Data informs business decisions. It can reveal meaningful insights and shape strategy. There’s data in everything from product sales to website visits. Your employees also provide powerful data that can transform business operations.
For human resources departments, “people analytics” can give companies an edge over competitors. According to research from McKinsey & Company, companies that use people analytics see:
- 80 percent increase in data-driven recruitment efficiency
- 25 percent increase in business productivity
- 50 percent decrease in attrition rates
For HR teams, there’s tremendous power in the data of your people. Discover how your HR team can use people analytics to achieve better business outcomes.
What Are People Analytics?
You’re likely familiar with how data analytics can inform business decisions. We look at website data to see which pages convert the most customers. Social media insights reveal which posts resonate with followers.
Similarly, people analytics uses data analysis to improve people talent and business outcomes. People analytics can help HR professionals glean important insights to inform talent acquisition strategies and boost employee engagement.
With the ability to replace manual HR processes, people analytics can also make HR operations more efficient. Data that may be a part of people analytics includes:
- Demographic data
- Learning, development and training completed
- Performance data
- Job history
- Skills and qualifications
- Program attendance and participation
- Key assignments and projects performance
- Annual performance assessments
Considering these benefits, it’s no surprise many companies have made people analytics a priority. An October 2020 report by McKinsey & Company found 70 percent of company executives cite people analytics as a top priority.
How Are People Analytics Used?
Oracle’s “The State of HR Analytics 2021” report surveyed 302 HR professionals to see how they use people analytics for their businesses. The report revealed 38 percent say people analytics is very effective at providing important insights to HR leaders. Further:
- 68 percent of organizations use descriptive analytics at least moderately.
- 43 percent of organizations use prescriptive analytics at least moderately.
- 34 percent of organizations use predictive analytics at least moderately.
The most important areas people analytics provided insights for were:
- Recruitment and selection
- Employee engagement
- Performance management
With all these insights it provides, people analytics can shape HR strategies for both hiring and retention. This results in significantly better business outcomes.
People Analytics Improves the Hiring Process
The cost of a bad hire can be as much as $240,000, a report by Society for Human Resource Management found. Recruiting, hiring, onboarding and training cost precious time and resources.
During this time of “The Great Resignation,” when people are more likely to quit, the effects of a bad hiring choice compound.
Your HR team can use people analytics to improve hiring quality and streamline processes. Here are examples of how people analytics can improve hiring.
See where your best talent comes from. Then, allocate future recruitment marketing spend there.
Create ideal candidate profiles
Use data to profile what employee success looks like in a particular role. Apply that knowledge to automate the screening function for candidates.
Run algorithms based on candidate pre-screening and job qualifications. Shortlist candidates who align with ideal candidate profiles and move them forward to the interview stage.
Combat the effects of inherent bias during the hiring process. This increases the quality of the hire and can support diversity, equity and inclusion efforts.
Provide candidates with employee-specific resources. Provide answers to questions about things like insurance and workplace coverage.
Improve and evolve
Align recruiting and hiring data with business outcomes like revenue. Link pre-hire data with post-hire performance data. Measure recruitment and talent acquisition effectiveness.
To reiterate, McKinsey & Company reports an 80 percent increase in recruitment efficiency for companies that use people analytics. You can hire smarter and faster and retain top employees with people analytics.
People Analytics Links HR to Business Outcomes
HR serves an important function related to revenue, growth and profits. Employees can make or break a business, and talent and retention impact business success.
McKinsey & Company reports businesses using people analytics see a 25 percent increase in business productivity and a 50 percent decrease in attrition rates. The following are examples of how HR can use people analytics to impact business outcomes.
Improve quality of hires
With the knowledge of which candidate characteristics are best for each role, HR can make hiring decisions that are more likely to stick.
People analytics can reveal what employees in certain roles need to succeed. HR can communicate that to managers and proactively provide support.
It’s especially important to engage top talent. Gallup research finds the cost of employee turnover is at least 1.5 to 2 times the employee’s annual salary.
Retain top performers
Top performers are costly to replace since they out-contribute other employees. HR can use people analytics to measure employee performance. They can then identify and profile top-performing employees to engage and retain them.
HR pros can use people analytics to identify individuals and departments that are underperforming. Using these insights, HR can then create interventions, provide training and move team members around to increase performance.
Prove HR business case
HR pros can use people analytics to link recruitment and retention numbers with overall business outcomes. People analytics can also measure the effectiveness of engagement programs. This demonstrates the value of HR efforts, which can lead to more effective investments.
People analytics can uncover certain times of the year (work anniversaries, for example) correlate with higher turnover likelihood. HR can identify employees who are flight risks and implement strategies to combat turnover. At certain times, HR may recommend retention interventions like promotions, raises and developmental opportunities.
HR can also use people analytics to measure average attrition rates across departments. This knowledge can inform recruiting and hiring decisions for backfills.
For revenue growth and market share, HR can use people analytics to proactively recruit and hire, as well.
How to Use People Analytics in Your Business
How you use people analytics depends on factors like the size of your team and your business growth goals. For small teams, you might get what you need out of a spreadsheet. For larger organizations, however, investing in a people analytics tool for HR may be a necessity.
Use people analytics like you would any business data — identify your pain points, set goals that people analytics data can help you achieve and determine what you want to measure and what data to collect.
Don’t forget to use data measurement tools to standardize your data collection. Most importantly, look at data analysis to reveal insights and take action. As you work with people analytics, you’ll reveal insights to inform future strategies and improve business outcomes.
How to Use People Analytics for HR | Talent Intelligence
Data-driven recruitment and retention strategies can improve your business outcomes. Learn how data analytics for HR can help. Contact us for a consultation.