People analytics: How to use HR data to drive business results
People analytics deliver actionable insights to improve the way your organization does business – and the impact HR has on the bottom line.
Today’s CHROs make data-driven decisions that have a ripple impact on the entire organization. This new generation of HR professionals understands the key categories of organizational data, how people analytics fits within the overall operational data strategy, and most importantly, the workplace strategies that actively influence the overall performance of their company.
New to the world of people analytics? Here’s a closer look at what it is, the metrics you should measure, how to get started, and a case study demonstrating people analytics in action.
What is people analytics?
In the not-so-distant past, HR departments would attempt to justify investments, programs, and strategies by recording and tracking impact on retention. They would use abstract “cost of replacement” calculations based on outside research to show how employee engagement or participation in leadership development programs would save money through more retained employees.
Essentially, they tried to indirectly show correlation to profitability.
Nowadays, savvy HR professionals leverage rapid data gathering techniques and data analytics platforms like Qualtrics to acquire and demonstrate where there are direct correlations between their actions and the overall performance of the business.
Get started with your free Qualtrics account.
The data collected via these techniques and platforms is people analytics, also commonly known as HR analytics or workforce analytics. With people analytics, organizations are able to make smarter, more strategic, and data-backed talent decisions throughout the employee lifecycle – from more diverse hiring decisions and better performance management to improved retention rates. People analytics deliver actionable insights to improve the way your organization does business – and the impact HR has on the bottom line.
“At Rogers Communications, we take people data seriously. We do rigorous analytics with this data so we can decide what people programs to build, what people strategies to implement, and what ultimately will take our organization to the next level."
What types of people analytics should I measure?
In order to use people analytics to support your organization, you must look at four different types of data across the organization:
Organizational performance metrics, such as:
- Revenue per employee – revenue divided by the number of employees in the organization.
- Operating margin – profit represented by the percentage of revenue left over after all operating expenses are subtracted.
- Earnings per share and total shareholder return – a measurement of the amount of profit or value a holder of one share of the company would receive.
- Return on assets (ROA) – net income divided by assets.
Workplace monitoring metrics form the basis of what people typically call a “big data” set when merged with the other data sets to see which individual and combined elements influence the key organizational metrics. These metrics include:
- Open hiring requisitions
- Time to fill open requisitions
- Cost per hire
- Number of candidates/interviews per hire
- Worker productivity
- Worker quality
- Absentee rate
- Safety incidents
- Voluntary vs. involuntary terminations
- Average performance rating
Key customer metrics are typically gathered and tracked by marketing or customer experience (CX) teams. A centralized and combined database of HR and CX data is integral to analyzing and tracking the impact your team has on the metrics that define (and better and refine) the outcomes of your work. Some of the most common customer metrics are:
- Customer satisfaction/Net Promoter Score/engagement
- Share of wallet
- Number of products purchased
- Customer retention
- Average revenue per customer
Voice of the employee data helps organizations understand behavioral, opinion, and other qualitative data about employees to allow them to draw new conclusions and pinpoint actions, management techniques, and operational changes. These metrics are gathered via:
- Lifecycle monitoring
- Performance reviews
- Exit interviews
- Candidate experience surveys
- Development program evaluations
- Assessment results
Each of these data elements will inform and influence different areas of the organization, but when analyzed together, they will allow you to make a compelling business case for how and why you want to execute any sort of initiative, project, or program. Identify which metrics you hope to influence at each level and how you hope to influence them by showing the correlations (or connections) between each effort and metric.
Learn more about collecting voice of the employee data with an Employee Pulse Survey.
What are the benefits of people analytics?
Now that you’re familiar with which HR data to gather and measure, you’re probably wondering about the benefits of doing so.
With a people analytics program, you can:
- Enhance business performance. Leveraging people analytics improves revenue per employee by four percent.
- Improve diversity and inclusion. Identifying metrics for diversity ratios at every stage of the hiring process helps ensure equity throughout it. With metrics, you can also set tangible goals for fostering a culture of belonging.
- Tackle your turnover problem. People analytics allow you to identify the cost savings of retention programs by analyzing the direct and indirect costs of turnover in relation to compensation, absenteeism, productivity, and learning and development.
- Solicit investment in your programs. Show your executives the impact of your initiatives over time and convince them to keep investing in your work by predicting the outcomes of your efforts.
- Build a world-class employee experience. Every interaction an employee has with an organization is a data point that can be utilized to glean insights – and improve EX.
“Many companies strive to make their sales force more effective and efficient, but few look at them through the lens of people data to do so."
"At Johnson & Johnson, we ask ourselves: what characteristics do successful salespeople have in common? How can we recruit and develop our people to replicate traits that will lead to success? People analytics can help answer these questions in a way that drives direct business impact.”
What does a people analytics program look like?
“After extensive research, we realized the organization would benefit from more focused, frequent, and comprehensive employee sentiment data,” said Dr. Marina Pearce, Global Talent Analytics Lead at Ford.
As a result, Ford developed an ‘ask-listen-observe’ approach — this involves compiling active and passive data elements to tell a more comprehensive story (versus the data collected from just one survey per year, as an example).
|What Ford does||Where (and how) Ford collects data|
|Ask||In a very structured way, Ford explicitly asks people to give their opinions and feedback on a particular thing.||
|Listen||Ford listens to employees, which is a very unstructured way to learn what your employees are naturally talking about in a public forum.||
|Observe||Observing is about quantifying behavior around a specific sentiment topic (such as culture change).||Ex. culture change — if Ford wants to know the employee behaviors around culture, they measure:
Combining those ‘ask-listen-observe’ results, Dr. Pearce and her global talent analytics team then share them with Ford’s internal decision-makers to help shape new programs to meet the needs and desires of employees.
How do I get started with people analytics?
Feeling inspired to make data-driven decisions and improve employee experience at your organization? Here’s a quick guide for getting started with people analytics:
- Assess the readiness of your organization. Are members of your board or C-suite asking about ways to improve efficiencies? Have leaders (in other departments) discussed the positive ROI of analytics and technology? If the answers to these questions are yes, your people analytics program is already in good company.
- Identify your data champions. Finding fellow (internal) data champions can help you get buy-in, build your business case, and navigate any potential culture change around putting people analytics to use.
- Formulate impactful questions. To draw insight into your organization, look at your overall business goals. Determine how HR and EX fit into those goals, then work backwards to the types of questions you’d like answered – and the areas you want to improve on.
- Be prepared to look deeper in your data. People analytics will enable you to go beyond typical HR questions to understand the “why” – such as:
- Why are you overspending on your overtime budget?
- Why aren’t total rewards aligned with the actual needs and wants of your employees?
- Why are voluntary terminations increasing?
- Choose your people analytics software. Qualtrics offers a suite of HR and EX tools for gathering and analyzing your people data.
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