People Analytics: Leveraging Data for HR Decision-Making and Organisational Success

HR professionals play a vital role in shaping and supporting the strategic direction of organisations. With their broad involvement across all business areas, they have a unique vantage point that allows them to identify priorities, challenges, and opportunities for data-driven decision making.

Gathering information from diverse sources, both internal and external, enables HR leaders to identify critical business challenges related to diversity hiring, productivity, equity, or inclusion. This data empowers them to propose solutions for more effective recruiting, talent acquisition, HR forecasting, performance management, and employee engagement.

According to the report Sharing People Data Outside HR to Drive Business Value, published by Harvard Business Review and Visier, companies that share people data have more effective work processes and better employee productivity.

While people analytics present a wealth of opportunities, they also pose a significant challenge: the need to carefully assess information from multiple sources and make objective decisions or recommendations based on the best available evidence.

Defining people analytics and its importance

The essence of people analytics (or HR analytics or workforce analytics) lies in utilising modern digital advancements to extract statistical insights from employee data, with the aim of modelling and optimising the human capital within an organisation.

By leveraging these analytics, decision-makers can base their actions on concrete evidence and data, leading to increased transparency, fairness, efficiency, and productivity within the company.

Furthermore, people analytics open up new avenues for personal and professional growth for workers, expanding their opportunities in the workplace. According to McKinsey, organisations can increase recruiting efficiency by 80% and decrease attrition rates by up to 50% by utilising data.

Instead of relying on generic industry trends, people analytics empowers organisations to understand and address their employees’ individual requirements.

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In today’s competitive market, talent retention is just as vital as talent acquisition. By leveraging people analytics, companies gain valuable insights to create policies and initiatives that enhance job satisfaction and boost employee retention, thereby strengthening the overall financial performance of the business.

Benefits of people analytics

Improves talent acquisition

Leveraging people analytics can significantly enhance talent acquisition for businesses. Hiring the right individuals who are a perfect fit for specific job roles can be a daunting task, and the consequences of a poor hire can be costly.

However, with people analytics, organisations can effectively analyse the information and experiences provided by applicants. By comparing this data with the requirements of the company and utilising algorithms, a fair and objective shortlist of the most qualified candidates can be created during the hiring process.

This data-driven approach streamlines the recruitment process, increasing the likelihood of identifying and selecting the best-suited candidates for the job.

Improves employee retention

Access to custom people insights is helping companies better address the mindset changes spurred by external factors such as The Great Resignation, the pandemic’s impact on remote or hybrid work, an increasing focus on employees mental health, etc.

Data on employee behavioural shifts is helping companies understand and address employee retention risks before they happen. With this information, employers can take proactive measures to address potential issues and improve employee retention, ultimately reducing turnover and maximising workforce stability.

Identifies skill gaps

Technology is changing the way we work faster than the workforce can adapt. According to a Gartner study, 64% of employees are unable to meet future skill needs. The only way to bridge this talent gap is by uncovering missing skills through people analytics.

People analytics allows employers to focus on upskilling existing employees who show potential in specific areas, reducing the need to hire new talent. By leveraging internal resources, organisations can better plan internal trainings, workshops, and areas to focus on when developing their workforce capabilities.

Increases productivity

People analytics significantly contribute to improved productivity within organisations. By analysing data, HR professionals can improve communication and collaboration among employees across different departments.

With the help of people analytics, organisations can leverage data-driven strategies to maximise employee performance and drive successful outcomes.

Mitigates workplace misconduct

By analysing employee behavioural data, HR analytics can detect red flags related to issues such as workplace harassment and bias. By evaluating key indicators and predicting trends, organisations can proactively develop strategies to prevent and address misconduct.

This proactive approach helps create a safer and more inclusive work environment, fostering a culture of respect and professionalism.

6 steps to develop an effective people analytics strategy

Developing a robust people analytics strategy may appear daunting at first. However, by employing the appropriate approach, organisations can unearth invaluable insights that are crucial for strategic decision-making. Forward-thinking business leaders are actively shaping their people analytics strategies using the following methods.

To successfully deploy people analytics within your company, it is essential to have a well-defined action plan. Below you will find nine valuable suggestions to help you create and execute a comprehensive people analytics strategy:

Outline the challenges or opportunities you aim to address

Before starting your people analytics journey, it is important to define the specific problems you intend to solve. First, identify the challenges or opportunities within your organisation that could benefit from data-driven insights. By focusing on specific areas, you can narrow down your goals and determine how data can contribute to finding potential solutions.

It’s advised to begin with a small-scale approach rather than attempting to tackle all issues simultaneously. This allows for a more manageable and focused implementation of people analytics.

Whether it’s strategic workforce planning, improving employee retention, or enhancing performance management practices, setting specific goals and KPIs allows you to measure progress, track success, and continuously refine your people analytics initiatives.

By understanding what you aim to achieve, you can tailor your data collection, analysis, and interpretation processes to provide the actionable recommendations needed to drive meaningful change.

Align your strategy with organisational objectives

To ensure the success of your strategy, it is essential to align it with the broader business goals of your organisation. The insights generated through people analytics should contribute value that aligns with the priorities and strategies set by leadership.

Engage with key stakeholders, including senior leaders and decision-makers, to understand their priorities and areas of focus. Seek their input on specific areas where they envision improvement and explain how people analytics can provide the necessary information to support those objectives.

Demonstrate the potential of people analytics in enabling data-driven decision-making and improving outcomes to can garner the support and resources needed to implement your strategy effectively.

This collaboration with leadership is crucial in establishing a shared understanding of how people analytics can contribute to achieving business goals. It creates a foundation for obtaining the necessary support, sponsorship, and resources to carry out your people analytics initiatives successfully.

With leadership backing, you can drive organisational alignment, foster a data-driven culture, and ensure that your people analytics strategy is closely intertwined with the broader business strategy.

Assess data sources and identify gaps

To make informed business decisions, reliable and high-quality data is essential. Review the existing data sources within your HR tech stack and evaluate their suitability and accuracy. Of course, you must determine how you will consistently gather the required data to support your people analytics strategy.

Make sure to conduct an audit of the data you currently collect and analyse within your HR systems. This assessment will help you identify any gaps in the data you have available. Understanding the limitations of your existing data sources is crucial in order to address those gaps effectively.

In addition to HR-specific data sources, consider exploring other relevant data sources within your organisation. Collaborate with other departments or functions to gain access to information that could provide valuable observations. By incorporating data from multiple sources, you can enhance the depth and breadth of your people analytics effort, better address the identified problems and make well-informed decisions.

There is a wide range of available data sources that can provide comprehensive datasets for your strategy. These sources include:

  • People analytics platforms;
  • Employee surveys;
  • Performance reviews;
  • Time tracking apps;
  • HR solutions;
  • Exit interviews.

Filling in the data gaps and leveraging a holistic dataset will enable you to gain a more comprehensive understanding of your company and drive more impactful people analytics outcomes.

Embrace next-generation technology

You cannot effectively leverage people analytics without adopting a modern reporting and analytics technology platform or a data-driven HR stack. Such tools enable organisations to collect, interpret, and take action based on their people data. Some examples include HRIS (Human Resource Information System), talent management software, survey tools, and data visualisation.

  • HRIS stores and manages HR data while offering analytics capabilities;
  • Talent management software tracks employee performance and provides analytics for informed decision-making;
  • Survey tools gather data on employee engagement and satisfaction;
  • Data visualisation tools transform complex data into visually appealing charts and graphs.

Without a reliable platform, the integrity of data may be compromised, making it challenging to establish meaningful connections between people data and organisational objectives.

Investing in next-generation reporting and analytics technology not only empowers HR professionals to make informed decisions, but it also contributes to the overall efficiency and effectiveness of the HR function. By leveraging the capabilities of these tools, you can derive deeper insights from your people data and successfully implement your findings to drive organisational success.

Launch an internal communications campaign

Gathering feedback from employees through various channels, including SMS, can provide valuable insights and perspectives that contribute to the overall data narrative. By incorporating feedback mechanisms such as SMS surveys or feedback forms, organisations can capture real-time input from employees.

After collecting and analysing the data, it is essential to effectively communicate the findings and recommendations to all relevant stakeholders within the organisation. They should be presented in a clear, logical, and unambiguous manner. It is equally important to frame the information in terms of its impact on business objectives, creating a compelling data narrative that highlights the potential outcomes.

Consider developing user-friendly dashboards that decision-makers can access and utilise independently. These dashboards should present the data in a visually appealing and easy-to-understand format, enabling stakeholders to interact with the information and gain insights on their own.

Implementing an internal communications campaign ensures that the information derived from people analytics are effectively disseminated throughout the company. This helps to build understanding, engagement, and support for data-driven decision-making.

Conduct compliance audits

Another important step in implementing a people analytics strategy is conducting compliance audits. Given the sensitive nature of the data involved, such as employee personal information and compensation data, it is essential to ensure legal and regulatory compliance. This involves engaging a legal committee to review and assess the proposed actions for legal compliance.

The compliance committee should comprise representatives from HR, Legal, IT, and other relevant departments, and should be responsible for designing, implementing, and monitoring policies and procedures related to data privacy, security, and legal compliance.

This way, organisations can uphold data privacy, mitigate risks associated with data misuse, and ensure the integrity and security of the data while building trust among employees and stakeholders.

In Summary

The role of data in making workforce-related decisions is poised to expand in the near future, and HR leaders must take the lead in driving this transformation. Establishing a people analytics strategy may seem challenging, especially for those new to the function, but it is essential to embrace this opportunity.

Moving forward with people analytics, it is crucial to have a clear understanding of your objectives, how they align with your organisation’s business goals, and the potential obstacles you may encounter. These starting points will set you on the path to developing a people analytics strategy that adds value and enables better decision-making and improved outcomes for your business.

Don’t hesitate to embark on this journey and leverage the power of people analytics to unlock insights that can drive organisational success. With a solid understanding of your goals and challenges, you can lay the foundation for a data-driven approach that brings about positive change and propels your business forward.

About the Author

Alexa Lemzy is a customer support advisor at TextMagic. She is passionate about helping businesses grow through the use of technology. You can keep up with her latest articles and updates on Twitter. In her spare time, she likes to read and travel.

Team 6Q

Team 6Q