Originally published in 16th July 2017.

We analyse everything, from weather, climate change, natural resourses, the stock market, to hot trends and etc. For those who are hearing for the first time, People Analytics sounds a bit weird. Even some of my friends told me it seems “impolite”. Eleanor Roosevelt once gave an immortal saying that “Great minds discuss ideas; Average minds discuss events; Small minds discuss people.”, and we all consider talking about other people, no matter how they are, as “mean” and “small-minded”. People Analytics however, is not about analysing people as an entity in society in their personality. Instead, it is understood as methods or techniques that can help managers and executives make decisions about their employees or workforce.

If traditional Human Resources Management (HRM) focuses more on individual contributions than people, modern HRM considers individuals as the core of any organisation. Since HRM was born as a consequence of the industrial revolution in 18th century, the transfer of contribution to people could be the biggest breakthrough in this field, which makes People Analytics more vital more than ever to HR managers in particular and leaders in general.

Analysoi työntekijöitäsi, niin löydät heidän kehityskohteensa ja vahvuudet helpommin.

What is people analytics, exactly?

Business leaders usually approach to managing their people by traditional methods of personal relationships, decision making based on experience, and risk avoidance. In modern HRM, people-related issues, such as recruiting, performance evaluation, leadership, hiring and promotion, job design, compensation and collaborations cannot be analysed solely based on personal experiences, but data and sophisticated analysis. People Analytics is a data-driven approach to manage people at work, so it gives exact and concrete results. Remember, statistics don’t lie (Except when liars always use statistics and distort them).

Related terms to People Analytics are HR Technology, Big Data and HR Predictive Analysis. There are three main types of data that People Analytics focuses on:

  • People data such as demographics, skills, and engagement.
  • Program data such as attendance, adoption, participation in training and development and leadership programs, and key projects and assignments.

Performance data such as performance ratings and data captured from the use of instruments such as 360 assessments and succession programs.

While People Analytics should never fully automate the complex HR decisions within a firm, it can prominently aid in the decision making process, saving time and money.

Why is it important?

People Analytics helps organizations make smarter, more strategic and more informed talent decisions. With People Analytics, organisations can find better applicants, make smarter hiring decisions, and increase employee performance and retention.

The benefits to recruitment include:

  • reducing time-to-hire by replacing manual processes
  • increasing quality of hire by avoiding unconscious biases early in the hiring process

collecting recruiting and hiring data that can be correlated with business outcomes such as increased revenue

Research featured in the Harvard Business Review found that using a People Analytics algorithm increases the ability of recruiters to find the best qualified candidates by more than 50%. People Analytics have also shown downstream benefits (Source: Ideal.come):

  • attrition rates decreased by 35%
  • performance increased by 20%
  • revenue per employee improved by 4%

The future of People Analytics

People Analytics will change the recruitment function by automating the profiling of what employee success looks like in a particular role and then applying that knowledge to candidates during shortlisting, which has downstream benefits for performance management (e.g., differentially compensating top performers), turnover (e.g., identifying which employees are flight risks and creating interventions for them), and workforce planning (e.g., linking revenue growth and market share in order to proactively recruit and hire for growth).

Further reading on People Analytics:

https://ideal.com/people-analytics/

https://hbr.org/2015/07/what-people-analytics-cant-capture

https://hbr.org/2017/06/hr-must-make-people-analytics-more-user-friendly