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What is People Analytics (HR Analytics) and why is it important to organisations?

Published date20 Apr 2023
Reading time7 min read
  • People Analytics
  • Culture
  • Employee Experience
  • Analytics
  • HR Analytics
  • Software
  • Metrics
  • Measurement

people analytics

What is People Analytics?

People analytics (or HR Analytics) is the use of data, technology, and analytics to derive actionable insights. This allows leaders to make critical decisions about employees throughout their entire lifecycle with an organisation. It involves identifying and prioritising key problems that have a major business impact. It then requires collecting, processing, organising and analysing data from various sources such as HR systems, time and attendance records, communication tools, operation tools, finance systems and survey results. Insights are derived and communicated to the business to allow key decisions to be made.

Why is it important for organisations to utilise people analytics?

There are several benefits for organisations to adopting people analytics as a core competency. Generally speaking the goal is to improve decision making. Organisations can make decisions based on data, rather than relying solely on ‘gut feel’. The reality is most decisions require a bit of art and science.

People analytics can help:

  • Identify causal relationships: An organisation may use people analytics to identify the factors that are the true drivers of turnover. Once identified, organisations can develop targeted interventions to improve it. This can include changes to the work environment, adjustments to compensation and benefits, or targeted training and development programs.
  • Predictive analytics: People analytics can be used to make predictions about future outcomes based on historical data. For example, an organisation may use people analytics to predict which employees are most likely to leave the organisation, or which employees are most likely to be promoted in the future. This information can be used to make data-driven decisions about talent management, HR initiatives, and other workforce-related activities.

Reduce turnover and absenteeism

The most visible people cost in a business is employee turnover and absenteeism. Whilst organisations may have a high level overview of what the turnover and absenteeism metric is, often it may fail to understand where the problem is occurring, why it’s occurring and more importantly what can be done about it.

Most HR initiatives use turnover reduction and absenteeism as justification for investment - few organisations actually measure the impact of those initiatives because of the lack of data.

Talent acquisition

Recruitment is one of the mostly costly people related activities in an organisation with recruitment fees costing 15-40% of the total salary. This doesn’t even include the productivity lost from internal staff members undertaking interviews during the recruitment process.

Using people analytics, businesses can identify the best-fit candidates, predict future performance, uncover hidden talent pools, reduce the time to hire and improve the quality of hire.

Improve performance and productivity

People analytics can allow organisations to identify the characteristics and traits of their top performers, and use this information to identify the skills that the rest of the team has to work on in order to improve overall performance.

For example an organisation can look at the behaviours of their top performing sales people by understanding the number of external communications, the breadth of their internal network and with which teams, how much time is spent in meetings and ultimately the impact on leads generated and deals closed.

By understanding the behaviours that differentiate top performers, training and coaching can be adjusted to focus on the behaviours that lead to better sales outcomes.

Increase employee engagement

People analytics can also provide insight into the drivers of employee satisfaction. This allows organisations to make changes to their policies, processes, and work environment to improve overall employee satisfaction and reduce turnover.

For example, a tech company may use people analytics to analyse employee satisfaction survey data and identify factors that are impacting employee engagement. Based on these results, the company implements a flexible work arrangement program, which leads to a significant increase in employee satisfaction and engagement.

Improve diversity, equity, and inclusion efforts and reduce biases

People analytics improves diversity, equity, and inclusion (DEI) efforts in the workforce by providing data-driven insights into DEI related metrics and trends. This includes analysing representation of underrepresented groups in the workforce, promotion, retention rates, recruitment, pay equity, and employee experiences related to DEI. People analytics can help identify unconscious biases in hiring, promotion, performance management and compensation processes to help drive a more inclusive and equitable workplace culture. 

Optimise workforce planning and management

People analytics can also help organisations monitor and manage the utilisation and deployment of their workforce. The insights generated by people analytics can help organisations identify workforce trends, such as changes in employee behaviour or demographics, allowing the organisation to proactively respond to these changes. This includes forecasting future workforce needs, identifying skill gaps, as well as creating effective talent acquisition and development strategies. The result is a more agile and optimised workforce that is better equipped to meet the changing needs of the organisation. The benefits are avoiding labour shortages or surpluses and ensuring the right people are in the right roles at the right time.

Enhance leadership development and succession planning

People analytics enhances leadership development and succession planning by identifying traits and characteristics of great leaders. This enables leaders to make informed decisions about leadership development programs and succession planning initiatives, such as identifying and grooming high-potential employees, identifying critical skill gaps, and creating individualised development plans. By using people analytics, organisations can also track the effectiveness of their leadership development programs and make continuous improvements, which leads to a stronger, more capable leadership pipeline. 

Measure and track the impact of HR initiatives

People analytics can help organisations measure and track the impact of HR initiatives by providing the following:

  • Employee turnover: The data collected through employee turnover metrics can provide a clear picture of how HR initiatives are impacting employee retention.
  • Performance and productivity: The impact people initiatives have on business outcomes such as Revenue per FTE or employee lifetime value.
  • Diversity, Equity and Inclusion: People analytics can be used to track the impact of diversity and inclusion initiatives on the organisation's demographic composition and employee engagement levels.
  • Employee engagement: Regular engagement surveys can help track employee satisfaction and provide insights into the impact of HR initiatives.
  • Talent acquisition: People analytics can help organisations track the success of their recruitment efforts and determine the impact of HR initiatives on attracting and retaining top talent.
  • Performance management: People analytics can provide insights into the effectiveness of performance management initiatives and the impact on employee performance.

By tracking this data over time, HR professionals can identify trends, spot areas of improvement and measure the success of HR initiatives, allowing them to make data-driven decisions and continuously improve the effectiveness of HR practices. This helps HR demonstrate the value and impact of their work to senior management, and ultimately make better informed decisions that support the organisation’s goals and objectives. 

How can Culturate help?

Culturate is a new SaaS based platform which automates People Analytics for organisations. It streamlines data sources from HR, communication, productivity and financial systems.

Culturate has a range of features that allows organisations to realise the benefits of People Analytics.

  • Pre-prepared reports - Analysis of the most valuable commercial use cases based on industry experience and feedback.
  • Intuitive dashboard - Our software presents the data in a user-friendly interface.
  • Integrations - A broad range of systems across HR (HRIS, ATS, payroll), communication (calendar, messaging, emails), productivity (CRM, ticketing) and financial data can be captured.
  • Artificial intelligence - Leverages advanced data science and predictive algorithms to identify and predict employee turnover.
  • Security by design - ISO 27001 certified which is industry best practise.
  • Privacy by design - Has employee privacy at the core of its design so that personal data is anonymised and analysis is aggregated.