People analytics is one of the hottest topics in the world of HR. This is understandable as people are the most valuable resource the organization has access to. But the implementation of people analytics also contains a great promise of transformation - the transformation of HR from a supporting business function to a strategic, revenue increasing partner.
This article is intended to explore the essence of people analytics and future predictions in the field.
What is people analytics?
People analytics is the practice of making data-based decisions about employees and people. First introduced by Google and populated by the article How Google Is Using People Analytics to Completely Reinvent HR
, people analytics caught the industry by storm. The concept is new - it only first caught public attention in 2013 - but people analytics is already experiencing some transformational changes.
Despite people analytics being completely data-driven, it has the power to solve intrinsically human problems such as workplace dissatisfaction, frustration over the poor management, and weak corporate culture. People analytics is a versatile HR tool that helps keep people happy and satisfied while also improving HR and recruitment processes.
Several factors have caused the rise of people analytics:
- The improvements in technology and software have led to an increased amount of data available.
- HR departments are currently under pressure to justify their decisions. It’s a commonly accepted business standard these days to make decisions based on data and not on the inner hunch or one person’s judgment.
- The need for people analytics was always apparent. HR data was available long time before people analytics came into the picture, however, there was no easy way to leverage that data.
How does people analytics work?
People analytics can greatly reduce human errors and prevent decisions made based on personal biases. For example, often times HR professionals view recruitment process as an established workflow and ignore new ways of finding candidates. People analytics helps identify most effective ways to recruit employees thus making the recruitment process faster and easier.
Additionally, people analytics helps HR departments comply with legal regulations. Current regulations place an increased emphasis on non-discriminatory hiring. By enforcing data-based processes of finding new candidates, people analytics prevents the breach of law.
The main components of people analytics
1. Performance Evaluation
Performance evaluation is a key component of people analytics. Performance can be measured in many different ways, but the way performance measurement is set up now at many companies implies that outcome is valued more than the process. This is a human bias that often stands in a way of correct performance evaluation. People analytics helps remove that bias.
Performance evaluation is based on four key components: regression to the mean, sample size, signal independence, and process vs outcome. With people analytics, HR professionals are able to separate luck from real skill.
The signs of being busy are also often taken as signs of great performance, which is not necessarily true. People analytics reduces the risk associated with human bias in performance evaluation thus creating a more clear, structured, and honest picture of organization’s performance.
One of the most important functions of HR is staffing or, in other words, finding the right people when companies need help. In the staffing field, people analytics deals with three components: hiring, internal mobility and career development, and the ever-present employee burnout.
With people analytics, you can increase the chances of finding the right people for the right jobs. People analytics can also improve employee happiness, as you become more informed about employees’ attitudes and moods.
Collaboration is another area that people analytics can help deal with. Even though you might think that collaboration can’t be measured, there is a plethora of data that is used to describe and assess the effectiveness of collaboration. In particular, people analytics allows you to create an organizational map of collaboration, that shows the patterns people follow when they work together on a project or task.
Collaboration is one of the crucial factors in a project’s success. If you want to reach maximum project involvement, people analytics is a surefire way to make people more productive and motivated.
4. Talent Management
As you improve at performance evaluation, staffing, and collaboration, your organization becomes more lean and stable. The next step is to help people develop within the company. The company’s efforts in supporting and promoting its own employees are often referred to as talent management. People analytics aids talent management in many different ways: it reveals employee behavior patterns, keeps track of employee development within the company, and identifies low and high points in employee engagement.
However, talent analytics isn't a perfect mechanism and you need to be aware of its four major challenges: context, interdependence, self-fulfilling prophecies, and challenges related to working with algorithms. These challenges are usually produced by the human bias or over-reliance on data.
The discipline of people analytics is exploding. For years people analytics was considered a small part of Human Resources. Nowadays, many businesses see people analytics as a business instrument that can be applied at every level of organization. According to the data from High-Impact People Analytics study, 69% of companies are integrating data to build a People Analytics database.
Moreover, the companies are constantly expanding the types of data they analyze. This is partly dictated by the greater amount of data available as employees actively use various communication channels and social media, but also companies express strong interest in making data-driven decisions. Business strives to gain access and analyze as many data types as possible. Here are the various types of data companies have access to these days: employee engagement, employee recognition, employee communication, employee wellbeing, travel, location, and even feelings and emotions.
Another trend that affects people analytics development is AI and Machine Learning. An example of AI used in people analytics might be a machine learning algorithm that identifies the behavior of best salespeople and then uses the collected data to train new people. Tracking location and travel patterns of highest performing employees can tell companies a lot about effective time management and that knowledge can then be imparted to the rest of the team.
Along with opportunities, people analytics raises a lot of concerns. The ability of people analytics to deliver highly personalized recommendations can backfire as more and more employees become active proponents of personal privacy. Even though people analytics is an internal data collection and analysis process, the possibility of the breach of data is real. In such a situation, businesses are encouraged to take privacy matters seriously and strictly follow local regulations.
While the majority of companies recognize the benefits of people analytics, only a few have technical capabilities to implement it. People analytics requires a specific set of skills that only a few people possess. The skills required include technical, analytical, and communication skills, which is a curious and hard to find mix. Therefore, hiring outside people analytics consultants can be costly and companies are forced to invest in the education of HR department employees.
Some other tips to keep in mind are to avoid doing analytics for analytics sake and focus on insights instead of numbers. People analytics is a technically complex and data-driven field but its real value lies in its ability to bring improvement to processes, workflows, and business results. Additionally, when used correctly, people analytics can increase employee satisfaction and happiness. So find opportunities for improvement instead of mindlessly reporting on the results of data collection and you’ll put people analytics to the right use.