The People Function runs the risk of conforming to the ideas and perceptions of the People Leader and/or the team. While the Leadership provides critical inputs and rolls-out the action plan for implementation, there is a need to keep decisions free from judgment and bias. This is particularly true for talent functions, not only because it deals with the ‘people question’ which is not set in stone, but also because of the ‘strategic’ nature of the decisions. These decisions have wider ramifications on business resilience, productivity, and financial health.
Data is impersonal and mostly unbiased, though the interpretation can vary.
What is People Analytics?
People Analytics, also known as HR Analytics, Workplace Analytics, or Talent Analytics, has become a catchphrase in HR tech. Before moving further, let us find out more about it.
Gartner has defined People Analytics as:
“the collection and application of talent data to improve critical talent and business outcomes. People Analytics leaders enable HR leaders to develop data-driven insights to inform talent decisions, improve workforce processes and promote a positive employee experience.”
People Analytics is a data-driven approach which enables business leaders to take decisions based on the data and insights rather than on the basis of traditional methods which may be colored by perceptions, personal relationships or experience. People Analytics utilizes technology and data to assist business executives in making informed decisions.
According to Redthread Research, People Analytics can be classified into 10 sub-categories. While this is a particular list, what constitutes People Analytics and what does not may be defined by the end-goals of an organization. However, the broad contours include the following domains:
- Employee Engagement/Experience
- Multi-Source People Analytics Platforms
- Organization Network Analysis (ONA)
- Workforce Planning
- Labor Market Analysis
- Learning Analysis
- DE&I/Pay Equity Analysis
- Employee Coaching
- HCM/Integrated Talent Management Analysis
- Text Analysis
Why is People Analytics An Integral HR Function?
People Analytics is the new frontier for the People function which can be applied to a variety of HR activity. Organizational people data can assist teams in talent acquisition activities, streamlining and improving performance management frameworks, help retain critical talent, and assist in succession planning. Over the years, analytics has become an integral part of the HR processes, so much so that organizations are spending time and resources in up-skilling HR professionals in leveraging and embedding analytics in to their routine functions.
In a nutshell, People Analytics has the potential to support HR managers to isolate talent hubs, understand talent demand & supply dynamics, home in on potential talent pools, create a talent pipeline of the future, benchmark performance, set compensation & benefits (C&B) standards, and map talent with business functions.
Though it may sound cliche, with all the research and supporting evidence in its favor, there is little doubt that embedding analytics in to the people function can greatly enhance the transactional nature of the HR function and drive it towards a strategic level. The HR teams are generally viewed as support staff, being a cost-centre and non-client-facing function. That has begun to change; by implementing analytics, the People function can pivot to being a strategic force multiplier.
What Does it Bring To The Table?
Organizations need to understand the power of people data. The explosion of data is changing the way organizations work or respond to marketplace changes. In today’s competitive labor market, where the talent wars are changing the workforce dynamics, companies must use people analytics to get a clear picture of what is working and what’s not.
Below are some of the impact areas of leveraging People Analytics:
- Pinpoints Issues in Hiring/Talent Acquisition
People analytics can help businesses to identify attributes that produce long-term, best-performing employees. In addition, it can help the HR team and managers find the best-fit candidates – whether from job boards, social sites, or from employee referrals. Furthermore, it also focuses on where they are losing the candidates – is it at the sourcing/interviewing stage, or if selected/offered candidates are not willing to join because they had a better offer.
- Saves Time
One of the most significant benefits of people analytics is that it saves time. People Analytics can empower teams to focus on employees and programs that benefit the organization, allowing the HR team to spend more time on actions that will provide better results for the company.
- Removes Bias
One of the most common problems organizations face is how they can remove bias while hiring a candidate or offering a higher position to the employee. People Analytics provides insights that the teams can use to inform (both candidates and employees) and empower their strategic decisions. In addition, using employee data, people analytics enables both the HR team and managers to make less subjective and emotion-based decisions.
- Improves Employee Experience
Organizations have always been inclined to increase their customer satisfaction, look for ways to improve customer experience, and neglect employee experience. However, they should consider that employee satisfaction is paramount for the overall success of the organization. By integrating people analytics, teams can gather information using feedback forms, surveys, interviews, performance reviews, customer feedback, and social media inputs (Glassdoor, Indeed etc.) and then analyse and compare the data to understand employee experience across a range of parameters, identify bottlenecks, levels of dissatisfaction and then find ways to improve any dissidents.
- Access to Real-Time Data
The market is awash with software that uses Machine Learning to assist employers with the information and data required to maintain staff and operate their businesses efficiently. People analytics tools search for patterns and models associated with employee behavior, performance, and other factors that may be tough to monitor consistently, producing extensive reports for the HR team and management on a real-time basis to act upon.
- Identifying Skill Gaps
One of the biggest problems for any organization is the skill gap (absence of requisite skills) that hinders performance, growth and time-to-market. It is more pronounced than before, particularly when companies are scouting for talent within limited pools. It is challenging to identify the skill-sets required to execute projects. However, with the amount of information provided by people analytics software, HR teams and management can pinpoint what an organization lacks in terms of skills. This can go a long way to plan for skills fulfillment, talent mapping, targeting candidates etc.
On the Organization Development/ Training side, People Analytics can help ascertain talent pockets within an organization that are most suitable to up-skill in selective domains. It not only helps to identify the skills domain that are required for success, but also helps to understand the talent mix that is required to inculcate those skills within the organization. This can have a profound impact on the need for training, the numbers, metrics, cost and the critical success factors.
- Reducing Employee Turnover
The global Labor market is witnessing an upheaval. As it is, new skills are moving up the desired list of recruiters in response to changing job descriptions, it is also the time of the so-called ‘Great Resignation’. 4mn Americans have quit their jobs in the month of July, 2021 according to the data from the Bureau of Labor Statistics. At the end of July, 2021, there were a whopping 10.9mn open jobs just in the United States. Resignations are higher in the Healthcare and the Tech industries. Unfortunately, hiring new employees costs thousands of dollars for the company. People Analytics can come to the rescue in such as situation. It can assist companies in quantifying the problem, identifying the root causes and develop tailor-made retention policies. In addition, Analytics can also shed light on those employees who might leave the organization in the future, pointing out any possible employee losses before they actually occur, providing an opportunity for HR teams to plan ahead of the events.
What are the Challenges In Implementing a People Analytics Program
According to a survey by Harvard Business Review, one in three HR professionals find that the major hurdle in achieving better use of data was “inaccurate, inconsistent, or hard-to-access data requiring too much manual manipulation.”
Decisions made by the experts tend to be more accepted by the management and employees rather than the decision taken based on just data pointers. For example, candidates and employers both prefer subjective-based hiring rather than data-based hiring.
Below we have highlighted some of the common challenges companies face, which act as hindrances to successful implementation of People Analytics program.
1. Lack of a Data-driven Mind-set
For organizations implementing data-driven HR functions, there is a need to invest a considerable amount of time, money, and resources on collecting, storing, and accessing the data. This involves investments in training and up-skilling people, processes and technologies (such as software platforms). However, due to historical reasons, when it comes to the HR department, the majority of the team members do not have adequate knowledge or training for data acquisition and usage. As a result, it becomes more challenging for the teams to analyze data in to meaningful insights. Building a data-first mind-set is of prime importance to make sense of the voluminous data available. One of the key levers in this is to train people to use data.
2. Lack of Requisite Skills
According to an IBM report, the demand for Data Scientists and Data Engineers is projected to grow by 39%. However, the bulk of this demand comes from the Sales/Business Development, Production/Manufacturing, Consumer Insights/Market Research, Marketing and Finance functions. The People function lags behind in terms of attracting the right analytics/data talent to work for them; and companies do tend to neglect it.
On the other hand, HR managers and staff are mainly graduates with MBA HR, and they don’t possess the skills or knowledge related to data analytics. Therefore, they will not be suitable candidates for up-skilling in most cases compared to other desired employees in other departments.
3. Data Cleansing
Shifting from legacy systems to platforms/data-analytics tools, represent a big challenge for the tech teams; e.g. transferring the data to the new systems without glitches, errors and downtime, while maintaining the sanctity of the data. User-generated unstructured data can slow down the processes to a great extent. Thus cleaning the data, standardizing them in a format which is compatible with the new systems, ensuring data consistency are the major indicators that need to be addressed. Instead of ignoring such warning signs, teams handling these projects should find ways to cleanse the data and update the new systems for future usage.
4. Data Governance and Security
One of the prerequisites of any data-driven people function is the switch from emotions-based approach to a data-first approach. Data governance, privacy, and security will be the critical aspects that can either stymie or enable any such initiative. For example, how does a company collect people data, where is data stored, what are the necessary permissions, what data-safeguarding framework is in place are some of the key considerations.
Some of the considerations are:
- Documented Policies
- Regular review of approaches and technologies
- Educating employees about the changes happening across the HR department
- Understanding GDPR policies and implementing them across
5. Cost of Implementation
Opting to leverage people analytics will help organizations streamline their HR practices, but the implementation cost is high. Another important cost factor is the training of the staff or hiring new employees who are familiar with the tools.
When it comes to Return on Investment (RoI), people analytics is not visible, and it does take years to showcase the results to the management.
What are The Prerequisites to Apply People Analytics?
The primary function of people analytics is to provide insights to the management that allows them to make informed decisions, which improves business performances, employee experience, and productivity.
So, how can the HR teams make it work for the organizations? Well, they do need to follow specific guidelines and practices to achieve the goal. In addition, HR teams and organizations need to remember that people analytics strategy varies across companies, and one size doesn’t fit all. In this article, we have highlighted a few critical checklists that can apply to a wide range of companies:
- Data Quality: The quality of the data will be the key to success for implementing people analytics. Metrics used for measuring the data should be simple and easy to intercept.
- Identifying the Role: Identifying the best fit candidate to lead the function (e.g. data scientist/visualization expert to handle the data and implement people analytics). Organizations must invest in dedicated data-engineering resources with the requisite temperament, skills and knowledge that work towards data creation and quality control.
- Understanding the Business: Understand the business needs – Selecting data directly relevant to the company’s success is the first big step in applying people analytics. If the organizations are not sure which data brings results, it is evident that people analytics will be a failed mission.
- Data-first Culture: A culture of trust, empowerment, and ownership is the critical foundation for ensuring that people analytics will yield the right results for the company in the longer run.
What Are the Current Trends?
The newer employee engagement models such as ‘Hybrid Work’, BYOD, greater thrust on Information Security and push to the Cloud have resulted in the growing importance of data as the key enabler of decision-making. As a result, data is more critical than ever. Data trends and analytics that were in the nascent stages earlier have evolved radically to help organizations improve remote work performance and boost employee engagement.
In recent times, there has been an increase in the usage of People Analytics to improve performance and boost employee engagement. HR managers can use data on employee performance, time management, relationship with colleagues, and soft and hard skills to make data-driven decisions when promoting internally. Companies need to analyze certain current and future trends that will have a long-lasting impact on HR management.
- Increase in Investments
According to a PWC survey, a stunning 86% of respondents reported that they have been implementing People Analytics and that it has been identified as one of the key priorities for the organization in the next one to three years. Moreover, around one out of two (46%) respondents mentioned that their organization has already implemented a People Analytics program.
When it comes to managing people data, there is a need for one Data Analyst for every 3,567 employees. Companies are planning to hire additional resources to manage people analytics functions.
- Emphasis on Employee Experience and Well-being
Employee experience is all about how employees engage and interact with potential/employers. Employee Experience spans the entire life cycle of the employee, right from sourcing, interviewing, offer management, employee on-boarding, compensation, training, performance management, and exit processing.
Employee well-being is one of the critical people analytics trends in 2021 and beyond. COVID-19 pandemic has highlighted the need for companies to focus on employee well-being. In addition, companies realize that poor employee well-being (both physical and mental health) will affect the company and its culture.
Employee experience is more essential in the remote work environment, where an overload of virtual interactions can lead to fatigue and burnout if not adequately managed.
- Identifying New Leaders
The Pandemic has forced companies to identify and nurture ‘Leaders of the Future’ on a fast-track basis. With the assistance of People Analytics, organizations will be able to identify future leaders and can manage succession planning better. During such challenging times, there is a need to choose and nurture employees, especially at the managerial levels, which is critical for the business. This is where People Analytics can help; using data, the teams can analyze employee performance over time using different yardsticks (KPI and KRA).
Promoting employees based on the outcome of the data will be another significant trend going forward. People Analytics tools can come in handy while promoting candidates. Using People Analytics can pre-empt wrong promotions to a large extent, not relying only on seniority or bias, but also take in to account the potential, skills and domain knowledge.
- Moving Beyond HR
As has been discussed above, the Pandemic has accelerated the use of data, across organizational functions. The Talent space is no different.However, with the extended envelope of data usage, the People Analytics function can go beyond decision-making within the Talent teams to include other critical aspects of business. In other words, People Analytics can help the C-Suite to find synergies with the overall performance, strategy, growth and the key success factors that can make a difference. There is a large scope to collaborate with other teams and take the learning across different functions.
People Analytics focuses on individuals, but it can shift to include broader impact areas. It enables the HR and CXO’s to analyze the flow of communications, information, and decisions within the company, to gain meaningful insights that will aid strategic decision making.
Final Thoughts
People Analytics has played a crucial role in transforming how HR leaders make decisions. However, it is more than just an emerging HR trend today, and it has become central to an organization’s broader people strategy.
With the introduction of new technologies, People Analytics has become an essential part of the HR function. As a result, HR executives are trying to find ways to integrate these new technologies into their operations.
We can predict that many HR executives will be using predictive analysis for hiring decisions by 2021. This is because employers are looking for a way to make sure they can hire candidates who are most likely to succeed before they even start work.