For many years HR was regarded as an errand to ‘hire and fire’ resources, but over the period of time, with the advancements in technology big enterprises are talking about the possibility to apply big data; which would aid them in making effectual decisions regarding the welfare of their employees and the organization. For this organizations have started to show interest in people analytics and have started to invest in it. Let us understand what is people analytics and how it is empowering HR?
Human Resource programs no longer need to be based on “soft” reasoning but should be as analytical and data-driven as any other management discipline - Chris Argyris.
The role of an HR consultant has changed. HR is no longer a ‘soft task’ or a ‘people’s person’. The pace at which technological developments are progressing has directed HR professionals to be more business-centric and tech-savvy. Amongst other technological augmentations like AI in HR, Virtual Reality, Automation, Gamification, Cloud-based HR systems has had a major impact on HR professionals and has taken the HR world by typhoon transfiguring the way HR operates. With the pervasive adoption of cloud HR systems, more organizations are financing profoundly in programs to use data for all aspects ranging right from manpower planning to people decisions, and operational enhancement.
As well stated by Joash Narainsamy, Organisational Wellness Specialist at ICAS Southern Africa
“Workplace analytics can give insight into Absence Management, Presenteeism (present but unproductive), Talent Acquisition and Retention, Fatigue and Accident Management, and tell you exactly where your business is bleeding and what to do about.”
What is People Analytics?
‘People Analytics’ is the process of scrutinizing the available people-related data to measure the efficiency of the HR programs and identify patterns so as to make profound business decisions. In simple words we can say that it is a process that refers to the technique of analytics that uses technology, statistics and proficiency to enormous sets of talent data which helps the management to make effective business decisions for the organisation as well as for their employees thereby having the opportunity to get better return on their investment in the business as well as in the people whom they employ.
According to Deloitte’s Global Human Capital Trends report:
- 71% of companies regard people analytics as a topmost priority.
- 31% of companies rate it as very important.
- 8% of organizations stated that they have usable data.
- 9% believe they have a good understanding of which talent dimensions drive performance in their organization.
Analytics is applied to a vast array of business operations and the challenges they face where recruitment is considered to be the first and foremost area followed by other areas such as workforce planning, measuring the employee’s performance, compensation benefits, and retention. Organisational network analysis (ONA) and “interaction analytics” are widely used to study employee behavior in order to detect new prospects for business improvement.
Different Types of Analytics
According to Gartner’s Business Analytics Maturity Model, four defined types of analytics are broadly used. They are
- Descriptive Analytics
- Diagnostic Analytics
- Predictive Analytics
- Prescriptive Analytics
1. Descriptive Analytics
Just as beams or foundation walls are considered to be the base of a building similarly Descriptive Analytics is considered as the base footing of the business intelligence. It is a primary stage of data processing that forms a synopsis of historical data to supply helpful information and probably prepare the data for further analysis. It mainly focuses on the question ‘what happened’ on issues related to employee turnover, number of openings, time to hire, new hire report etc.
2. Diagnostic Analytics
When we do a case study we form a detailed outline of what happened. Just as after we investigate what happened; we then tend to dig deep in order to know why it happened. Similarly, Diagnostic Analysis focuses on the question why did it happen? It digs right into the depths of the data in order to understand the causes of a particular behavior or event. For instance: In employee turnover, the diagnostic analysis would help to classify whether the separation was a voluntary one or an involuntary one. It is characterized by techniques such as data mining, correlation, data discovery etc. It enables you to select potential employees for a position. It unveils meaningful perceptions about talent pools by comparing succession metrics and performance reviews across selected employees.
3. Predictive Analytics
It is a twig of advanced analytics and is used to identify and project information about the unknown future. possibilities and trending events. It comprises a number of statistical techniques ranging from predictive modeling, machine learning, data mining and artificial intelligence that analyses current data and historical facts to make projections about the future. The outlines found in past and transactional data can be utilized to detect the future risks and opportunities. For instance: While hiring; it helps to identify candidates with a tendency to join or who can be efficacious at the organizations, thus helping the talent acquisition team to fill the position swiftly.
4. Prescriptive Analytics
It is a zone of business analytics and it focuses on proposing possible measures to direct towards a solution or a viable outcome. It is associated with both descriptive and predictive analytics. As descriptive analytics seeks to provide insight into what happened, predictive analytics aids to predict what might happen. Prescriptive analytics uses artificial intelligence and machine learning to understand the impact of the future and aims to provide the best strategies based on those situations, thereby aiding enterprises to mitigate forthcoming risks or suggest best possible options to enterprises to take advantage of the future opportunity. Prescriptive analytics is used in industries such as travel, oil, and gas, transportation etc.
The Best Analytics as a Tool
Amongst the above mentioned four analytics, Predictive Analytics can be considered as an astounding tool for business enterprises. The reason for this is that it has the capability to give meaningful perceptions into areas such as talent management, employee benefits, and promotions or helps in predicting information about the unknown future happenings.
For instance: Calculation regarding the efficacy of the training courses can be done with the help of analytics. It can show the effectiveness of performed CSR initiatives by an organization and rank them based on their contribution to corporate culture and employee participation as well as it can determine which employees are likely to achieve their targets. Several leading business ventures have already given thumbs up to analytics. For example- Employee performance data is used by Google to compute suitable interference time to facilitate both high-performing and low-performing employees succeed.
Areas Where People Analytics is Used
The development of people analytics is worldwide and not limited to a particular country. It has its usage within the HR domain and the business framework. The areas of its usage are likely to develop in a diverse way in the nearby coming years. People analytics can be leveraged in several ways to enhance the functioning of a company.
To name a few areas where people analytics are/can be used within the enterprise are -
- Talent acquisition
- Picking up the right applicant in order to minimize bias in hiring
- Increasing employee engagement
- Workforce readiness
- Measuring work culture, employee experience and employee retention.
For instance: Google the tech giant is considered one of the best companies to work for. With the use of people analytics, they hire the best applicants and retain them with the highest engagement rate.
However, HR areas such as recruitment, employee retention/turnover, and employee performance are the core areas where analytics can be used and the organization can reap its benefits.
The skills of application stalking procedure have changed the recruitment procedure. The judgment could be biased after interviewing the applicant irrespective how accurately the information pertaining to the applicant is presented. As stated by Sujee Saparamadu Orange HRM CEO in an interview with Better Buys,
“When you do small talk before the interview, this leads to subconscious hiring on a confirmation bias. That’s where personality insight comes into the picture.”
In order to curb bias when working through a recruitment process, people analytics can be used as a helpful tool to do the relevant assessments of the applicants. Clarity in terms of data about the candidate’s traits can serve for other comprehensions such as whether the candidate’s behavior and personality traits would be appropriate with the organization’s culture or not. Additionally, if all the data about the candidate is saved and being managed in a recruitment CRM software, it makes lives easier for HRs to compare candidates and shortlist the best ones effortlessly.
2. Employee performance
Employee Performance is an area where predetermined notions and prejudices are difficult to jiggle. People analytics provides HR the ability to recognize probable fissures amongst employees within a particular department/team, and what training and guidelines are required to compress and seal those fissures. An in-depth digging into the information will give organizations a gist of who will be a high and low performer amongst the freshly hired applicants. This will help managers empathize; how to effectively get involved and encourage employees in order to enhance the overall progress of the organization.
3. Employee turnover
The use of people analytics helps to identify the ratio of employee retention. By collecting several data and penetrating deep into the available information, an enterprise can observe employee’s behavior and ascertain the behaviors of employees who are about to leave/are leaving the company against employees who are loyal to the company. Just as business determines what drives consumers buying decisions similarly such type of understanding lets HR get a fair idea as to what is the reason that makes an employee leave an organization and vice-versa. Rather than banking on gut feeling it is far much better to bank on insights that are proof based. This will help HR to make effective decisions to enhance employee retention.
Seven Steps to Building a Great People Analytics Strategy
1. Seek aid from business trailblazer
The function (People analytics) should be capable enough to provide global support and not just mere technical analysis. It should be fit enough to identify right problems that pop in during the business processes. For this one should seek help and support from stakeholders, IT resources, senior executives and not to forget business trailblazers.
2. Establish a powerful analytics team
Success of People Analytics relies on and comprises teams across all segments of business such as finance, HR etc. and data traversing the functions. It is important to build and establish a strong, closely knit multi-functional expertise team that is proficient with the data calculations, data visualization, institutional knowledge and advisory skills so that the team develops as the enterprise’s Analytics Team.
3. Gather reliable data-driven HR
Accurate data is the foundation of all analytic practices. The accuracy of the analyses depends upon how good data is fed into the software. One has to invest in money, time and execution of actionable insights that are drawn from analytics in order to get the best out of people analytics.What step needs to be taken is something that is very essential to decide upon once the organizations discover the causes of the problem through the evaluation process obtained from the statistical data. Appropriate steps should be taken to make sure that data quality is a part of every analytics conversation. Avoid using irrelevant data as it leads to an interpretation of wrong conclusions and creates data turbulence.
4. Enhance analytics fluency
In order to choose a right to follow up the action, it is very important that one is intelligent enough to understand and interpret complicated data. For this it is necessary that enterprises implement and provide training on data governance programs that would provide training in terms of implementation of standard tools, standardization of reports and dashboards etc. and prepare a cluster of important managers and knowledgeable HR’s stakeholders.
5. Develop a roadmap for investment in analytics programs
Develop an analytics investment roadmap for a wide rainbow of analytics. Investments should be endeavored at constituting a new business operation for the organization and not merely a technical team within HR.
6. Emphasize on actions and not merely findings
To add value to people's analytics program the analytics team should be capable enough to understand the root cause of the problem from the provided information and thereby provide the best and appropriate solution to the problem.
7. Create Data plan
People analytics banks on the bisection of data from business operations, HR and outer sources. So, it is necessary to establish a data plan in order to align/amalgamate the organized and unorganized data from both in-house as well as outer sources.
Benefits of People Analytics
1. Strengthen decision making
People analytics gives you the opportunity of collecting information from vast sources of data that help in making effective decisions. When it comes to making decisions, traditional HR was subjective. With the introduction of people analytics, subjective decision making has come to an end. People analytics gives you statistical data which helps you understand where the problem is and make effective decisions to curtail the problem.
2. Enhances retention
Losing an existing employee can be pricier for an organization rather than hiring a new applicant. People analytics helps you to enhance employee retention. As mentioned above predictive modeling is useful and plays an important role in the future. Predictive analytics helps the management to know which employees are about to leave/are leaving the organization. With this information on hand, they can take proactive steps to retain the employee and encourage them to stay on with the organization.
3. Drives accountability
Data presentation is a vital part of people analytics calculation. Accepting people analytics means accepting a world of easy, pertinent data visualization. Such statistical data is easily interpretable and can be understood in the context of strategic business goals. This clarity boosts accountability, as employees take control of the data. Accountable employees perform better and are considered to be more of a business asset. Finding ways to drive accountability has been the biggest challenge and people analytics has let accountable employees to meet that challenge.
4. Increases employee satisfaction
Employee engagement has been a major issue in HR. Contented employees are more productive, well-organized and more faithful to the organization they work with. People analytics can have a good impact on employee satisfaction. With the use of People Analytics management can get an idea about how employees feel about working in their current organization.
5. Hire better people
One of the biggest benefits of people analytics is the ability to hire better and suitable candidates for a given position. People analytics helps you to develop a predictive evaluation for performance on the basis of the current top performers of the organizations. Organisations can use this knowledge while evaluating applicants to make sure they hire those applicants that are most likely to perform within their business.
6. Saves time
From sourcing to hiring and training to nurturing the talent is a time-consuming activity and all the time and efforts go in vain in wrong placements. With the use of people analytics, employers get an idea about which people and programs are worth their time and which are not. As a result, people analytics gives you additional time to spend on the things that direct business-driven results.
Concluding Reflections – The Path to Widespread Adoption
A lot of the organizations have to still constitute decent and reliable people analytics functions. Those enterprises who have are fuelling ahead and these organizations have not restricted the functioning of people analytics only to the HR domain; but have extended people analytics function to work across all segments of the business including finance, HR, and business operations so as to reap the benefit of the function’s powerful impact on the business performance. People analytics is set to be a nucleus element of the future of HR and those enterprises that put employee belief and confidentiality at the midpoint of their endeavors will eventually be the ones that reap the most value. It’s geared up to be an electrifying road ahead.
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