What is People Analytics?

For hundreds of years – possibly longer – organizations have made critical HR decisions based largely on instinct and intuition. Where should we find talent for our business? What’s the best way to attract those people? What kinds of benefits and perks should we offer to keep them? What kind of training and develop should we use, who should we offer it to, and what are the results? All of these critical questions, and many more, were often answered based on gut feelings and anecdotal experience.

Over the last couple of decades, human resources departments have increasingly accessed internal data and analyzed HR performance. It’s true that businesses should know how much they are spending on human resources and learning and development programs. We should also know what kind of value we’re delivering from that spend. This information is useful to gauge the performance of HR departments, and is interesting to senior HR managers and their managers. However, it doesn’t provide much value to sales, marketing, and operations managers.

people-analytics2.jpg

By definition, this information is comprised solely of lagging indicators. It tells us about the past – it offers no information for the future. The executive suite is highly interested in leading indicators – information that can help predict the future and help shape strategy.

Nowadays, organizations have access to troves of data surrounding the people they’ve hired and the performance they’ve delivered. We know where people are from, where they went to school, where they’ve worked in the past, and for how long. We know details about people’s work environments – what office they sit in and who manages them. We have information from exit interviews on why people have quit.

We also have tons of data on the performance of individuals and teams. Who are the organization’s top sales people? Where have there been the most operational failures? How does the performance of employees who have been trained differ from their colleagues who haven’t?

By accessing and analyzing all of this data, HR departments can both report on results, and help predict what should be done to improve performance – increase revenues, decrease costs, reduce the time to market, etc. People analytics enable HR departments to provide this critical information, thereby elevating the value of the entire HR function in the organization.

People analytics tools are increasingly being adopted to help human resources access and analyze both internal and external data and provide strategic insights to the executive suite. These tools combine multiple technologies like Big Data analytics and Artificial Intelligence to slice and dice data, and present real-time representations of the information that is most interesting to the organization.

For example, you can set up dashboards to better understand attrition, employee cost, and employee engagement by business unit or geography. You can generate up-to-the-minute reports to see patterns around operational outcomes (time to market, patient outcomes, etc.) and how management issues influenced results. Or you might better pinpoint sales training solutions and improve sales hiring quality based on analysis of sales performance by demographics, territory, and education.

You can also use People Analytics tools to protect your business from fraud or ensure regulatory compliance. By analyzing internal data, HR can find patterns of fraud, and ensure that hiring, training, and management practices can significantly reduce the initiation and impact of fraudulent activity. You can also analyze employee demographic and salary information to ensure that you comply with equal pay regulations.

Like contemporary CRM and Business Intelligence tools, many People Analytics tools have become simple to learn and use. Deploying such a tool enables HR departments to immediately provide strategically valuable information to the executive suite, and consistently roll-out additional value to the organization as executives come to rely on the HR function.

Using Workforce Planning to Deliver Completive Advantage

In today’s tight labor market where matching talent and outcomes has become critical for achieving high levels of performance, an organization’s workforce is arguably its most important asset. Indeed, organizations routinely exclaim that their people are their most important asset. However, very few businesses carefully plan, measure, or optimize this all-important resource.

Too many organizations don’t know of the current workforce gaps that will limit their ability to execute against their business strategy. The main cause of this disconnect between the recognition of the value of the workforce and the management of this resource is a lack of agreed objectives regarding what the output of workforce planning should be and a lack of a workforce planning process that includes predictive workforce modeling.

People-analytics.jpg

The main goal of workforce planning is to ensure that talent supply is equal to or greater than talent demand. If you want to execute your strategic plan, you need to have the right people in the right seats to deliver. So what outputs from workforce planning activities should the business expect?

 

Some benefits we want to achieve include:

  1. Knowing what headcount is required to execute the strategic plan, and specifically what talent will be required.
  2. Knowing what talent demand and supply issues currently exist in different areas of the organization (line of business, location, function, etc.).
  3. Knowing what impact management decisions and priorities will have on future workforce investments.
  4. Understanding what issues impact employee productivity.
  5. Determining the best metrics for understanding the risks concerning talent across the business.
  6. Providing accurate, real-time reports on workforce planning results.
  7. Creating a plan to be proactive, instead of reactive, when it comes to talent management.

Deploying a Workforce Analytics (people analytics) solution will enable you to gather and analyze data from across your organization to provide information for your workforce planning process. Using this information, you’ll be able to determine the real demand required by your strategic plan, understand what workforce supply already exists inside your organization, and design a forward-looking plan for bridging any gaps that might exist.

Understanding Demand

Typically, organizations task an individual or small “center of expertise” to look at the business’s plan and draw up workforce requirements for the different areas of the organization. The problem with working this way is that the future is uncertain. No matter what plan an organization has in place, the rate and extent of success or failure in different areas of the organization are somewhat unpredictable.  

For example, according to Peter Cappelli in his research on workforce planning, “The error rate in the U.S. on a one-year forecast of demand at the stock keeping unit (SKU) code or individual product level, for example, is over 30 percent.” 

There are two key components to avoiding this approach and the reactive stance it generates. The first step is to understand that workforce planning is a process, not a project with a “plan” as the outcome. Workforce planning is an ongoing process that takes the ever-changing state of the reality of the business into account and compares it to the strategic plan and expectations.

The second step is to implement technologies like People Analytics (such as the PreditiveHR platform) that provides users real-time and accurate information of the current state of the organization and provides predictive capabilities. Not only can analysis take place as part of a regular process, ad hoc analysis can provide critical information every time the state of the business changes due to internal or external circumstances.

Understanding Workforce Supply

In addition to understanding and predicting changing needs to your workforce requirements, you’ll need to keep abreast of your current workforce supply to meet those needs. Much like with planning, most organizations approach their future workforce supply stance by carrying forward historic trends when it comes to turnover, retirement, and internal job movement – and possibly take into account industry benchmarks.

Not only is this method inaccurate when it comes to total workforce supply, it doesn’t take the performance of individuals in the organization at all. That is, even if you’re lucky enough to have internal workforce supply to fill all of your seats, you may not have the right people to fill the jobs in terms of competencies and performance.

As with predicting demand, People Analytics tools should be used to bring predictability to both the number and makeup of your organization’s workforce supply. Good People Analytics tools take into account a wide variety of data and apply Artificial Intelligence to that data to conduct complex analysis incorporating demographics, organizational actions, workplace conditions, and much more to predict how groups, and individuals, may be impacted and the effect it will have on your internal workforce supply.

Action Planning

Once you know where there are likely to be gaps between your workforce demand and supply, you can create a framework for and ongoing workforce planning process. Since using People Analytics tools provide detailed and individualize intelligence, you can create a more detailed and targeted approach than the typical business.

Most organizations focus on general hiring, retention, and develop programs to bridge any perceived challenge they may face in the future. Organizations that enjoy the predictive analytics available in People Analytics tools can proactively target recruitment based on accurate career transition information, target development programs to specific areas or individuals who would most benefit, and fine tune pay strategy and bonus programs to enhance retention. Even promotions, transfers, and reorgs can be planned in advance to take advantage of your current supply – putting talented, capable, and engaged employees in roles that leverage their highest value.

Using the right tools, businesses can achieve advantage over their competition by better managing the most important resource in every organization – the workforce.