The Historical Approach to People Analytics: Relying on Instinct
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.
The Shift to Data-Driven HR
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.
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?
Empowering HR with People Analytics
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.
Diverse Applications of People Analytics
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.