How People Analytics Can Help Your Business

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As a concept, people analytics (or human capital analytics) has been around for years. Yet, if you’re like most businesses, the idea of incorporating advanced analytics into your HR practice is fairly new.

Thanks to technology and innovative approaches to data collection, however, what was once seen as complex and only available to large corporations is becoming more accessible and mainstream.

That’s important because HR analytics can help business leaders at companies of all sizes make thoughtful, data-driven choices when planning their HR strategies.

Still, if you’ve been holding out on embracing it – or if the phrase is completely new to you, you may be wondering:

  • What is people analytics?
  • Who can use it?
  • What can a business leader do with it?
  • Will it be worthwhile?

To help you get some answers, let’s take a closer look at how HR analytics can better your workforce.

What is people analytics?

analytics is the practice of collecting and transforming HR and organizational data into actionable insights that can improve the way you do business.

By transforming raw data into meaningful insights, answers and solutions, people analytics gives you the ability to better understand your workforce and organization.

Using these insights, you can back up your instincts with facts and rely on data-driven strategies to help your organization grow while empowering and maximizing your most critical asset – your people.

Some of the most powerful and universally valuable people analytics are predictions for:

  • Turnover
  • Retention
  • Attrition

Driven by machine learning and artificial intelligence, human capital analytics can enable you to:

  • See the risk of employees leaving in advance.
  • Understand the underlying drivers influencing why they might leave.
  • Create an actionable plan for how to keep them.

Committed to inclusivity? HR analytics can also help you assess how diverse and inclusive your workforce is, potentially uncovering whether any hidden biases or inequities exist as you work to increase your workplace diversity efforts.

Who can use people analytics?

Companies in almost every industry can benefit from the actionable insights you can draw from using people analytics.

This is especially true once you’ve passed the 100-employee mark – when the size and the level of organizational complexity makes the data richer, but these insights can even be useful to companies with as few as 30 employees.

Beyond standard talent management analytics, the industry that you’re in will dictate which other aspects of people analytics will be most useful to you.

For example, if you’re in retail, manufacturing, home healthcare or any industry that employs mostly hourly workers, then overtime and compensation analytics will be very useful to you.

To reiterate, there is something for every company to discover with people analytics, but your category of business will determine which parts of the data are most important to you.

6 people analytics use cases

Let’s take a closer look at how exactly you can use people analytics to make strategic decisions and improve your business.

1. Turnover and retention analysis

With the help of technology, you can use people analytics to see not just who might leave your company, but why they might go. You can dive into these risks among various groups of employees – whether that’s first-year employees or senior leaders.

On the flipside, you can also use people analytics to understand what factors are keeping people at your company. In some cases, you may begin to see a correlation between management training and employee retention that you may want to address.

2. Workforce modeling

People analytics tools can paint a picture of what your workforce would look like in the future, whether that’s 12 or 18 months down the road, based on variables that are pertinent to your budget or growth goals.

This can help you turn a basic staffing plan into a longer-term strategic workforce plan, making more appropriate hiring decisions along the way. You can also use this information to create better compensation and retention plans.

3. Labor cost analysis

With people analytics technology, you can discover factors that may be driving up your labor costs, such as patterns of overtime or absenteeism or workforce shortages.

4. Management problem analysis

People analytics can help you pinpoint management problems that are causing some of your biggest business and HR challenges.

For example, your data may reveal a location or department where there is a pattern of:

  • High turnover
  • Low performance
  • High employee dissatisfaction
  • High use of overtime
  • Or other challenges

Approaching these problems through the lens of the data can give you an unemotional viewpoint, making it easier to decide how to solve them.

5. Generational analysis

What if you could predict who is likely to retire within your organization in any number of years in the future? With HR analytics, it’s possible. At the same time, you can research what the succession pipeline looks like underneath those positions nearing retirement.

You can also use people analytics to find patterns within each generational group that comprises your workforce. Are there trends related to retention, performance or career progression among certain groups?

6. Pay equity and diversity analysis

Another important use for people analytics is the ability to look at compensation and see if any pay inequities exist between genders, sexual orientations or generational groups.

You can also look at the true diversity of your organization. For example, do you have a homogenous management group? Do you have female leadership at all levels?

Getting these answers can help you develop fairer and better hiring, promotion and pay practices. Over the long run, these efforts will add up to better business performance, too.

3 keys to success with people analytics

1. Data cleanliness

Data cleanliness and accessibility can really affect the results of your people analytics.

If your HR data is messy or disorganized, it can degrade the experience and generate less valuable or potentially even misleading insights.

It’s worth it to take the time before you embark on a people analytics journey, to ensure that you have:

  • A data cleaning strategy (also called data hygiene)
  • An ongoing data governance plan

This activity doesn’t have to be overly complicated or burdensome, but ongoing commitment to quality data will determine how useful the people analytics results will be.

2. Leadership commitment

If your company leaders aren’t committed to looking at your data with an objective eye and incorporating it into your strategic HR plans, investing in people analytics technology can become a means to no clear end.

To get the most benefit from people analytics, your leaders must be ready to rely on the data (in addition to instinct) to make decisions.

3. Change management

HR analytics is more about follow-through and change management than just looking at the data.

If the data helps you learn about a new problem, there will likely be a learning curve or growing pains involved in finding the right solution and designing an effective change agenda.

Your organization must be committed to finding a way forward or to getting the right kind of help to make people analytics a worthwhile investment.

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