What does people analytics mean?

People analytics is the idea of using concrete data related to your employees to help you make decisions. While you likely collect data in other core business areas, such as sales and marketing, people analytics applies those same concepts to managing your workforce. It can give you a way to answer questions about how your business is operating. You can analyze things like turnover rates and drivers of high employee turnover, labor costs, employee diversity and employee benefits.

Benefits of using people insights

People analytics can give you better insight into your workforce and talent. It uses data to quantify various factors using evidence rather than making assumptions about your employees. Potential benefits of using people insights include:

• Data-driven decisions: With people analytics, you can have concrete data to inform any decisions you make related to business operations and personnel practices. This can help you make better decisions that have a positive impact on your workforce.
• Reduced turnover : Taking action based on what the numbers tell you could help reduce employee turnover. You can use the data to offer better benefits, an improved work environment and more meaningful work for your employees.
• HR interventions: Looking at talent-related metrics can help you identify when you need HR interventions to improve a situation.
• Diversity, equity and inclusion: Analyzing your workforce can help you improve your company’s DEI efforts. You can review your current strengths in those areas and identify opportunities to expand on them.
• Employee performance: People analytics can improve employee performance by identifying barriers and helping you improve those issues.
• Reduced costs: Looking at the workforce numbers can help you control labor costs. For instance, you might recognize that a particular training or software program helps employees work more efficiently or generate more revenue.
• Hiring decisions: Your analytics could reveal common themes in hiring certain types of people including factors that might cause high turnover . The information you gain could help you make hiring decisions that create a strong staff with low turnover.
• Training: Data from your HR department can help you identify training needs, skills gaps and potential opportunities for upskilling certain employees.

Using people analytics

Getting started with people analytics doesn’t have to be difficult. Here are some steps you can follow.

1. Identify your goals

Decide your goals for using this strategy. Start with wider concepts, such as employee retention, productivity, training or labor costs. Then, get more specific with questions or concerns related to those larger topics. For instance, instead of looking at all turnover, you might focus specifically on why your new hire turnover rates are high.

2. Choose your metrics

Once you know what you’re analyzing, you can identify the key data points that can give you more details. Some examples of metrics you might use include:

• Employee turnover rates
• Retention rates
• Time to hire
• Cost per hire
• Absenteeism rates
• Revenue or billable hours per employee
• Time in positions
• Workplace accidents
• Employee satisfaction ratings
• Training costs
• Dismissal rate
• Diversity
• Benefits usage and satisfaction

3. Gather the data

If you already track the necessary data and have it readily available, you have a head start on the process. Pull the numbers for the specific areas you want to analyze. If you don’t have the information in a database, you’ll need to do some data gathering and calculations. You can find a lot of the information in personnel files and HR documents.

4. Look for trends

The data can help you answer questions you have about your workforce and business operations. Look for common themes or trends in the data. For example, do all of your new hires who leave within six months have anything in common? Is there a correlation between employees who went through a specific training program and their productivity rates? Do certain benefits go largely unused by most employees? Looking for these clues within the data can help you identify core problems and the root causes of known issues.

5. Use insights to make data-driven decisions

The insights you gain from the data can help you make changes to how you run your company. Perhaps you discover your high new hire turnover rate is due to insufficient ongoing support after initial training or a lack of necessary skills upon hire. You might decide to expand your onboarding program to include more training and support through the first six months or year of employment. Or, you might decide to change your minimum requirements for the position.

6. Repeat the process

People analytics is an ongoing process rather than a one-time assessment. Repeating the data collection, analysis and decision-making can help you continue to grow and change. The workplace is dynamic, so staying on top of analytics can allow you to adapt to those changes.

Repeating the analysis can also help you evaluate the effectiveness of your data-driven decisions. For instance, looking at changes in the new-hire turnover rate over time could help you determine if your retention efforts are working. This can help you decide if you should continue them or try a different approach.

Best practices for people analytics

Following these best practices can help you establish good people analytics skills:

• Verify data accuracy: Your conclusions and decisions are only effective if your data is accurate. Make sure you’re using clean, complete data.
• Consider the amount of data: If you only have a small amount of data, the conclusions may not be as accurate. If you see similar trends with larger amounts of data, it’s more likely to be true for a larger number of people.
• Avoid biases: It’s easy to go into people analytics with an opinion that you try to support with the data. Avoid having preconceived ideas about what you’ll find. To achieve bias-free results, you’ll want to let the numbers speak for themselves.
• Follow legal regulations: Make sure you’re following all legal and industry guidelines for collecting and using data. You’ll need to protect private data and follow relevant privacy laws.
• Incorporate technology: Using HR software to collect and analyze data can make the process faster and easier.
• Involve other departments: Including leaders from finance, operations and other departments can help you make better decisions. You may need help analyzing certain data or drawing conclusions about it. If you’re considering making changes in a specific department, you might work with that department head to see if it’s feasible.
• Be careful of unintended consequences: Some changes may seem like the perfect solution, but they could cause other unintended issues. Say you implement a new software program that should increase productivity. However, the program doesn’t integrate with other systems you use and has a steep learning curve. This could end up decreasing productivity and leaving employees frustrated.

FAQs about people analytics

What is the difference between HR and people analytics?

The terms HR analytics and people analytics are often used interchangeably. A large amount of data used for people analytics comes from your HR team. However, it also incorporates other data sources, such as marketing and financial information. People analytics—sometimes called workforce analytics—is a broader look at your team.

What skills are required for people analytics?

Analytical and data skills are important for the process. You need to understand the data you’re using and know how to evaluate it to draw accurate conclusions. Communicating what you learn is also important. This can allow you to share what you’ve learned and help managers and executives apply it.

How can you improve your company’s people analytics?

You can learn a lot about people insights simply by jumping in and getting started. However, you might also choose to do formal training. Look for local or online courses and workshops related to people analytics and general data analysis. Sending key decision-makers to these training sessions can help you build a small group of experts within the company.

How does people analytics impact strategy?

The insights gained from the analysis of your workforce may help you identify problems and areas of improvement. You can use the information to create a more people-centered strategy for your company. It can also help you see how effective your strategic decisions are, so you can decide if you’re on the right track or need to shift your strategy.