Finance and marketing departments have, for years, used analytics to understand business trends and gain the insights they need to make better decisions. Now, human resources (HR) departments are also starting to embrace the benefits of data-driven decision-making. People analytics empowers them to enhance how they recruit, develop, engage and retain employees.
Online learning provider, ICSA Learn, offers this definition of people (or HR) analytics: “HR analytics… is the process of collecting and analysing HR data to enhance overall organisational performance. [It] applies statistics and analysis of employee-related factors (i.e. recruitment and employee experience) to provide leaders with direction on how to improve business solutions.”
Organisations can no longer afford to make workforce and HR-related decisions based on instinct or intuition. HR analytics enables them to move away from making decisions by feel towards using employee-based data to drive better business outcomes. This data can include performance and talent management information, demographic data, psychometric data, employee surveys and more.
People analytics success factors
Success with people analytics will depend heavily on two factors. The first of these is the quality of the data available. HR departments will generally need to work with IT to identify which data they could access, how clean and complete it is, and which tools they will need to drive insights from the information at their disposal.
The second is about applying people analytics to answering the right questions. Without framing the right question, the organisation will not get the best return on investment from people analytics. Examples of such questions might include:
- Where did our best hires come from?
- Why are we seeing such high staff turnover among women in our HQ as opposed to our Durban branch?
- How can we predict whether someone transferring from one branch or function to another will be a good fit?
- How satisfied are employees with our work from home policy?
- How have performance and morale been affected by the pandemic?
- Why is absenteeism so high in a particular branch?
Practical ways to use people analytics to make better decisions
- Optimising people-related costs: According to The Blueprint, one of the most useful applications for people analytics is understanding workforce costs in granular detail. This lets you understand whether you are getting the expected return on investment from training, or if your leave pay or overtime costs are out of control, for instance.
- Improving employee experience and engagement: As in marketing, personalisation of user experience matters more than ever in HR. Many companies are now using people analytics to better understand the employee’s journey and level of engagement with the company and support them with appropriate rewards, benefits, training and content. For instance, they can start to segment their workforce into categories such as ‘ambitious young performers’ or ‘seasoned mentors’ and create propositions that answer their needs and help keep them motivated.
- Streamlining recruitment: Insights from HR data can help you understand how long it takes to recruit a new employee, how much it costs, the best sources of new hires, and how many hires don’t work out. This data can help companies to reduce hiring costs while improving performance.
- Better employee retention: Most HR teams have a reasonable idea about what their levels of annual staff churn are. People analytics lets them dig deeper to find out about employee retention across business units, functions or demographics and identify why employees are leaving. To this end, exit interviews play a critical role and should be part of the exit process for all exiting people regardless of seniority or tenure.This can be used to predict when key resources might leave so that the company can intervene.
- More effective training and development: HR and managers can use people analytics to pinpoint skills gaps, predict which skills they may need in the future, explore employee engagement with the training and development resources available to them and measure the effectiveness of training programmes.
- Boosting employee performance: Data from performance reviews as well as organisational performance metrics can be used to measure and track the performance of teams and employees over time. This can help you see where employees need support, identify star performers for potential promotion, and address team or individual performance gaps.
Moving towards HR analytics will be a complex journey for most HR functions, and they will need to build new skills in areas such as data science and data storytelling to succeed in becoming more data-driven. However, a better understanding of the real workforce dynamics will enable them to add even more value for the business and its people in the years to come.
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