One of the major themes of the 21st-century workplace is our reliance and dependence on data and people analytics in order to make informed decisions. It's necessary from making calls on performance evaluation to budget allocation. Data analytics have become such a significant part of the workplace that companies are expected to put tools and protocols to capture any data that might generate valuable insights for the business going forward.
According to a recent update to the Worldwide Big Data and Analytics Spending Guide, global private sector spending on big data and business analytics (BDA) solutions is expected to exceed $200 billion this year. This is up 10% from 2020. And if you think that growth is simply a result of the bounce back from the pandemic, then think again. The projected compound annual growth rate (CAGR) for BDA spending from 2021 to 2025 is 12.8%.
In the modern workplace, a company's ability to capture data on its internal operations, customer behaviors and preferences, as well as its competitors' performance, has a direct correlation with that company's ability to compete, survive and thrive in its industry. As a result of this correlation, managers are scrambling to understand what data they need to capture, how to extract it effectively, and how to mine it for relevant insights for the business to pursue to grow its bottom line.
However, while managers have accepted integrating data analytics into almost every department, the uptake has been especially slow in the HR department. If your organization has an HR department that hasn't integrated HR with data analytics, specifically people analytics, then you are missing out.
People analytics can help your HR department achieve its core objectives like recruitment, team integration, performance evaluation, employee retention, workplace culture implementation and many others. You can't overstate the benefits of using people analytics when designing and implementing your HR strategy.
But before we go into why you should engage in people analytics in your HR department, let’s start by briefly explaining what people analytics is.
What is people analytics in HR management?
According to Gartner’s glossary, people analytics collects and applies talent data to improve critical talent and business outcomes. With people analytics, HR managers can make data-driven decisions that can enhance employee productivity, cross-team communication, and workplace culture. This can have a significant impact on employee morale, engagement and satisfaction, which will improve employee retention.
For example, let's imagine that your HR team just implemented a new remote training program for all your employees, who are spread across several cities in the US. To gauge the success of that training program, HR needs to implement protocols to gather feedback from the employees on how helpful they feel the program is to them. Beyond basic survey questions asking ‘Was this helpful?' you also need to assess how many questions were asked to HR about the training which helps gauge how easy it was to use and understand. By tracking people analytics long term, you can answer questions like ‘months down the road, were the people who took the training less likely to complain about internal opportunities?’. This is the type of data that helps leaders make key strategic decisions and is just one example of how people analytics can help HR managers meet their objectives and positively impact the organization.
However, employee training is not the only HR objective that can be aided by people analytics.
What are some HR benefits of people analytics?
The HR department of any organization is an essential part of any organization. HR is in charge of everything from recruitment, onboarding, payroll, employee engagement, performance and retention. HR is also in charge of mediation and conflict resolution among employees and implementing a healthy workplace culture. This makes HR responsible for the well-being and performance of the organization's literal lifeblood: human capital.
However, because HR has to engage with all employee-related issues, concerns and complaints in real-time, most HR staff spend a significant amount of their work hours (as much as 80% in some cases) reacting to employee issues and queries. This reactive approach to HR management hinders the department’s ability to be strategic and proactive when dealing with employee issues.
That, in turn, keeps the HR department occupied and reactive and doesn't leave much time for the team to pursue its strategy and meet all its objectives. With people analytics, the HR department can use people analytics to anticipate certain HR-related events and plan for them in advance. With prior planning, the department can make sure that all its actions are premeditated, proactive, and preventative.
This data-driven approach helps HR take care of issues before they fester, which would leave the department more time to meet its wide range of objectives. Some of the HR objectives that can also benefit from people analytics include:
Recruitment and Onboarding
The recruitment and onboarding process is well positioned to benefit from an integration with people analytic systems. During the recruitment process, HR considers a wide range of factors before extending an offer to someone. For example, the department has to look at a potential recruit's academic background, previous work experience, leadership qualities, ability to work in a team, etc.
All these factors help HR evaluate whether a potential recruit’s skills will add value to the company and whether they would be a good fit with the company’s culture. All these factors are data points that can be tracked and compared across different potential recruits to find who the best fit for the business is. Therefore, deploying a people analytics tool would speed up the recruitment process and increase the likelihood of finding the best match for the position you are trying to fill.
Furthermore, organizations today have values like diversity and inclusion that have been found to improve productivity, creativity and workplace culture. These values can easily be taken into account by the people analytics tool you are using and implemented directly to ensure the recruits you are considering fit within the organization's values.
Employee engagement is one of the main drivers of productivity in the workplace. That is why engagement is a top priority for every HR department in the United States. According to a Gallup survey, companies with a high level of employee engagement have on average 22% higher revenue compared to competitors that don’t prioritize employee engagement.
Furthermore, they have 65% lower employee turnover, 10% higher customer ratings and 21% higher productivity. These engagement high-achievers also report 37% less employee absenteeism than their less engaging competitors. These numbers demonstrate the remarkable ability for engagement to change the efficiency and profitability of a business.
However, for HR managers to improve employee engagement, they first need to measure and track it. This is where people analytics come in.
With people analytics, HR departments can gather data on engagement levels across the organization. They can track the drivers and inhibitors of engagement and put in place a data-based strategy to increase engagement in the organization.
Diversity, Equity, & Inclusion
Many companies have given HR the responsibility for creating and implementing an end-to-end DEI strategy instead of hiring for a specific role or creating a designated department to tackle this issue.
As many HR departments implement a diversity, equity and inclusion strategies to develop welcoming workplace cultures, pay equity is now high on the agenda. Ensuring employees are paid based on performance and experience and not on discriminatory factors like race and gender is vital to achieving equity in the workplace.
With people analytics, it is much easier for the HR department to identify employee compensation discrepancies and implement a strategy to achieve a more equitable pay scale. This would increase employee engagement and also reduce the level of conflict and dissatisfaction among employees.
No matter how you spin it, it always looks bad when a high number of employees voluntarily leave your organization. Especially if this is paired with negative Glassdoor reviews and blasts on twitter or Blind. This can pose a challenge for your PR team as it manages potential reputation damage and can deter top talent from working with you. It can also generate negative attention that can spread to the consumers, as seen recently with the #AppleToo movement started by Apple employees.
High employee turnover has clear monetary costs too. According to a survey by Deloitte, voluntary employee exists can cost companies over $100,000 to refill each position.
With people analytics, your HR department can get on top of the reason that employees are leaving and answer the three main questions of employee retention;
- Which department is posing the most significant risk to the business due to high employee turnover?
- Why are employees leaving, and by extension, why are they staying?
- Who is most likely to leave?
By helping you answer these questions, people analytics can give you a clear sense of your turnover rate and why. Furthermore, it can help you anticipate departures and either prevent them or recruit replacements before the departure even happens. This proactivity could help you recruit the best available candidate for the job instead of scrambling to fill a gap you didn’t plan for.
One of the main objectives of an HR department is to facilitate seamless communication between the different departments and teams. Reducing the lag time for cross-team communication will increase efficiency and reduce the number of mistakes made due to poor communication between teams.
HR departments can use people analytics to identify the parts of the company’s work processes that create a jam in communication and reorganize those processes to unblock the communication lines.
Furthermore, with people analytics, the HR department can get a good sense of how employees and teams prefer to communicate amongst themselves and work towards streamlining and enabling those communication channels instead of creating new ones.
For instance, you might discover that most of your employees prefer to use Slack instead of email to communicate within the team. Then your HR department could enable this by creating a training program to teach your staff how to effectively communicate and stay on top of their assignments using Slack. This also saves money in the long run as you can lose the other communication tools that aren’t being used.
People analytics are key when evaluating the productivity and performance of individual employees.
Without data analytics, evaluating employee performance can be a subjective and ineffective process. This can cause negative feelings, (eg. favoritism) if employees don’t understand the reasoning for poor performance reviews. This sense of inequity could lead to some employees disengaging or even leaving altogether. This is especially true in organizations with performance benefits like bonuses and promotions.
With people analytics, performance reviews and evaluations can be objective and backed by data. This could also help your employees know the rubric used to evaluate their performance and give them the chance to improve in those areas.
Furthermore, people analytics can also help you identify the top performers and incentivize them, which could lower the level of attrition among your top performers, thus allowing you to retain them.
People analytics is the common ground between the different HR objectives
All in all, people analytics can set excellent HR departments from the rest of the herd. Objectives like productivity, engagement, retention, etc. are all more likely to succeed with data-backed strategy and decisions.
This means that if you deploy people analytics in your HR department, you can track and manage the progress on all your objectives in one place since they all become data-driven parts in one unified HR strategy. This saves your team a lot of time and resources that they would have spent trying to identify the issues with the strategy and brainstorming solutions. Solutions which must be deployed on a trial and error basis since there is no way to know what will work for your organization and what won’t. People analytics makes HR management more easy to evaluate and mark areas for improvement.
Now that we understand how people analytics connects many core HR objectives, let's dive briefly into best practices on how to use people analytics.
How to use people analytics to meet your HR objectives
Integrating people analytics with your HR management strategy is not as simple as it may appear. There are some key steps you need to follow if you’re going to be successful. Here are some steps to guide you as you integrate people analytics into your HR operations:
1. Set clear goals
Before you begin gathering any data to analyze, it is important to identify problem areas or goals that you hope to achieve using people analytics. The more clear and precise the goals are, the better.
It’s important to start here because setting clear goals will give you a better understanding of the data you need to capture. Data can be generated on everything, so you don’t want to gather any and all data in the hope that you catch something helpful.
Furthermore, setting clear goals will help you evaluate the performance of your people analytics strategy and modify it until it’s most effective.
2. Identify the technology you are going to use
To execute an effective and efficient people analytics strategy, you need to integrate various technologies and software into your work processes. The type of technology you need will depend on the nature of the data you want to gather and the goals you set.
For instance, if you want to find out what time your employees get to a physical workspace, you might need to install a key card system for employees to swipe in when they arrive. If your employees are working remotely, you might need time tracking software.
In addition, you will need access to data extraction software that can extract all the relevant data you need for your analysis, store it in one location for analysis and help you make sense of all the data you have gathered.
Take time to get the right software for you, since getting it wrong could cost you time and money to later switch to a different people analytics software.
3. Extract the data
Once you have set up the necessary infrastructure to capture relevant data, you need to start extracting. Again, depending on how much data you are gathering, this could be an exhausting process if done manually (more reason to find a solution that can do the heavy lifting for you).
Integrating with a data extraction platform with AI and machine learning speeds up both the data extraction process and it automatically displays the data in a way that’s easy to read. On the back-end, the platform you choose should extract the data, clean it, correct and present it in an analysis-ready format. This will also be completed in a fraction of the time it would take human analysts with a much higher level of accuracy.
4. Make informed decisions
After analyzing the data and generating data-driven insights, you can start working on building a data-driven strategic plan to help you achieve your top goals.
Feel free to reiterate this process as many times as it takes to start seeing the results you want. Then, keep evaluating your strategy and keep refining your goals till you have integrated people analytics with every part of your HR management roadmap goals.