In the past, attempts at using HR data as a decision-making tool were limited by the lack of tools to help pull meaningful information from team member statistics. Using multiple spreadsheets to derive metrics on complex topics, such as team member turnover and engagement, is challenging at best. The development of more sophisticated analytic software has allowed HR organizations to use people analytics far more effectively to support timely decision-making.
What is People Analytics?
People analytics involves using digital tools and team member data to gain statistical insight for solving business problems. These digital tools are typically cloud-based software solutions developed in-house or purchased from a tool provider. People analytics can be used to study the skills and experience of a workforce and individual and team performance.
While it can be difficult trying to make sense of one-dimensional metrics like headcount and attrition, people analytics results can help HR leaders understand the root causes of different workforce problems.
For HR organizations and executive planning teams, people analytics can provide insight into a variety of strategic team member metrics, including:
- Return on Investment (ROI) for company initiatives.
- team member retention and turnover rates.
- New hire successes and failures.
- Training effectiveness.
- Cost per hire.
- P&L per team member.
- Impact of diversity and inclusion initiatives.
The usefulness of people analytics in making strategic workforce-based decisions has made it an important core competency for HR professionals.
The Benefits of People Analytics
Increased recognition of the benefits of people analytics has fueled the growing interest in making them an integrated part of business operations. Here are a few examples of how analytics are having an impact on organizations.
This is an area where people’s analytics are especially effective. When used to implement targeted retention by focusing on specific sets of team members based on their role or team assignment, analytics has significantly reduced turnover rates.
People analytics can help identify the skills and attributes that are shared by high-performing team members who stick around. Also, recruitment efforts can be validated or improved by analyzing how the best candidates are located and hired.
Team Member Development
Using people analytics, the value of training in an organization can be evaluated by analyzing its impact on business outcomes. Using analytics to compare performance and training can point out areas where team member development is needed.
Analytics that examine the link between performance and revenue can help businesses set target performance levels to increase productivity. According to Oracle, people analytics can increase revenue per team member by up to 26 percent by providing insights into recruiting, hiring, and retention.
Return on Investment (ROI)
By taking value created – cost, management can assess the P&L for each position, department, and initiative. This helps the organization decide where to make future investment decisions, and helps to measure the returns on investment at hand.
Eliminating diversity gaps has become an important goal for businesses for a variety of reasons. People analytics can play a critical role in evaluating diversity and identifying areas where biases may exist. The gender and ethnic makeup of the current team member base, leadership, and hiring funnel can be used to create diversity actions and initiatives.
Optimizing HR Operations
People analytics can help make hiring, training, performance appraisal, and many other operations more efficient. Analytics support informed decision-making and help streamline time-consuming and inaccurate manual processes.
People analytics are most effective when they are used as part of an overall HR and business strategy. Without some goal in mind, the benefits of gathering data and performing analytics is difficult to assess. Being able to measure people’s analytics’ effectiveness against a strategic goal allows a business to identify the return-on-investment for the effort. Before launching an analytics project that involves people’s data, be sure to define the project’s goals and success factors for evaluation of project impact. The analytic process can then be reviewed and improved if necessary.
There are no easy answers or easy solutions here; data and metrics must be carefully aligned, monitored, and continuously evaluated and improved. Contact coAmplifi today to learn how we can help you achieve your HR and Project Management goals!