HR decision-making has undergone a transformative shift from being based on intuition or gut feelings to a strategic and metrics-informed approach. In the past, HR decisions often lacked solid data to back them up, but the case is different in this age.
HR professionals can now collate and analyze big data, enabling them to access accurate insights into workforce trends.
What is People Analytics?
People analytics is a data-driven study of employees’ performance, functions, processes, and engagement and how it affects the organization’s success. Also known as HR analytics or Talent analytics, People analytics involves gathering and evaluating data to make better-informed decisions via the use of statistics and data interpretation techniques.
From hiring decisions to retention, employee engagement, and performance, this data-driven approach can help companies optimize their HR strategies, thereby ensuring better business outcomes.
What are the types of People Analytics?
As more organizations begin to pay more attention to analytics to make better informed decisions regarding their workforce, it is crucial to know more about the various categories of people analytics. Here is a guide explaining the types of people analytics, and how they can be specifically used to make a positive impact in an organization.
1. Descriptive Analytics
Descriptive analytics is the most fundamental type of people analytics, involving analyzing data patterns to understand more about the past. This type of analytics focuses on the past with statistical analysis techniques to gain insights into the past but leaves no predictions for the future.
Descriptive analytics, also known as decision analytics, enables HR professionals to identify patterns and anomalies to enhance better planning. It often involves mathematical calculations like deviation, range, central tendency, frequency, ranking, variation, etc.
2. Diagnostic Analytics
Diagnostic Analytics builds on descriptive analytics, as it provides further insights into the past. While it uses the same historical data as descriptive analytics, diagnostic analytics takes it to the next level by answering the “why” behind anomalies, workforce patterns, data trends, etc.
Diagnostic analytics uses various techniques like data mining, regression analysis, correlation analysis, and probability theory, amongst others. HR teams can see the big picture with diagnostic analytics because it highlights the potential factors that can cause problems. This allows HR professionals to channel their efforts and strategies in the right place.
3. Predictive Analytics
Predictive analytics provides HR teams and organizations with possible future outcomes. It categorizes data to isolate correlations and patterns, then estimates a model to forecast what may occur in the future.
Predictive analytics is instrumental in providing HR leaders with quintessential information that improves decision-making in aspects like hiring, retention, performance and talent management, etc. HR professionals can leverage predictive analytics for data-driven decisions and develop insights and strategies from precise data prediction of future results.
4. Prescriptive Analytics
Prescriptive analytics is an aspect of HR analytics using algorithms, artificial intelligence, and machine learning techniques to suggest insightful steps that HR leaders can use to improve their workforce.
While predictive analytics predicts what might occur, prescriptive analytics suggests proactive measures to prevent it from happening.
Prescriptive analytics provide HR leaders with a forecast of what will occur next, the reason, and the possible solutions. This enables HR leaders to leverage opportunities, manage complicated problems, and enhance organizational performance.
Benefits of People Analytics: Reasons to use People Analytics
Regarding unlocking the potential of any organization, the entity should be ready to give up traditional methods and embrace a data-driven approach that embodies lots of benefits. Here are some benefits of how people analytics creates values and long-lasting impact in an organization.
1. Improves Employee Retention
People analytics is efficient in helping HR professionals understand employee retention and providing them with actionable insights into the factors affecting retention.
HR professionals can leverage people analytics to understand employee engagement through feedback, surveys, and crucial performance metrics.
With the insights generated from this data, HR managers can create individualized strategies to ensure job satisfaction and establish a positive work environment where employees will be comfortable staying for a long time.
Organizations can use people analytics to benchmark their benefits and compensation plans against industry standards. To retain key talent, people analytics can be used for succession planning, which helps to identify high-potential employees and evaluate their readiness to take on crucial roles within the company.
Organizations can use people analytics to actively plan for transitions, showing their dedication to their employees’ long-term development.
2. Hiring/Recruitment
People Analytics benefits the hiring and recruitment process in many ways. First, it helps HR managers to efficiently optimize their sourcing channels. After evaluating data on the quality and performance of hires from diverse sourcing channels, HR teams can focus on the channels yielding the expected results.
Organizations can use predictive channels to assess the likelihood of a potential employee’s success depending on performance indicators. This helps HR managers spot candidates likely to align with the organization’s culture and succeed in a particular role.
3. Diversity and Inclusion
HR managers can leverage data to facilitate a diverse workforce and inclusive culture. Organizations can analyze hiring trends, demographic information and employee engagement data to identify areas for improvement and incorporate strategies to boost diversity and inclusion. This ensures a more equitable workplace with positive impacts on employee satisfaction, innovation, and organizational performance.
By analyzing turnover rates, the HR team can leverage people analytics to develop targeted retention strategies, allowing employees to feel supported and valued. Organizations will also be able to tailor training programs to address employee’s specific challenges and needs faced by various groups.
4. Strategic Workforce Planning
People Analytics allow organizations to stay ahead of the curve with strategic workforce planning.
Workforce planning is a systematic and strategic process where organizations align their human capital with their goals and objectives. This process involves evaluating present and future workforce needs and identifying talent or skills gaps.
Workforce planning ensures that organizations have the right people with the ideal skills in the right positions at the needed time. With strategic workforce planning, HR teams will be able to identify areas of inadequate or excessive staffing levels, thereby aligning workforce size with organizational needs.
5. Performance Management
When performance management is seamlessly incorporated with people analytics, it becomes a data-driven process with more benefits than traditional performance reviews. People analytics helps HR managers leverage analytics techniques and tools to effectively measure, analyze, and improve employee performance.
Therefore, HR teams will be able to objectively evaluate employee performance with data instead of depending on subjective judgments. This approach fosters transparency, accuracy, and fairness in evaluations.
Organizations can also identify the KPIs that align with their goals and objectives, ensuring that performance assessments are directly associated with outcomes that are quintessential to the organization.
Challenges of People Analytics
Not all HR teams may be able to fully realize the potential of people analytics and how it positively impacts their organizations. This is due to some key challenges they experience when using people analytics.
Here are some crucial challenges that HR teams may face with people analytics
1. Prioritizing Data over intuition
HR leaders have depended on their sixth sense for several years to make crucial decisions. And the truth is their instinct, combined with their experience and knowledge, has taken their companies to greater heights.
However, as the business world takes different shapes, relying on data seems more beneficial than gut feeling. With data-informed evidence, HR leaders can make better decisions because data can be trusted to ensure business performance.
Overall, it is crucial for HR managers to strike a balance between qualitative insights and quantitative metrics in managing organizational resources.
2. Unclear Goals
It is essential to mention that not all the problems in an organization can be solved at once. Hence, HR leaders need to tackle each issue one step at a time. While People Analytics plays a pivotal role in decision-making, it is not an immediate solution.
HR leaders need to set clear objectives for what they intend to achieve with people analytics. For instance, you can identify specific organizational problems that have slowed down critical operations. And outline how people analytics can help you roll out a long-lasting solution to the problem.
3. Compliance and Ethics Issues
Concerning workforce data, it is crucial that its collection and usage should meet compliance and ethical standards. HR teams must ensure that employee data and privacy are protected and should not be biased when using them to make promotion and hiring decisions.
Each individual’s right should be respected when their data is used. Employees’ consent should be sought before their data is collected because a lack of transparency can cause ethical concerns and trust issues.
In Summary
People Analytics is a profound tool for HR professionals, enabling them to drive informed decisions from data-driven insights. It is crucial for HR leaders to identify the peculiarities of each type of HR analytics, to help them spot areas for improvement to ensure organizational success.
