In business today, the ability to make informed decisions is fundamental to success. That is especially true for organisations looking to differentiate themselves from competitors and build a real advantage.
One area that has grown in importance in recent years is People Analytics, also known as HR Analytics. This field — data analysis applied to human resources — has the potential to transform how organisations manage and develop their human capital.
What is People Analytics?
People Analytics is the collection, analysis and application of data about an organisation's people, with the aim of improving critical business outcomes and the management of human resources. Put simply, it is a data-driven approach to managing people.
The field goes by other names too — Workforce Analytics, Talent Analytics, Talent Intelligence — depending on an organisation's particular approach. All of them share the same objective: using data to drive decision-making in HR.
Why does People Analytics matter?
Companies are awash with data about their employees, from demographics to job performance and training history. People Analytics puts that data to work answering questions that matter:
- Recruitment and Selection: How do we identify the best-suited candidates for a role and improve the hiring process? A bank, for instance, might use People Analytics to identify candidates with a track record of strong financial performance.
- Employee Performance: How do we measure and improve performance effectively? A company might use People Analytics to identify employees underperforming on a specific task.
- Employee Engagement: What can we do to improve engagement and, in turn, reduce turnover? A company might use People Analytics to identify the factors driving low engagement.
- Leadership Development: What traits do our most successful leaders share? A company might use People Analytics to identify employees with the potential to move into leadership roles.
- Organisational Culture: What impact does culture have on performance and employee satisfaction?
By answering questions like these, People Analytics lets organisations sharpen their HR operations, make better-informed decisions and, ultimately, achieve better business outcomes.
The challenges of People Analytics
For all its benefits, People Analytics brings challenges of its own, and the biggest is collecting and analysing the data. Companies need to pull data from a range of sources — HR systems, performance management systems, social networks — and they need the tools and the expertise to analyse it properly.
Practical ways to get past that challenge include building a People Analytics strategy, investing in the technology and developing strong data literacy within the HR team.
The other challenge is ethics. Companies need to be careful with employee data and make sure it is used responsibly.
Meeting that challenge means establishing clear policies and guidelines for the use of employee data, and educating employees about their privacy rights.
The future of People Analytics
As organisations continue to recognise how central data is to success, People Analytics will keep growing in importance. Companies that adopt it will hold a significant advantage, because they will be better placed to make informed decisions and improve how their people perform.
Looking ahead, People Analytics will increasingly be used to:
- Personalise the employee experience: People Analytics can surface individual needs and preferences, allowing the employee experience to be tailored — which in turn improves engagement and performance.
- Generate predictive insight: People Analytics can be used to predict employee behaviour: identifying who is at risk of leaving, improving health and safety, and forecasting future performance.
People Analytics is a powerful tool for improving how people perform and for meeting business objectives. As business becomes more competitive, it will only become more important to organisations.
Specific trends shaping the future of People Analytics include:
- The use of artificial intelligence (AI) and machine learning (ML) to automate tasks and generate more sophisticated insight.
- The use of non-traditional data sources, such as social media and text analysis, to build a fuller picture of employees.
- The growing importance of ethics in People Analytics, as organisations work to use employee data responsibly and fairly.
Being aware of these trends lets organisations prepare for what is coming and make the most of what People Analytics offers.
Conclusion
People Analytics is a powerful tool that can help organisations improve how their people perform and meet their business objectives. As business grows more competitive, it will become increasingly important to organisations looking to set themselves apart.
To realise those benefits, organisations need a strong focus on data and a collaborative culture. They also need to be clear-eyed about the challenges — data collection and analysis, and ethics.
As People Analytics is adopted more widely, organisations will have a fuller view of their people and will be able to make better-informed decisions about how to manage and develop their human capital.