The Future of HR: The Importance of People Analytics
Technology has made our lives infinitely more measurable. If we choose, we can capture everything we do and turn it into data to be analysed and assessed.
We have watches that track how far we walk and apps that can measure everything from how many calories we’ve consumed to how many times we were disrupted in our sleep.
Business has quickly jumped on the data analytics bandwagon, gathering and analysing data on everything from their customers' online habits to their behaviour in-store.
HR departments, whilst perhaps being slower to get to the party, are now beginning to adopt people analytics as an increasingly integral part of their workforce planning and strategy.
What is People Analytics?
People analytics, sometimes referred to as HR analytics, is a method of analysing workplace data that managers and executives use to make decisions about their workforce or employees.
This process applies Maths, statistics and data modelling to workforce data to discover and predict patterns.
Being able to study past data and make predictions for what is to come is enabling HR managers to:
- Make better, more informed decisions
- Provide smart recommendations
- Discover and keep track of problems
- Engage with individuals and enhance their experience in the workplace.
“Measurement and reporting of the workforce is enabling HR to uncover previously hidden aspects of work, and in some cases even shaping the relationship employees have with their organisations.
From understanding the movement of pickers around fulfilment warehouses to spotting patterns in decisions of investment bankers on the trading floor, people data is more and more becoming part of how we gain insights to improve performance and productivity, but also the engagement and positive experience of work for people.”
– Peter Cheese, CEO, CIPD
How well is HR utilising people analytics?
The CIPD recently conducted a survey on the global use and perception of people analytics. They uncovered some positive findings on the number of HR professionals using people analytics and the value this adds to organisations.
- 75% of HR professionals globally are using data to understand workforce performance and productivity issues.
- 65% of professionals whose organisation has a strong people analytics culture said that business performance is strong.
- Only 32% of those whose organisation has a weak analytics culture report strong business performance.
While it’s encouraging to see such a high percentage using analytics to study performance and productivity, the numbers aren’t as high when it comes to other uses of analytics.
Only 52% of HR professionals state that their organisations use people data to tackle business problems, meaning that half aren’t utilising their workforce data to its full potential.
What’s more concerning is that confidence in HR’s ability to effectively use analytics is relatively low. The study uncovered that:
- Only 40% of global respondents believed that their HR function is able to use people data to solve business problems.
- 70% of global HR professionals feel confident conducting basic analytics, but this drops to just above 40% when asked how confident they feel with advanced analytics.
Splitting the survey results geographically, HR professionals in the UK have the lowest confidence. Just 21% of UK HR professionals feel confident conducting advanced analytics, 25% less than those in South East Asia and 30% less than those in the USA.
This lack of confidence is a potential risk to the UK being able to unlock the full potential of people analytics in the future. However, a lack of confidence does not mean a lack of capability.
UK organisations should be working to build confidence within their HR teams and invest in the required skills and knowledge to take full advantage of people analytics.
The CIPD concludes their report by stating, “The HR profession is at an important point in its history: it can either take the lead in using people data and being evidence-based, or it can cede responsibility to other functions and act as a user of people information”. We’d encourage any HR professionals reading this to be aiming for the former.
So, where can you use people analytics?
What areas of HR are People Analytics used in?
Analytics can be used in numerous ways by HR, but to give you a broad idea of the possibilities we've decided to focus on 3 key areas:
- Performance tracking
- Employee retention
The smartest way to monitor employee performance
The most widely recognised use of people analytics is performance tracking. As technology has advanced, it has become easy to measure performance and the data gained can be broken down by departments and teams, all the way down to the individual employees.
Take, for example, a telesales department in a large organisation. Technology allows us to record the number of calls made or received, the length and content of these calls and how many have resulted in actual sales.
This shows how the department is performing as a whole, but the data can then be broken down to show the performance of each team and individual.
Once you identify the individuals who aren’t performing as well, it’s possible to use data to gain further insight into why this might be.
Are there patterns in their behaviour? Perhaps their productivity is lower at certain times of the day. Any additional information you can glean gives you a good starting point in figuring out a strategy that will help them perform better.
The employee might not have even been aware of these patterns and seeing the evidence may prompt them to really think about why their performance has fallen and what support they need to get back on form.
The key to keeping top performers
Losing a valuable employee is a costly business. Not only do you have to deal with the cost of time and money spent on recruiting a replacement, you also have to deal with the cost of losing this person’s unique skills and knowledge.
All businesses want to avoid this where possible and using predictive people analytics can be extremely valuable when it comes to retaining your top performers.
Gambling company Rank Group has been experimenting with using predictive analytics to try to determine how likely it is that employees will remain with the company.
They use a complicated process to combine performance data with other information, including assessments from a system created by third party psychologists and feedback from the employees themselves.
Rank Group’s HR Director David Balls says this process allows them to identify top performers that are likely to leave, reach out to these individuals, and see what can be done to retain them.
If this is successful, Rank Group’s use of predictive people analytics will save them considerable time and money that would have been spent replacing their top talent.
The diversity-boosting recruitment tool
Not only does people analytics give HR insight into current employees, it can also pinpoint any areas of the business where there are skills gaps.
This enables HR to be smarter in their hiring practices, as job adverts can be tailored to target candidates who have the skills and knowledge the company is missing.
Any recruiters looking to avoid bias and boost diversity (and that’s all of us, right?) should be looking at ways to use people analytics to accomplish this.
Have you ever hired someone on the strength of a gut feeling? Many of us have, but you could be unintentionally biased towards candidates you 'feel' are right for the job rather than the person who has the best credentials and experience.
You should start by looking at your historical recruitment data. This will allow you to review your recruitment process and identify any patterns of bias occurring. If you filter the data by demographics such as gender, ethnicity or social background, you'll be able to see where diverse candidates are being lost and investigate why this is.
It's then up to HR to devise a system that combats these issues whilst meeting the hiring needs of the organisation. Let technology make things easier for you and use recruitment software that's designed for your specific needs - there's a software to battle bias at every stage of the candidate journey.
- If you're failing to attract diverse candidates from the get-go, try using a tool which helps you write unbiased job ads.
- Struggling with your initial screening process? Try blind reviewing. TalVista strips candidates' CVs of all irrelevant personal data so all you'll see is the candidate's skills, experience and qualifications, curbing any unconscious bias.
- You can even set up 'blind auditions' a la The Voice in place of a standard face-to-face interview!
Software programmes like these provide recruiters with data which can then be analysed to see which candidates are the best fit for the role based on their skills and knowledge alone.
Making the decision based on data alone takes any 'gut feelings' out of the equation and can create a fairer and less biased process.
HR professionals who can utilise people analytics across these areas and beyond are likely to be in high demand as organisations look to build future-proof strategies.
If you start by mastering the basics and make the case for the investment in more advanced training, you could soon find a host of new opportunities at your feet.
Interested in the future of HR? Check out our other articles in this series:
- How AI is Impacting Human Resources
- How HR Can Use Virtual Reality
- Blockchain for HR: How the 'New Internet' Could Change Your Job
- 4 Unusual HR Strategies from Innovative Companies
Become an expert in HR strategy with our online CIPD qualifications.