition rates, and so on.

Thankfully, there are HR analytics tools that can help streamline data tracking and analysis so that you can avoid managing multiple spreadsheets altogether. Let us take a look at four familiar people analytics tools:

1. Qlik

This is a people analytics software that boasts of an expansive dashboard capacity. It enables data integration from multiple sources and converts it into a dashboard to quickly interpret the data. It is also capable of supporting conversational analytics and user-driven business intelligence.

2. Power BI

This people analytics tool makes data aggregation, analysis, and visualization extremely straightforward. Power BI connects to multiple source systems such as SQL databases with people’s data, machine learning APIs, and a live Twitter feed. That way, you can combine multiple datasets in one extensive database suited for analysis or reporting.

3. Tableau

Like Power BI, Tableau facilitates data aggregation from multiple sources, transformed into insights, and displayed on the dashboard through visualization. It represents data through easy-to-understand graphs and charts, making the information quick to process. It supports real-time data analytics capabilities.

4. Visier

It is a data aggregation service designed to answer questions about the workforce. It connects various HR systems and integrates them with one HR BI tool. You could say Visier is more of an actionable people analytics tool that highlights the trends in workforce data. It enables you to find answers about driving organizational efficiency and performance.

However, if you still prefer Excel, run advanced analytics on it, loading the “Analysis ToolPak.” Acquaint yourself with Excel functions and carry out vital data manipulation conveniently. Excel also has a broader scope for data visualization.

Potential pitfalls of people analytics

People analytics is not always effective as it depends on the data, which is often stored in silos, incorrect, inconsistent, or out of date. Therefore, it is not surprising to see why the people analytics approach sometimes fails:

  • Incorrect or siloed data may lead to variations in results. Data storage is not always appropriately done in organizations.
  • Accurate data collection may not be easy, as employees may resist sharing and fear the data will be used against them.
  • The organization's leaders and stakeholders focus more on the technology than the people issue and how it affects the business outcomes.
  • Since behavioral and health data of employees are collected, that may be abused, leading to compliance issues.

Boost your organization's people analytics capabilities

Your HR leaders must build a people analytics strategy based on your business model and employee needs. Here is what needs to be kept in mind:

  • Your people analytics strategy must be in line with your business strategy.
  • Analyze your team's capabilities, their current skills, and the scope of upgrading them.
  • Convince decision-makers to study data thoroughly before implementing changes.
  • Acknowledge resistance across different levels of the process and find relevant solutions to the problems.

With the help of people analytics in HR, you can dig deeper into the behavioral aspects of work, understand the cause-effect relationship between various human and non-human elements at work and arrive at better decisions.

If you want to get an accurate data-based picture of an employee's abilities before hiring them, opt for pre-employment assessments. You could test them on various parameters, including their cognitive abilities, culture fitment, situational judgment, and so on.

Use a tool like Adaface to screen quality talent and ensure a scalable and efficient recruitment process that reduces your hiring time by up to 80%.

Asavari Sharma

Asavari is an EiR at Adaface. She has made it her mission to help recruiters deploy candidate-friendly skill tests instead of trick-question based tests. When taking a break, she obsesses over art.

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