5th November 2020
HR leaders face many challenges every day. Be it the fall out of a bad hire, finding new ways to maintain retention or the impact of poor productivity, deciding how to tackle isn’t always as straight forward as you would like to think.
When you begin to look at human dynamics, things begin to get complicated. Why? Well, put simply, human resources look after the people who make up a company – and every person is unique. An individual.
Which means that while they all bring something different to the table, they also require a tailored approach when it comes to conflict management or any other form of HR issue resolution.
What are People Analytics?
Also known as HR or workforce analytics, people analytics uses people-data to solve business problems.
It is defined by CIPD as ‘a number of processes, enabled by technology, that use descriptive, visual and statistical methods to interpret people data and HR processes. These analytical processes are related to key ideas such as human capital, HR systems and processes, organisational performance, and also consider external benchmarking data’.
Analytics may be used to look at the traits of the workforce, in particular its human capital: the value of individual knowledge, skills and experience of individuals and teams, as well as elements such as performance and productivity.
People analytics is the difference between taking a stab in the dark to see what happens and making well-informed, fact-based decisions.
It is surprising, therefore, that many businesses still rely on metrics that don’t provide accurate insights to the root causes of their problems.
Historically, HR analytics has focused predominantly on tracking basic HR metrics or providing reports to managers on headcount and attrition.
However, people analytics teams are now focusing more and more on using data to understand every part of how people impact business value and operations, embedding analytics into real-time applications and the way we work to derive insights and support the business in making data-driven decisions.
Check out Human capital analytics and reporting: theory and evidence by CIPD, which summarises key academic concepts for practitioners to apply through people analytics strategy.
Why Should I Use People Analytics?
The business environment is always adapting, which creates a real need for better decision making, company-wide. According to DDI, companies who use people analytics well are 3.1 times more likely to perform better than their competitors.
Traditionally, HR has often been siloed in structure, leading to a disconnection between the micro and macro business goals and people strategy within an organisation, often looking at individuals without any context. But context is key in how individuals are likely to perform and contribute to business objectives.
People analytics can support both HR professionals and executive teams in tackling top-level strategic challenges using powerful insights that can be used to fix bigger business challenges.
With people analytics, you can dig deeper into strategic HR metrics such as:
- Revenue per employee.
- Quality of hire improvement.
- Performance turnover in key jobs.
- Revenue lost due to position vacancies.
- HR effectiveness.
- New hire failure rate.
- Diversity hires in customer-impact positions.
What are the Benefits?
The initial integration of HR analytics into business operations and decision-making was a slow one. But once business leaders began to realise the benefits, interest shot up and more and more business started to reap the rewards.
Mitigating turnover is one of the most effective applications of people analytics. The impact is most visible when businesses focus on a particular role or set of employees. Targeted retention informed by people analytics can significantly reduce employee turnover.
Achieve Fair Pay
Analysing and optimising compensation practices can help companies to achieve fair pay across the business. Employers can use people analytics to assess proposed candidate offers, counter-offer considerations, and promotions.
This allows them to compare compensation profiles, incentive scores, performance ratings and compare employee attributes to that of others on the same team or in similar positions instantly.
Talent acquisition analytics can help employers to identify attributes that produce long-term, high performing employees.
It can also help them to understand where they get their best candidates from and whether they are losing people in the acquisition funnel, enabling businesses to optimise spend on recruitment.
Learning and Development
People analytics can be used to optimise training. Learning analytics that connect the impact of training and development on business outcomes can enable managers to determine whether an employee has completed adequate training to effectively perform their role.
Diversity can be a very powerful thing for businesses. Analytics plays a key role here: from answering questions about the state of diversity throughout a company and across its employee lifecycle, to identifying areas where intentional or unintentional bias may be occurring and to helping companies understand how to effectively address problem areas. People analytics gives organizations more visibility into diversity initiatives.
Optimise Workforce Planning
Companies that use people analytics can analyse workforce data to understand the current state of their workforce and inform discussions on talent needed to meet business objectives.
People analytics can help businesses to optimise their productivity. When companies can link actual hours spent on activities to an optimal target time and monitor against this index, they are able to increase productivity and save money.
People Analytics Strategy
People analytics need to be run in line with both an HR strategy and the business strategy.
Having a strategic and planned approach to people analytics allows you to gain the most value for the business and create further demand for HR insights. This is also beneficial in demonstrating HR’s return on investment.
A people analytics strategy should:
- Connect HR data with business data to demonstrate a particular aspect of the organisation that business leaders should be informed about to help them make decisions.
- Enable HR leaders to design and implement HR management activity in an efficient and effective manner.
- Allow the business and HR to measure the effectiveness of HR in delivering against its objectives.
If you’re looking to implement a new people analytics process (or else just wanting to refine an existing one), it should follow these nine steps:
Plan: Develop the goals and purpose of the analytics activity. Map the requirements of the customer and plan questions/queries which will be answered by the analytics process.
Define critical success factors: Define the measures that will show if the project has been a success.
Data audit: Map the data which is currently available and grade its quality. This will illustrate where any gaps in data may be, which should be filled before progressing.
Design the process: Define roles and set objectives for team members. Define resource requirements and map stakeholders for the project.
Design the data collection strategy: Design the collection and processing stages of the analytics activity.
Data collection: Collect data from data sources. This can be from drawing on established data sets (for example. absence records) or running new data collection processes (for example, engagement survey).
Analyse data: Depending on the customer requirements, analyse the data and develop insights in the form of recommendations and guidance for the users of the data.
Report data: Report in a clear and simple way illustrating a solution to their issue, or further areas of investigation if further data is required.
Evaluate: Review the data-analytics-insights process and evaluate impact. Review and update the process as required.
Clarisse works as the Lead of our Customer Care Team to provide our customers with the very best care and guidance when using their HR software and is responsible for our day-to-day marketing activities and strategies.