A comprehensive guide on people analytics and its significance in creating a productive organization. Read on!
The changing business environment requires organizations to modify decisions to suit the changes. Businesses today have a large amount of workforce data that they can use, but merely having the data does not guarantee success.
You need to analyze the data to determine the root cause of the problem, plan appropriate corrective actions, and predict future developments. People analytics helps managers and senior management unlock the data, increase rigor, reduce bias, and improve performance.
In this blog, we attempt to explain what is people analytics? How managers use analytics to make decisions? How can data analytics improve the measurement of employee’s performance? Various tools you can use for HR metrics and analytics.
What is people analytics?
If you want to know what is people analytics? People analytics is defined as the practice of collecting and transforming HR data and organizing the data to get insights to improve business processes. The information is presented in graphical representation, charts, and visualization to answer questions using HR extraction tools.
HR Analytics is the process of measuring the impact of measuring human resources metrics example, time to hire. HR analytics helps to solve human resources problems.
Talent analytics are statistics and technology applied to a large set of people to make better organizational and operational decisions. Talent analytics uses BI tools and systems to create a detailed holistic using human resource data of an organization.
People analytics is a process where HR leaders use statistical practices, technology, and their expertise to large sets of business and employee data. People analytics helps in decision-making and helps to show ways for competitive talent and people investment.
The key human resources problem defined
Human resource professionals now hold a strategic position in a company’s core team. These are some of the top human resources problems,
- Finding and landing high-quality talent – According to HR professionals recruiting and hiring is a critical challenge. HR managers found hiring quality candidates very challenging.
- The revolving door of talent – The World Health Organization has defined burnout as workplace stress that has been unsuccessfully managed. HR managers struggle to retain talent.
- Developing the next generation of leaders – Businesses spent money on training and developing new leaders for their firm. The scarcity of talent and the costs of training and retaining talent make companies focus on in-house talent.
- Finding Resources for workforce development – Large organizations spend a lot on workforce development. Investing in your team helps in loyalty.
- Achieving Diversity with Inclusion – Workplace bias can be conscious and unconscious. It can hamper the hiring, development, and promotion of underrepresented groups. HR has to focus on diversity and create a culture of inclusion in the firm. People analytics can reduce bias.
Also Read: Voice echoing | A complete guide
What to do when HR is the problem?
Organizations can have various problems due to HR like,
These problems can lead to a higher turnover ratio and low motivation and productivity levels. HR measurements used in people analytics can improve employee engagement, retention, employee wellness, productivity, employee experience, and work culture.
Why HR analytics is needed?
The benefits of HR analytics are,
- Improved hiring decisions – human capital analytics helps HR makes better choices based on historical data.
- Reduce talent scarcity – HR data analysts can help to find the ideal candidate for the position. The people analytics helps to make the hiring process more efficient.
- Process improvement – Once a firm has sufficient HR data experts can come up with statistics and patterns. The hiring manager will learn where candidates are required.
- Good training – HR analytics help to identify gaps in training. The analysis also helps to analyze if the candidate is utilizing the training received.
- Better insight – Human resources analysis helps to track the professional lives of their staff. The data helps provide insights about employees and find strategies to boost morale, retention, and engagement.
- Attrition – HR analytics tools help the company learn why employees leave or stay. The results help to find gaps where employees find it difficult to perform optimally.
- Improved employee experience – It helps to improve the recruitment process and improve the brand image.
- More productive workforce- Analytics helps to hire better candidates, improve HR policies and training. These measures result in a more productive workforce.
Key HR and people management definition
Here’s a quick definition of some of the key people analytics terminologies,
Human Capital Analytics
Human capital analytics is the process of understanding how to use the power of human capital to transform businesses by using logic. The analytical processes are applied to the HR department to improve employee performance and get a better return on investment.
Talent analytics is an analytics platform that produces insight into the workforce- potential hiring pool and existing team members. We use these insights to create a better understanding of the strengths of employees and potential employees. We can understand employee weaknesses, strengths and how these can be improved.
Workforce analytics is the process of using data-based intelligence to improve and enhance decision-making capability. Workforce analytics help decision-makers to make better decisions by accessing information.
Predictive HR Analytics
Predictive HR analytics analyzes historical data to forecast the future. In human analytics data, is collected and analyzed to report what is working and what required improvement. We use predictive HR analytics to make future predictions about employees or HR initiatives.
We use advanced statistical techniques to create algorithm models to identify trends and future behaviors. These models can help companies to describe risks and opportunities for long-term decision-making. Some predictive HR Analytics include,
- Organizational performance.
Human analytics has been defined as the identification and qualifications of people drivers of business outcome or a data-driven approach to human resource management. Analytics today allow HR professionals to make data-driven decisions. It helps to test the effectiveness of HR policies and different interventions. Analytics has allowed the HR department to become a strategic partner in the company’s growth.
Work analysis definition
Work analysis definition is the process used to understand what jobs are vital, how they are performed, and what qualities help carry them out successfully. During the study, information about the incumbent, the nature and condition at work, and the qualifications required are collected. Work analysis helps organizations understand which candidate is best suited for the job.
HR metrics definition
HR metrics definition is the measure used to determine the effectiveness of HR initiatives like turnover, training, return on human capital, cost of labor, and expenses per employee. It helps to improve the organizational function and internal temperature.
Human resources metrics examples
HR metrics help demonstrate the effectiveness of different HR responsibilities and initiatives like hiring, employee retention, training, and labor costs. Human resources use these findings to improve their efficiency and prove their effectiveness to the upper management. Examples of human resource metrics are,
- Time to hire – This measures the average length of time required for hiring a candidate from the time posting the requirements to the candidate accepting the job offer.
- Cost per hire – This calculates the cost required to hire a candidate. It includes parameters such as recruiter’s time, the costs of listing a job on third-party websites, the time required to shortlist candidates, interviews, etc.
- Employee turnover – Every organization wants a low employee turnover rate. If you have a high employee turnover, you will have to spend resources to hire new candidates. You may need to evaluate your recruitment process.
- Revenue per employee – This calculates the revenue per employee. The total revenue earned by the company is divided by the number of employees.
- Billable hours per employee – Billable hours may not apply to every business.
- Absenteeism – Absenteeism is the amount of time your employee is absent from work (vacation, sick day, etc.) for some reason. The metric for absenteeism is a percentage of the total number of working days.
- Cost of HR per employee – Hiring, training, and managing a team costs money. This looks at the HR expenditure of the company.
- Employee engagement – Employee engagement is difficult to calculate since there are no financial records. It involves taking a survey.
- Cost of training per employee – When you recruit a candidate, you need to spend on training, supply them with equipment, and they may need supervision for some time.
- Diversity/EEOC numbers – Diversity includes race, ethnicity, sex, job type, and salary. Your company may be required to file this with the Employment Opportunity Commission.
Human resource matrix
A human resource matrix is beneficial for organizations where employees are reporting to more than one channel or multiple leaders. You use the matrix structure when mid-level executives collaborate with employees in different teams or when you cannot achieve coordination through organic or informal methods.
Clearly defining channels of communications helps work to go through without hiccups. The human resource matrix helps to ensure the project does not stall in single-approver bottlenecks. It ensures smooth interactions with cross-functional management.
Also Read: Remote work habits | A comprehensive guide
HR analytics examples and uses in organizations
Most companies already have data that is routinely collected. Raw data on its own is not useful. Once you organize the raw data can provide actionable insights about your organization. With data-backed evidence, your company can focus on improvements and plans for the future. Here are some examples of HR metrics employment analytic,
Human resource analytics and employee turnover
When employees leave a company, you need to analyze why they left? There may be reports or data on individual situations, but there may be no way of knowing if this translates to a trend. Turnovers are costly in terms of time, profits, and organizations need insights to prevent turnover from turning into a problem. Human resource analytics can,
- Collect and analyze past data on turnover to identify trends and patterns why employees quit.
- Collect data on employee behavior on parameters like productivity and engagement to understand the correct status of employees.
- Correlate both types of data to determine factors that increase turnover.
- Create a predictive model to track and flag employees who may quit.
- Develop strategies to improve engagement levels and work environment.
HR data analytics and recruitment
You need to hire the candidate with the right skill and attributes, who can match the organizational work culture and work efficiently. Sifting through 1000 resumes can be time-consuming. big data in HR analytics in HR work can help,
- Collect candidate data from multiple sources.
- Gain insight about the candidate to determine if they will be a cultural and development fit.
- Select candidates with attributes that are similar to the top-performing employees.
- Avoid habitual bias and ensure equal opportunities for all candidates.
- Provide metrics on how long does it take to hire candidates to help departments to be better prepared.
HR analytics training example
Most businesses have an ongoing professional development program to attract and retain quality staff. Implementing an employee development program will show you are interested in helping employees reach their potential and motivate employees to learn new skills. HR analytics can,
- Help identify the best training solution for an individual.
- Analyze the effectiveness of the training course.
- Understand the number of candidates using training solutions.
- Calculate training costs and costs saved after training.
How do people analytics work?
HR analytics has several components,
- To gain the problem-solving insights that HR analytics data must be first be collected.
- The data was monitored and measured against other data (historical data, averages, etc.).
- Identify trends or patterns.
- Apply insight to organization data
Step 1: Data collection in human resources analytics
Collecting and tracking high-quality human resources data. The data needs to be obtained and capable of being integrated into the reporting system. There could be a data collection system in places like learning and development systems, or the latest data collection methods such as cloud-based systems, mobile devices, or wearable systems.
The data should be such that it can be aggregated i.e. you should be able to sort and organize the data for further analysis. Some of the data collected are,
- Employee profiles
- Data on high-performers and low-performers
- Salary and promotion history
- Demographic data
Step 2: Measurements – HR metrics and analytics
At the measurement stage, we begin HR metrics i.e process of continuous measurement and comparison. During the HR analytics, data is compared against historical norms or organizational standards. You need to ensure continuous data is feed over a period. The key metrics that monitored are,
- Operational performance:- Data is collected and compare to understand various HR parameters such as turnover, absenteeism, and recruitment outcomes.
- Operations:- Data is monitored to determine the effectiveness and efficiency of daily HR operations.
- Process optimization:- This combines data from operations metrics and organizational performance to pinpoint where the improvements can be made.
Step 3: Human resources analysis
In this stage review results to form human resource metrics identify trends and patterns. There are different human analytics methods used depending on the outcomes. The analytics typically used are,
- Descriptive analytics focuses on historical data to understand what can be improved presently.
- Prescriptive analytics utilizes different statistical models to analyze historical data to predict risks and opportunities.
- Predictive analytics uses the results of the prescriptive analysis for further analysis to predict the consequences of the forecasted outcomes.
Typical analytics are,
- Time to hire
Step 4: Human resource data application
After human resource analysis, the results are used as insights for decision-making. Some typical HR analytics examples are,
- Time to hire – if the findings indicated the time required for hiring is too long because a job application is found to be problematic. Businesses can modify the job application process based on the findings.
- Turnover – Understanding why employees leave while let you make concrete decisions to prevent or reduce turnovers from occurring.
- Absenteeism – Finding the reason for long-term absenteeism helps firms develop strategies to improve factors such as work environment or employee engagement.
Also Read: Office management | A complete guide
Case study: Google people analytics
Google started working on people analytics long before it became mainstream. Google people analytics team spent a decade studying various parameters (leadership to productivity) in their organization. These insights helped to understand how their manpower operated daily and develop Google’s human resources strategy.
When the project began in 2008 it was called ‘Project Oxygen” and gradually developed into a strategy shaping the way Google-operated. Project Oxygen was conceived to find out what successful project managers do.
The people operation team at Google used productivity data and employee feedback to determine employee behavior and skills. Parameters such as performance ratings and employee feedback were analyzed and compared with productivity metrics to study the impact of different leadership styles on productivity and employee engagement.
Google used the findings to define Google’s human resources practices and create “Oxygen 10 Behaviors for Great Managers”. The manual was used to select and train potential leaders.
After the success of Project Oxygen, Google human resources analytics team conducted similar research to discover the secret of effective teams within the company. Project Aristotle used HR data management with human experience to assess team leadership, cohesion, and qualitative factors. Some of the findings people analytics Google helped to define,
- Psychological safety
- Structure and Clarity
Google HR strategies definition integrated people analytics became part of their ecosystem.
HR analytics tools and software
Managers need HR predictive analytics tools if they want to do HR analytics jobs. Some of the best HR analytics tools and software available are,
- R is a popular tool used in HR data analytics. R is used for statistical analysis and visualization. The program is ideal for exploring large datasets. R Studio is IDE (Integrated Development Environment) is more friendly software with additional functionality.
- Python – Python is ideally suited for HR predictive analytics. Python IDE used are PyCharm and Spyder. Python is easy to use and learn.
- Excel – Excel is a basic analytical tool and is intuitive. When you use data it usually comes in CSV files and can be easily opened in Excel. Pivot tables are ideal for data visualization. HR professionals still love using excel for HR analytics.
- unremot virtual watercooler –Unremot virtual water cooler is used to improve employee engagement and team bonding. After implementation, you can study if the human resource matrix and human resource analytics have improved.