7 min read

Top 8 reasons why your business needs data-driven people analytics.

data-driven people analytics

“Analytics is no longer a ‘good idea’ for HR,
it is now mandatory.”

Josh Bersin, Principal and Founder of Bersin

Most of us are used to seeing or experiencing data analysis in marketing, sales, or other customer-facing departments. But today, people analytics is gaining more attention, with 69% of organizations building a people analytics database. Increased focus on measuring and addressing diversity, gender pay gaps, skills shortages, retention, and productivity have contributed to the rise of people analytics. Many business leaders are now realizing that people analytics is the missing piece of their analytics puzzle and a way to gain a competitive edge in the market.

More than ever, HR departments are generating more data. So, today the capability to turn these data into valuable insights is a core to-do for organizations that strive to be in the position to generate reliable data and share them in a well-structured form to be used for data analytics. Undoubtedly, organizations that build capabilities in HR analytics out-perform their peers in quality of hire, retention, and skills development. People are vital to the success of any company. HR analytics can help to provide businesses with the insights to attract the right competencies, recruit people with the right skills, manage talent effectively, as well as pinpoint any issues that adversely impact staff morale which can then be quickly addressed.

data-driven people analytics

So, what are these 8 powerful reasons in favor of data-driven people analytics?

1. HR Analytics identifies gaps and opportunities

Also, it measures and then increases its business impacts. For example, by designing more effective recruiting, employee retention, and reward systems, HR can directly increase the revenue of the sales group. Labor Market tends to behave differently in each niche and thus an approach that is applicable to one industry can not be applicable to another industry. Exactly people analytics would help to understand the underlying trends in labor market dynamics.

People analytics helps to understand the most pressing challenges within the organization as well. We witness now employee experience is playing a huge role for the retention and productivity of the people which is only possible due to analytics and insights gained.

2. Analytics allow HR to boost workforce productivity

People are the main driver of any business. So, if you put the right people in the right role you will witness the shift in productivity. Analytics reveals untapped opportunities in the workforce, such as a hidden talent that an employee has learned outside of work. Besides, Big Data increase hiring and recruiting efficiency, i.e. quality, speed, capacity, and experience of hire. It also identifies the sources that produce the highest quality of hires (e.g. referrals from top-performing employees) and even which interview questions don’t predict new hire success (e.g. brainteaser questions).

HR analytics improvs employee engagement, i.e. it provides insights on how staffs are better engaged by measurable factors such as recruitment, performance, pay, and benefits, enabling the HR department to look into changes to improve employee productivity. Feedback during an appraisal can also provide relevant insights to improve company culture and create a better working environment.

3. Analytics attracts the best talent and gives knowledge of why people leave

Smart Apps can predict if someone is looking for a new job before they even advertise themselves as available. This gives you a headstart over competitors, especially for in-demand or very senior talent which is few and far between. Then it can provide insights on why people join your company. Your office location, the ability to travel or your annual learning budget might have tipped the scale in your favor with a new hire. By knowing this, you can promote these perks to other recruits and attract the best talent as a result. On the other hand, people analytics can also uncover the unspoken reasons why people leave. Certain teams, roles, or departments might be flagged as having high turnover or disengagement, spurring you to take action in those areas to prevent more employees from leaving.

4. Analytics increases corporate speed and innovation

During the rapid changes and volatility, the business can only succeed if it is fast and adapts quickly. HR can contribute to that effort by utilizing analytics to develop a hiring process that selects individuals with these two key skill sets. Those that aren’t good at people analytics are not ready for AI in HR.

If you look at the most valuable global firms by market cap (e.g. Apple, Google, Microsoft, Amazon, and Facebook) you’ll find that the one success factor that they share is serial innovation. As a result, increasing innovation is frequently a strategic corporate goal.

5. Analytics prioritizes and funnels resources into the highest business impact areas

It enables to accurately allocate the HR budget and staff to the programs with the maximum impact. Data can also help HR identify the jobs, teams, and business units that, when provided with top talent, have the highest impact on corporate goals. Moreover, new and emerging data sources will help companies improve competitive advantage.

6. Analytics allows HR to identify which existing talent programs are not working

With its own ROI ratios, HR can also compare the effectiveness of its programs against those in competing functions like finance, marketing, and IT. Under the analytics model, HR will also require all new talent programs to utilize data-driven decision-making and to include performance metrics and current and predictive analytics. Then, People analytics will contribute to the development of new work models.

7. Analytics identifies the hidden causes of problems

You can’t really improve a problem area unless you know the root causes of the problem. HR must go beyond its current “what happened metrics” (i.e. our turnover is 12%) and begin gathering what I call “why metrics,” (i.e. 85% left because of bad managers). Analytics prevents decisions based on good feeling and stands for logical data reasoning. It connects dots in a complete picture and comprehends the main driver for any issue.

8. Analytics provides capabilities for strategical planning

For example, benchmarking can improve performance. To be able to leverage on the result of data analysis to feedback into business strategy will be invaluable to your business. The HR department can leverage various KPIs to find the keys to retention or boosting workforce performance. Ensure the HR team has the right talent to drill and analyze into the pools of HR-related data. HR analytics is more than just analyzing; it should help you to plan.

people analytics in HR

So what’s the line on this?

As you see, people analytics is shifting from the periphery to the center of the HR agenda, namely to a data-driven high business impact HR model. As a result of being the top challenge for such a long period, it is clear that data-driven Human Capital is expected to bring a higher value rate of strategic change than most HR functions have been able to deliver. Hence, HR and its key functions like recruiting, retention, and learning must move to dramatically increase their measurable business impacts by adopting analytics and data-driven decision-making. Remember, HR can’t become a high business impact function unless it adds analytic capabilities.

You may want to find out how your business can benefit from Labor Market Analytics, Market Intelligence, talents availability in the context of digitalization. Get in touch with us and ask us about any challenges you are facing right now! Let’s get prepared and shape the future together!