Whisper it quietly, but the past 12 months have seen a significant rise in the adoption of people analytics.
Bersin by Deloitte’s High-Impact People Analytics study, which was published in November 2017, says 69 percent of large organizations (those with at least 10,000 employees) now have a people analytics team.
Perhaps not surprisingly, the number of professionals on LinkedIn that list “HR analytics,” “people analytics” or “workforce analytics” as a skill has more than doubled in the past 12 months.
Don’t get me wrong — there’s still a long way to go. Most organizations with people-analytics teams that I speak to still have challenges to overcome, not least in creating sustainable capability through developing a data-driven culture within HR. as well as converting more of their work into actionable insights.
The extent of progress that still needs to be made in the people analytics field is highlighted in recently published research from the likes of the Corporate Research Forum (see here); Deloitte’s 2018 Global Human Capital Trends, which saw people data rated as the joint top trend (see here); the CIPD (see here); and i4CP/ROI Institute (see here).
Nevertheless, compared with just 12 months ago, significant progress is being made. I would go as far as to say that the future of people analytics looks rosy. My confidence is based on the fact that when done well, people analytics should provide benefits to all key stakeholders within the business — leaders, managers, employees and the HR function itself. Let’s look at each of these stakeholders in turn.
Research undertaken by Nucleus a few years ago found that the return of analytics to the business is $13.01 for every dollar invested. The same study also found that the level of return will likely continue to increase as the quantity/quality of data, technology and people continue to grow. Put simply, the insights that analytics offers helps business leaders make more informed decisions on people, which for most organizations is their single biggest cost. There are several examples of how people analytics has helped the business. Three of these are:
- Credit Suisse calculated savings of $75 million to $100 million from just a 1 percent reduction in attrition (see here).
- Clarks, a shoe retailer, found that engagement was a leading indicator of business performance and that a 1 percent increase in engagement translated to a 0.4 percent increase in business performance (see the Corporate Research Forum research highlighted above).
- Virgin Media found that a poor candidate experience was costing the business £4.4 million per year, and that implementing an improved candidate experience could add £5.3 million of additional revenue per year (see HR Open Source case study here).
For managers, people analytics democratizes data and provides information when managers need it to run the business and support decision making. Examples of the types of areas in which people analytics can support managers include:
- Recruiting: Insights on talent supply and demand to inform hiring and location strategy, drivers of quality of hire, candidate experience, etc.
- Performance: Characteristics of high-performers included intra- and inter-team collaboration.
- Development: Insights to support individual and team coaching, learning and development.
- Retention: Insights on drivers of attrition, at-risk employees and recommended actions to drive retention.
- Effectiveness: Insights on managers’ own performance and behaviors, and its impact on team engagement and performance (see example here from Dawn Klinghoffer).
One of the big trends in people analytics I’ve witnessed over the past 12-18 months is the shift toward creating value for the people that generate the data — namely employees. This can be seen in the sharp increase of analytically based products that enable a better understanding of employee (and candidate) experience. As well as providing value for the business (e.g. to support workforce planning), these products are designed to personalize HR services for employees. This includes areas such as:
- Recruiting: Matching candidates with companies and roles that are aligned to their skills, preferences and ways they like to work.
- Onboarding: Providing new employees with tools that enable them to connect with the right people and to more easily get the information they need when they ask for it.
- Learning and mobility: Providing personalized recommendations to employees on training courses, mentors and internal opportunities to support career development.
- Productivity: Providing insights on behaviors that can be used to improve productivity, performance and wellness.
- Networking: Tools like organizational network analysis can provide insights to employees in areas such as growing their network, who they should connect with and how to avoid burnout.
Developments such as the Facebook/Cambridge Analytica scandal and the introduction of the European Union’s General Data Protection Regulation have intensified the focus on ethics in people analytics. Indeed, ethics is arguably the most important part of people analytics and means that there will always be debate on what we can do and what we should do (and a good thing too). If you can’t articulate the benefit of a people analytics project to employees, then my advice would be to not undertake that project. As such, I expect the benefit of people analytics to employees will become even more evident as the space continues to grow and progress.
While people analytics can provide demonstrable value to business leaders, managers and employees, it also can significantly improve the impact of HR and its credibility within the business. Indeed, the insights that analytics offer can change the game for HR and change the dynamic of conversations it has at every level of the business. Analytics is also central to enhancing and personalizing the employee experience as part of a digital HR transformation (see here).
Want to Learn More About People Analytics?
If you want to learn more about people analytics, my course “An Introduction to People Analytics,” together with Jonathan Ferrar, launches on Aug. 6. Click here to find out more and to register for an introductory offer.