Are you feeling the need to include people analytics in your business? You’re not alone. In fact, a recent survey conducted by SHRM states 78 percent of companies consider incorporating people analytics to be an urgent need. Data-driven decisions have always been the standard in business—and thanks to big data are now more prevalent—but HR departments have relied more on intuition to evaluate talent. The explosion in people analytics is changing this by bringing data into every aspect of HR, from talent acquisition to employee engagement.
What is People Analytics?
People analytics refers to the data collection and analysis techniques used to evaluate talent and measure employee satisfaction. Advances in algorithms and data analysis software are driving the explosion in people analytics. Many of the same data-driven developments that revolutionized sales and marketing departments are now happening in human resources.
Executives want human resources to back up their personnel decisions with data rather than subjective evaluation. HR can gather data on employees through assessments and engagement surveys. They can track performance reviews, productivity numbers, and peer evaluations. All combined into a dashboard to help make decisions—I like the sound of that, don’t you?
What are the Benefits of People Analytics?
Collecting various types of data on employees allows you to eliminate guesswork and reduce costs in your HR processes. Subjective decisions have been engrained in HR for a long time. As much as they’ve tried to, eliminating all human bias from every decision is extremely difficult and highly unlikely HR professionals would make decisions off of “gut feelings” and their experience dealing with similar candidates and employees—a form of bias that data is now trying to eliminate.
Some fear using people analytics because they think algorithms will replace their expertise entirely. Instead, HR professionals should see the rise of people analytics as a growth opportunity. Companies now need an HR department with data analysis skills. In fact, 47 percent of companies say lack of employees with analytical skills is the biggest reason for not using people analytics. Employers want HR candidates who know how to use their critical thinking skills and knowledge of algorithms to make better decisions.
According to a study by the Harvard Business Review, recruiters who use algorithms in their process have a 50 percent higher chance of finding a qualified candidate than those who don’t. The same study also found the following regarding the benefits of people analytics:
- 4 percent increase in revenue per employee
- 35 percent decrease in attrition
- 20 percent increase in employee performance
Using people analytics allows your HR processes to run at optimal efficiency. Data-driven decisions transform your HR department from an expense into a revenue generator.
Real Companies Using People Analytics to Improve Business
The measurement of employee engagement, productivity, and satisfaction has been the goal of HR departments for years. I’m sure we’ve all received an employee satisfaction survey. And I’d venture to guess that most of us provided vague answers. Cisco used to follow this model, but have recently incorporated people analytics by using a talent management platform called Teamspace. With Teamspace, Cisco reduces feedback to the team level. Employees can provide feedback on every task they are assigned, and it goes directly to the team leader. Conversations stay private, and team leaders can apply the feedback quickly to improve employee satisfaction.
A fast-food restaurant chain used people analytics to increase global revenue by five percent. They focused on collecting data to answer these three questions:
- What are the traits of our staff?
- How do we manage our people?
- How do our employees behave at work?
The company implemented online games designed to measure the psychometrics, or psychological metrics, of their employees. Such games provide more accurate data by helping employees forget they are taking a test. They answered the second question through using the Organizational Health Index by Mckinsey, which measures 37 of the management traits crucial to organization health. Finally, sensors placed within each restaurant were used to track employee behavior at work. While it does have elements of “Big Brother,” this strategy allowed them to measure the tone of employee conversations and use this data to decrease their turnover rate while also increasing profits.
People analytics is coming out of its infancy and exploding into the mainstream as a crucial tool for making informed human resource decisions. It will only be a matter of time before these HR departments and their companies leave the competition in the dust.