The Ultimate Guide to People Analytics: How to Collect Meaningful Data
People teams have a seemingly impossible job of protecting the business and its employees in equal measure while complying with endless regulations and meeting shifting business goals.
It's a tough job, and that's why HR teams are leaning more on people analytics to scrutinize the inner workings of their organization.
This article will:
- Define people analytics.
- Provide concrete examples of how data analysis could benefit your organization.
You'll learn exactly how to apply people analytics to specific use cases and how to build your first analytics strategy to make sure you're collecting the people-related data that matters.
📊 What is people analytics?
People analytics is the process of using data, statistical analysis, and modeling techniques to make informed decisions about an organization's workforce.
The primary goal of people analytics is to improve:
- organizational performance;
- employee engagement;
- overall employee experience.
HR leaders use it to make better decisions in areas such as:
- talent acquisition;
- employee engagement and retention;
- performance management;
- workforce planning (identifying skill gaps and making strategic decisions about hiring, training, and redeployment of staff);
- diversity and inclusion;
- compensation and benefits;
- organizational design.
The process involves data mining and finding links and correlations between data sets and hypotheses.
"Data analytics is the process of identifying measures or metrics and collecting and analyzing data relating to them [which] focuses the attention of the organization on what needs to be done to find, keep, develop and make the best use of its human capital." Armstrong's Handbook of Human Resource Management Practice.
🔍 Example: Imagine the headache of 25% of your mid-level managers resigning within the same quarter. People analytics may examine compensation data, performance management data, and exit interviews to help you understand why this happened and what you can do to prevent it from happening again.
With the right data, people teams can identify potential risks, performance issues, and opportunities faster and more accurately. Ultimately, analytics enables businesses to make real-time data-driven decisions that are effective, efficient, and spot-on.
🕵️♂️ Why is people analytics important?
Let's dive deeper into how people analytics supports the key pillars of HR.
Analytics helps HR teams identify and attract the right talent for open positions. Your teams will create targeted campaigns, customize job postings for each candidate and discover sources of top talent.
The right data can also predict the quality of hire or pinpoint problems in your hiring funnel.
🔍 Example: If you notice that candidates reject your job offers, analytics can identify why. You may need to adjust your recruitment process or improve your employer value proposition to ensure you're competitive.
➡️ Learn more about developing an attractive EVP.
Employee engagement has been on a downward spiral since the pandemic hit. Gallup data reports that:
- 36% of employees were engaged in 2020.
- 34% of employees were engaged in 2021.
- 32% of employees were engaged in 2022.
People analytics allows you to crosscheck engagement levels in your organization against this workforce data to spot if you have a similar issue. It can also spot if you have a problem with absenteeism caused by job dissatisfaction.
In either case, dig into employee engagement surveys and other data points to identify the root cause and develop an action plan to improve general sentiment across your company.
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2021 was the year of the Great Resignation.
A recent Pew Research Center study reveals why people voluntarily left their roles that year.
- 63% left due to low pay.
- 63% quit due to a lack of career advancement opportunities.
- 57% felt disrespected in their workplace.
- 48% suffered ongoing childcare issues.
Although the metrics may look different in your organization, this type of data allows people leaders to prevent a constant stream of departures. For example, suppose you discover that half of your workforce can't afford or secure adequate childcare.
In that case, you might consider offering flexible work arrangements.
Alternatively, if almost two-thirds of ex-employees couldn't visualize their future at your company, invest in career pathing to create a robust framework for professional growth.
➡️ Learn more about why people quit their jobs voluntarily.
Performance & development
HR teams may scratch their heads over why certain employees perform better than others. Analytics enables you to identify what makes your top performers stand out and how to develop other team members using the same strategies.
🔍 Example 1: Use historical employee performance data to predict who will likely be a high-performing employee.
Sift through the data to identify key traits and behaviors in top performers, then apply these learnings to new hires or existing team members as part of an employee development program.
Additionally, the data may illustrate that bias is present in your performance review cycles.
🔍 Example 2: If you discover that white males aged 25 to 45 receive consistently higher ratings than their peers, you know it's time to take action.
Calibrating performance reviews is the right analytic approach here.
➡️ Learn more about integrating performance management with talent management and the best strategies to do so.
Diversity, equity, and inclusion
53% of L&D pros report a deeper relationship with diversity, equity, and inclusion this year, according to LinkedIn's Workplace Learning report. And some 41% of organizations use DE&I programs to support employee retention.
People analytics can support these drives by measuring the effectiveness of diversity initiatives and analyzing performance gaps to identify any potential bias. Analytics can also assess the positive impact of DE&I programs over time and provide actionable, data-driven insights about any further necessary interventions.
➡️ Learn more about how to promote DE&I in your workplace.
🏆 5 Benefits of people analytics
At first glance, people analytics may seem like HR teams are most likely to profit from its strategic benefits.
But employees also have much to gain by working for a data-driven organization.
Here's how number-crunching contributes to a well-rounded employee lifecycle.
Creating a culture of continuous learning and improvement
Share growth and performance data with individual employees and empower them to take ownership of their career development.
You will build trust and deepen employees' connection to the organization, boosting morale and engagement.
Enhanced growth and development opportunities
Use analytics to identify the most likely development opportunities to support employee growth. By tracking employee growth trajectories, you can provide tailored learning and coaching experiences that equip them with the skills needed for promotion.
You'll learn how to serve your workforce, reduce stress or mental health issues, and improve employee work-life balance through surveys, engagement metrics, and feedback data.
From understanding what perks your employees want to evaluating the efficacy of your wellness initiatives, data can help you better support employee wellbeing.
Personalized employee experiences
Analyzing data allows you to provide each individual with a more tailored employee experience.
- Craft team-building activities that reflect the interests of your employees.
- Offer rewards for individual contributions.
- Setting up regular check-ins to promote mentorship opportunities.
➡️ Learn more about how to supercharge L&D with personalized training.
Exceptional onboarding experiences
According to Harvard Business Review, a well-designed onboarding process can improve new hire retention rates by 50%.
Onboarding analytics digs into employee data to understand how well you introduce the company, the team, and the role to your new joiners.
➡️ Learn more tips and tricks to boost your employee onboarding experience.
🖥️ 4 Specific business use cases for your people analytics
People analytics has a wide range of use cases in the corporate environment.
Here are some ways to use hard data to move your business functions forward.
Solving specific business challenges
The best way to approach data is to have a specific pain point you need a solution for.
Tracey Smith, one of the "Top 50 Global Influencers in HR Analytics," writes:
"If you do not know the specific questions you are trying to answer or the specific problem you are trying to investigate, you risk wasting a lot of time and money on something the company doesn't value."
🔍 Example: If you need to boost employee engagement in a specific department, look at the data to see which initiatives have had the highest success rates in other departments and make the necessary changes.
If your HR team has previously based workforce planning decisions on gut instinct alone, data will provide the foundations for future decision-making. Use it to test out hypotheses and create viable action plans.
🔍 Example: Your managers experience a flux of departures and suspect that higher pay would aid retention. Instead of throwing money at the situation without evidence, use data to explore the relationship between compensation and retention.
For example, crosscheck external benchmarked data with retention rates at other companies in your industry; you may also uncover another relationship between departures and career opportunities in your organization.
Determining skill gaps
As companies go through digital transformations, expand into new business areas, or strive to become more sustainable, people analytics will highlight where your organization should invest in filling gaps and acquiring new skills.
🔍 Example: If you plan to expand your operations into Portugal, you might benefit from having employees on your team who are fluent in Portuguese. Conducting a skills gap analysis will scour employee data to learn who has this niche skill and where you should invest in filling any gaps.
➡️ Learn the steps to conduct a skills gap analysis.
Creating proactive competence development plans
Data doesn't just tell you who has the right skills—it can also enhance employee competencies for their role. An analysis of past performance can identify employees with high potential, and individual coaching plans tailored to their strengths will progress their careers over time.
➡️ Learn how to create an 8-step competence development plan.
🔍 Example: Business leaders at Google use performance data to determine the ideal criteria required to reach success in specific roles.
➡️ Learn more about how the search engine giant conducts employee performance reviews in our Google performance management case study.
🪜 6 Steps to your people analytics process
People analytics is an invaluable tool in today's workplace, so long as you know how to use it effectively.
Here are six steps to get you started on your journey.
Step 1: Determine your priority data
Focus on the key metrics that enable you to achieve your goals regarding efficiency and productivity. For example, if your business aims to reduce turnover, pay close attention to metrics like employee engagement, job satisfaction, and data collected in exit interviews.
McKinsey highlights five different categories of data in terms of quality:
- Poor data: unusable information.
- Good data: difficult for people teams to access or analyze.
- Strong data: fully accessible for key decision-makers.
- Advanced analytics: includes capabilities for data science and statistical analysis.
- Reliable predictions: uses historical data to predict future outcomes accurately.
Remember: If your budget prevents you from tackling a large-scale analytics program, don't be afraid to start small with a priority area and use data to improve this business area.
Tip: Publish the results to make it easier to gain buy-in across your organization in the future.
Step 2: Establish a data infrastructure
Set up an analytics platform or data warehouse to securely store your information. Your target is being able to easily capture and organize actionable insights you can use for crucial business decisions.
Step 3: Consider any legal limitations
Ensure you know all legal regulations regarding collecting and using employee data.
For example, GDPR or other local privacy laws may apply to people analytics, depending on your business sector.
Step 4: Use data to explore
Once you've collected your data, experiment with different data points and indicators, such as performance ratings, workplace satisfaction surveys, or absenteeism information — whatever is most relevant to your business objectives.
Tracey Smith wrote about the importance of analyzing data in context.
"Numbers are great, and many people are skilled at "slicing and dicing data." But, what does that data mean to the business area or the problem you are studying? This is where HR analytics experts need to partner with experts in the specific business area to interpret what the data is really telling you. For example, what are the possible root cause reasons for the movements of metrics in the data? People working in that area every day are best suited to provide this insight."
Remember: Only some of the data will fit your hypotheses, and there will be surprises along the way.
Ensure you explore the possibilities behind the numbers and consider any potential implications.
Step 5: Give stakeholders access to your people analysis
Share your findings with all stakeholders in the organization, including senior leaders. Back up your conclusions with data to ensure everyone understands where these business insights come from and how to apply them to their areas of responsibility.
Step 6: Define the elements for building a fact-based, measurable HR strategy
Measurement and reporting should be part of your overall people analytics strategy.
First, identify what data is meaningful and measurable to you, then build a consistent set of metrics to track progress towards your long-term business objectives over time.
🧰 3 Simple ways to get started in people analytics
HR must define the following points before collecting data or making people decisions.
1. Decide what data to collect and analyze
Shonna D. Waters et al. write:
"There's a lot of talk about big data, algorithms, and automation.
However, the value of data is limited by your ability to extract information and insights from them. Organizations are using technology to collect more and more data. They need people capable of interpreting the data and extracting valuable information from them. Equally important, they must help turn that information into insights that can be used to make better decisions and provide a competitive advantage."
Tip: Ensure you focus on collecting specific data rather than trying to wade through infinite data sets without direction.
2. Pinpoint which resources are available
Consider whether you have employees with the necessary skills to handle large-scale analytical work. Specifically, seek out people with experience in:
- Change management
- Data governance and architecture
- Data science
- Behavioral science
- Business acumen
Tip: If you lack people analytics teams with the necessary skills, consider upskilling your existing talent by offering analytics certification courses. Alternatively, seek external resources to support your people analytics efforts.
3. Select which people analytics software to use
We would always stress that some data analysis is better than zero data analysis, even if it requires manual collection and analysis using spreadsheets or similar.
So, don't worry if you're not ready to invest in expensive systems to make predictions on your behalf.
However, many companies quickly realize that the ROI for people analytic tools is significant.
Therefore, it's essential to do your research and select a system matching your HR team's size and scope.
🔮 Check out our in-depth article on the latest people analytics trends. Here is a snapshot of what we discuss:
➡️ Drive strategic people policies with Zavvy
Zavvy offers a software suite that will deliver valuable insights for your people analytics teams to pore over. Add the following to your toolkit:
- Analytics: filter through valuable people data using search categories such as attrition rates, tenure, gender, age, headcount, compensation, start date, or department. View your data via customizable people analytics dashboards to see what you want and need.
- Pulse surveys: gain insights into employee sentiment with regular surveys that reveal workforce trends.
- Performance feedback: collect and assess performance review data, developmental milestones, and individual goals
- Onboarding: collect data throughout this crucial period to understand how new joiners are acclimating to their roles.
Ready to start unraveling your people mysteries with eye-opening data that will boost business outcomes? Book a free demo of Zavvy today.
If you have questions about people analytics, you're not alone. Here are some common queries about this relatively new HR practice.
Why get involved in people analytics?
The basics of people analytics revolve around collecting rich data to provide insights into how you can manage your workforce more effectively. Then, combining data points, you'll conclude on business performance, productivity, satisfaction, retention, and other essential factors for creating a thriving organization.
Are there ethical considerations to the use of people analytics?
Although employees have likely consented to you collecting their data, there are many ethical considerations regarding how you handle, present, or distribute it.
Consider how data is segmented, anonymized, and protected to ensure nobody can identify individual employee information.
Always check with your compliance officers or legal team to ensure your data practices and systems comply with all applicable laws and regulations.
What are the differences, similarities, and overlaps involved in people analytics and HR analytics?
There's much confusion about whether people analytics and HR analytics are different, the same, or overlap in some way.
Although they both take a data-driven approach to analyzing employee information, people analytics is broader in scope. It covers the entire employee lifecycle from recruitment to retirement and includes understanding why employees engage in certain behaviors at work.
Plus, the scope of people analytics extends to understanding the impact of the workforce on overall business performance.
HR analytics focuses more on KPIs related to specific Human Resource goals such as talent acquisition. It emphasizes the effectiveness and efficiency of HR functions.
What are examples of people analytics?
There are three different types of analytics, including:
- Descriptive analytics: using data to understand a specific behavior, such as absence rates
- Multidimensional analytics: combining different data sets and establishing relationships between them. For example, does an increase in employee benefits correlate with lower attrition rates?
- Predictive analytics: leaning on historical data and machine learning to predict future trends and determine HR strategy.
What are the pillars of people analytics?
The pillars of people analytics include data collection, analysis, insights, and decision-making. With the right data collection processes, you can analyze the information to gain meaningful insights that will inform your people-related decisions.
What quantity of data do you need for a brand-new people analytics project?
Many companies believe they need extensive data sets spanning several years to get started with analytics.
But in reality, all it takes is a few simple measurements over time and other high-quality data, such as employee surveys, to form key insights. Then, as you build momentum, you can incorporate more complex datasets into your analytics strategy.