What is People Analytics?

People analytics, also known as HR analytics or workforce analytics, is the process of collecting, analyzing and interpreting employee-related organizational data to improve workforce management and decision-making. It uses data from HR systems, employee surveys, performance evaluations and other workforce-related metrics.

The insights derived from people analytics empower organizations to make well-informed decisions concerning recruitment, talent management, employee engagement and retention. Additionally, it acts as a strategic tool for identifying potential compliance and legal risks, allowing timely corrective actions.

Primary Benefits

Better Recruitment Decisions: People analytics guides organizations in identifying the most effective candidate sources, assessing potential hires’ skills and experience and ensuring diversity standards within the workforce.
Improved Employee Engagement: People analytics efficiently digests and presents employee feedback and engagement data, helping organizations tailor strategies for better pay, learning and development opportunities, ultimately enhancing employee satisfaction and retention.
Increased Productivity: People analytics pinpoints the factors influencing high or low employee productivity, leading to optimized workforce performance through refined hiring and training practices.
Efficient Talent Management: People analytics helps identify high-potential employees and develop targeted development plans to improve their skills and advance their careers, helping improve overall job satisfaction and employee retention.

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How Does It Work?

In essence, people analytics aggregates vital data from an organization’s digital HR tools and applies algorithms and calculations to present it in ways that facilitate informed talent decisions. This process involves:

How Does People Analytics Works?

Data Collection: Gathering relevant data from HR systems, employee surveys and other workforce metrics into a centralized database.
Data Analysis: From there, analysts access and examine that data in a structured and consistent manner using statistical and analytical tools to identify patterns, trends and insights. Intuitive data visualization tools like dashboards and charts help simplify data interpretation.
Insight Generation: Provides analysts access to examine the data, using statistical and analytical tools to identify patterns, trends and insights, with visualization tools simplifying interpretation.
Action Planning: Insights inform decision-making and workforce management strategies, encompassing prescriptive, predictive and descriptive analyses. Some common people analytics action areas are improving cost per hire, reducing and addressing turnover and minimizing time to hire.
Evaluation: Finally, evaluate the effectiveness of the action plans through ongoing monitoring and analysis of workforce data.

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Potential Risks and Challenges

Even though people analytics seems like a complete win on paper, looks can be deceiving.

Like everything else, people analytics also comes with risks and challenges. Since we’re here to give you a complete picture, let’s start with the risks:

Privacy and Data Security: Privacy concerns arise as personal employee information is collected and stored, posing risks of compromise or misuse, leading to legal or reputational damage.
Bias and Discrimination: Incomplete or inaccurate data may result in biased hiring and retention practices, impacting workforce diversity.
Employee Resistance: Employees may resist people analytics if perceived as an invasion of privacy or a tool for monitoring and controlling their behavior, affecting engagement and productivity. Without the proper context, it’s easy for employees to view these efforts as invasive physiological and social profiling or behavior shaping. This resistance could impact employee engagement, morale and productivity.

Let’s also look at some people analytics challenges:

People Analytics Challenges

Data Quality: Ensuring data quality is challenging due to incompleteness, inconsistency, or inaccuracy. Addressing this requires a larger budget for data acquisition, employee expertise and specific technology.
Technology and Infrastructure: Advanced analytical tools and technology infrastructure are prerequisites for effective people analytics. Acquiring these tools and infrastructure or gaining technical expertise may pose challenges.
Privacy and Ethical Considerations: Complying with data protection regulations and maintaining ethical standards in using employee data is imperative.
Resistance To Change: Stakeholders accustomed to traditional HR processes may resist shifting to data-driven decision-making. Managers may be hesitant to relinquish control and adopt new data-driven approaches to decision-making.

Ethical Considerations

Adopting ethical people analytics principles and practices is critical. Ensuring that data use is responsible, transparent and respects the rights of employees is an absolute must.

Some key ethical considerations we strongly recommend for people analytics:

Inform employees about the collection and use of their personal data and ensure informed consent.
Be transparent about your people analytics practices and communicate the purposes and benefits to employees.
Use people analytics in a way that respects employee’s autonomy and agency. It shouldn’t treat them purely as data points or objects for analysis.

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How To Implement a Successful Strategy

Implementing a successful people analytics strategy requires a commitment to data-driven decision-making, continuous improvement and effective stakeholder communication.

How To Implement People Analytics

With the following principles, you can leverage people analytics to gain valuable insights into your workforce and develop effective strategies for talent management, employee engagement and retention.

Leadership Buy-In: Securing support from leadership is vital for obtaining necessary resources and facilitating the needed changes. Without this support, securing the resources required and making the necessary changes to achieve success may be difficult.
Technical Expertise: People analytics requires advanced analytical tools and technical expertise to effectively manage and analyze large amounts of data. Organizational investment in technological capabilities and infrastructure is essential for effective people analytics.
Continuous Improvement: People analytics requires continuous improvement. Regular evaluation and refinement of strategies based on data-driven insights ensure continuous improvement.

People Analytics Software

People analytics software plays a pivotal role by collecting and analyzing large amounts of employee performance, behavior and engagement data. It collects and analyzes large quantities of employee performance, behavior and engagement data. The software also helps identify patterns, trends and correlations between various employee data points. Examples of successful implementations include:

Google utilizes people analytics software to track employee performance and engagement, developing insights-based leadership training programs. Using data from their innovative People Innovation Lab (PiLab) helped them determine what to look for in a great manager and an effective team, setting themselves apart as one of the first organizations to use people analytics in those types of decisions.
IBM leverages people analytics to identify employees at risk of resigning, predict outcomes based on various data points and take timely actions.
Unilever uses people analytics software to improve hiring processes by analyzing successful hires and identifying key skills and characteristics for targeted recruiting strategies. This information helped them develop a targeted recruiting strategy.

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Future Trends

According to a recent People Analytics Trends report:

“The percentage of companies experiencing an increase in the size of their people analytics teams has increased yearly since 2020, with 65% having increased their team size in 2022.”

Anticipated developments in people analytics in the near future include:

People Analytics Trends

Increased use of predictive analytics and AI-based tools to forecast future workforce trends and to better predict employee behavior.
More focus on improving the employee experience through data-driven insights that inform employee engagement, diversity and inclusion and employee wellness initiatives.
Continued focus on recruiting, employee engagement and retention for distributed workforces, especially as more and more organizations embrace remote work.
Increased use of augmented analytics to automate data preparation, analysis and insights, simplifying complex data sets for non-technical users.
Further dedication to ethical data use amid the ever-growing emphasis on privacy implications surrounding sensitive personal employee data.

The future of people analytics centers on leveraging data-driven insights to improve talent management, optimize workforce planning and enhance the overall employee experience.

FAQs

What’s the future of people analytics?

Considering the rise of AI, the future of people analytics is likely in the world of predictive analytics. HR managers and departments can use data and powerful AI tools to forecast workforce patterns and events accurately and effortlessly.

Is people analytics a growing field?

Yes, people analytics is a growing field, and it’s showing no signs of slowing down. It’s a vital practice that helps HR managers and organizations better manage their employees and promote good organizational culture, with 71 percent of HR executives calling it essential to their overall HR strategy.

How is AI transforming the future of people analytics?

Just like many other industries and fields, AI will be a factor for HR professionals and people analytics practices. While AI is unlikely to replace HR professional and their departments, it can be used as a tool to help with people analytics in the following ways:

Data analysis
Automating and streamlining repetitive tasks
Improving data-driven decision-making
Eliminating human error and bias in hiring/recruiting

What’s another name for people analytics?

People analytics is also commonly referred to as things like HR analytics, workforce analytics or talent analytics. While these four terms are often used interchangeably, they all have the same principles.

Which companies should invest in people analytics?

Businesses of all industries and sizes can benefit from effective people analytics practices. At its core, people analytics is about gathering insights from employee data that facilitates key decisions on vital things like diversity and inclusion, employee well-being and retention, growing and promoting positive organizational culture and balancing distributed workforces and hybrid work.

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Next Steps

People analytics has emerged as a critical tool for gaining valuable insights into your workforce and driving better business outcomes.

However, by leveraging data-driven insights, people analytics raises several ethical considerations regarding privacy, fairness and transparency. As such, make sure to maintain ethical standards in your use of employee data and comply with data protection regulations.

Overall, the importance of people analytics will only continue to grow as organizations seek to optimize HR functions and drive better business outcomes. If you’re looking for an HR solution to assist your analytics process, our free comparison report makes it easy to evaluate products based on the features you’re looking for.

How has your business benefited from people analytics? Let us know in the comments.

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What’s the Hype Around People Analytics?