Maybe you get confused when you hear someone mention people analytics, or maybe you already have a clear understanding of what this term means.
No matter which category you fit into, this post will break it down. You will get a full tour of the world of people analytics, so you can decide whether your organization would benefit from implementing it.
In short, people analytics enables organizations to make important business and people-related decisions in a data-driven way. Data is collected and applied to support decision-making (we cover 10 use cases below).
People analytics is not the same as HR analytics. HR analytics is typically only concerned with classical HR metrics like absence, headcount, seniority, average salary, org charts, and so forth. People analytics has a more holistic view, and widely collects data for each employee, like engagement, personality, and performance.
It also should not be mistaken for workforce analytics, which is more concerned with resource allocation, headcount, and productivity-related metrics.
Beware that many people use the terms interchangeably. There is no strong consensus on what (per definition) falls within HR analytics, workforce analytics, people analytics, and employee experience platforms.
Benefits and common use cases
People analytics uses quantitative data to support human decision-making. A powerful combination. Here are 10 of the most sought-after benefits.
1. Detect stress. People analytics lets you detect stress in teams and departments. Some platforms can also show if a specific employee shows symptoms of stress. For example, if an employee shows signs of stress in Zoios, the system will not tell you who that employee is. Instead, it will advise the employee to let their manager or the HR department know.
2. Measure the effect of initiatives. You might know the struggle of not knowing whether your last workshop or team-building initiative had the desired effect. People analytics gives you quantifiable data that tells you exactly that. Say you want to improve the social driver in a team. You arrange two team-building events where getting to know each other is the main focus. By using frequent measurements of your team's drivers, you can quickly tell if the events had the expected effect by comparing pre- and post-event scores.
3. Predict turnover. People analytics can help you predict which departments have a high turnover risk, so you can initiate retention initiatives or start planning to look for new candidates.
4. Improve retention. With people analytics, you know when engagement drops and the risk for turnover therefore increases. This allows you to take action and hopefully avoid people leaving.
5. Manager feedback. A manager might not be aware that they are not offering the necessary support to their team. With the right people analytics system, this is easy to spot. The information helps the manager know where to improve, and helps HR business partners know how to coach managers.
6. Ensure engagement. By measuring and following the development in engagement and the metrics that drive it, you can create initiatives that ensure a happy, high-engagement workplace.
7. Drive the P&C and HR strategy. Data can show you where to invest. For example, if data shows high stress levels in a particular department, you may want to allocate more resources to that department.
8. Insights for D&I. Get insights into diversity and inclusion and ensure that all segments of the company thrive equally. Awareness of how well expats, parents, and young people thrive can help you create a workplace that is attractive to all segments.
9. Onboarding analysis. A great onboarding experience is crucial for getting new hires up to speed, making them feel welcome, and retaining them for longer. People analytics helps you measure how well your onboarding works so you can continually improve it.
10. Understand exit reasons. When someone leaves, it is crucial to understand why. People analytics can help you collect the right data and automate the process. Typical insights include things like 60% left because of a bad relationship with their manager, 54% said compensation played a small role in the decision, or 35% left because they felt a lack of development.
KPIs for people analytics
When implementing people analytics, you can measure progress across several KPIs. As they say: you can't change what you can't measure. So getting up to date with the most important KPIs is a great first step in creating a better workplace.
Examples of typical KPIs companies measure when implementing people analytics:
- Employee well-being score
- Employee turnover
- Employee stress score
- Absence
- Performance
- Unsolicited applications
- Average tenure at the company
- Engagement and job satisfaction
These are just examples. Consider your organization's specific goals and the KPIs you want to focus on improving.
How does people analytics work, and what data is collected?
People analytics combines many different data sources (for example, survey data) and advanced data analytics. There are several different types of people analytics solutions, each using different data sources and analyses. So it is essential to find the right platform for you and your organization. We cover some of the available possibilities later in the article.
First, let us look at the four cornerstone data sources that people analytics most often uses.
4 cornerstone data sources
- Employee master data. Name, job start date, position, team, salary, gender, age, and so on.
- Employee engagement data. Well-being score, stress level, and scores across the drivers for engagement and well-being.
- Employee personality data (psychometrics). Examples include talents and strengths tests like Gallup's "Strength Finder," or personality tests like Predictive Index.
- Employee performance data. How well employees perform on KPIs, or how well they perform in a 360 review.
When these data sources are combined and analyzed correctly, they will indicate how to create a workplace where people thrive and perform.
For example, imagine you find that all departments that have an employee with a certain personality trait, like a tremendous coordinating talent, on average perform 4% better. Now visualize how you could use that knowledge to optimize performance across the organization.
Or say you find that employees with two years of tenure tend to score low on well-being. You can use this information to consider what factors in the organization might cause this, and try to change them.
Nice-to-have data sources
The possibilities are almost endless. Four examples of optional data sources:
- Financial data. Financial performance at company or department level.
- Behavioral data. Amount of remote work, how many meetings an employee attends, or how many emails they send.
- Compensation data. How compensation, or lack of bonus, affects performance and well-being.
- Recruiting data. Number of applicants, time to hire, time to start, submission-to-acceptance rate, or applications per job.
Challenges in implementing people analytics successfully
It is not hard to implement people analytics in your organization, but you must be aware of a few things.
Decide what data is nice-to-have for you. When you have decided that you need people analytics, consider which data sources are relevant. If you want to know how engagement affects financial performance, you must include financial data. But be aware of what is truly relevant. If a data source is not highly relevant, do not include it. Too many data sources increase the risk of drowning in irrelevant data that blurs the bigger picture.
Ease of use and adequate processes. Turning data into actionable insights is not always easy. Data can be complicated, so it must be presented in a way you can use without being a data scientist. Choose a people analytics platform you feel comfortable using. Our platform includes a monthly consulting session with one of our people strategists, to help our customers get the maximum output from the tool.
Get management buy-in. The executive level in your organization must support the idea to make it a success. Display both the financial and the human benefits.
Get employees excited about it. Just as important as executive buy-in is clear communication to all levels in the organization that implementing people analytics is about creating a happier workplace for everyone. Emphasize that well-being is a shared project, and that everyone takes responsibility when they take the time to answer a survey.
Ensure 100% anonymous survey data. You might not want to tell your boss that you are unhappy with your working conditions and that you could never imagine recommending the company to a friend. But as a leader or HR professional, this information is crucial. Honest answers require real anonymity.
Design processes that actually work. What is the organizational goal of implementing people analytics? How often should you look at the data? How do you connect the new tools with the general strategy and incorporate them into your everyday workflow?
Support managers to do their part. Managers will need support and education on how to use the data. Make sure they get an introduction to the platform to get started using the data they receive about their team.
Three enterprise examples of people analytics in real life
Google. Google is an example of a company that has developed and incorporated a very complex and comprehensive people analytics system. Back in the day, Google was not convinced that managers had a positive impact on the business. They started their people analytics project, "Project Oxygen," in 2009, to question whether managers mattered to team performance. They started to collect different types of complex people data and combine it with performance and financial data. As you can imagine, Google did not find that managers don't matter. They found that even a slight increase in the quality of the manager led to an increase in team performance, lower turnover, and greater satisfaction.
Microsoft. Microsoft also works distinctly with people analytics. In 2019 they launched their "Manager Hub" internally. It is a platform that collects data across the organization and gives managers recommendations on what to do and why. Reminders to do 1:1s with employees, find a buddy for the new hire starting next week, or asking the manager whether they have taken the new manager class, with a reminder that the data shows they can expect to increase well-being in their department by 10% by taking the course (based on other managers' performance after taking it).
NASA. NASA has a crucial need for rare data science skills. Their people analytics is centralized around talent mapping. Using Neo4j technology, they can see advanced connections between people, skills, and projects. This enables NASA to identify skills, connect employees to training programs, and create greater alignment.
What if you aren't the Google or Microsoft of the world?
Even though it can seem that this kind of data collection and analysis is reserved for big companies, that is no longer the case.
The future of people analytics is for all kinds and sizes of companies. The employees of a company are more and more commonly recognized as the most critical asset of an organization. So most industries are likely to adopt an increased focus on well-being and feel a need for better people tools, tools that can assist them in creating a happy and more effective workplace.
Solutions for small to medium-sized companies (typically up to 1,000)
- DIY with Google Forms, spreadsheets, and PowerPoint. If you only need the absolute most basic functions of people analytics, a spreadsheet can be acceptable. Keep in mind that this is time-consuming and hard to analyze and visualize.
- Zoios People Analytics. A prebuilt platform that comes out of the box with the essential features small to medium companies are looking for. Zoios automatically collects, analyzes, and presents the data in an easily accessible way. You can effortlessly give your managers access to the insights without creating and sending PDF files.
Solutions for large or enterprise companies (1,000+ employees)
- DIY with a SQL database, Tableau, or PowerBI. Large or enterprise companies might have very specific needs, so it can make sense to build their own people analytics system. Be aware this is a long and highly complex process.
- Visier People Analytics. Can be a good platform for large companies that don't want to build their own. They target companies like eBay and Ford.
People analytics for all company sizes
In recent years, we have seen a trend of new people analytics platforms that create better workplaces by making people analytics accessible for all company sizes.
The field is rapidly developing, and we recognize that it can be challenging to stay updated. We hope this post gave you an overview of people analytics and how you can incorporate it into your organization.
If you want a further introduction, get in touch. We would love to tell you more about Zoios People Analytics and how your organization can benefit.