Why you should employ people analytics as a competitive weapon

Emily McMahon · 11 Feb

Customarily HR departments have operated in silos but the range of data being collected coupled with its value to business strategy has led to the rise of people analytics.

People analytics is the analysis of data collected by HR used to help managers make better decisions. What started as an activity carried out by a small team has now become mainstream.  This has led to the evolving role of HR – now involved in operational improvements as well as workforce planning and talent management.

The rise of people analytics and what it means for HR leaders

The adoption of this data-driven approach combined with sophisticated HR systems, has enabled people analytics to become widespread.  As its positive impact on the bottom line continues, HR leaders are now required to use retrospective and real-time data to have deeper understanding of the workforce. 

Types of data

The three main types of HR data are: people data (payroll, benefits, data collected workforce management systems), program data (attendance, adoption, training), and performance data (360 assessments, succession programs).

Lagging data (traditionally reported on by HR) such as absence levels, identifies concerns rather than solutions.  However leading data is where people analytics has the most impact.  

It should be noted that both qualitative and quantitative data is key to successful people analytics.  

The importance of collecting data which meets the objectives of the business

Wisely choosing what data to collect is fundamental to solutions-driven people analytics.  Andrew Spence, HR Consultant at Glass Bead Consulting shares an example of a bank experiencing stress related absence. By noticing trends they were able to establish metrics that predicted when there would be increased risk of stress-related absences.  This was used to implement a 24-hour helpline – a quantifiable solution where savings can be measured as well as a wellbeing initiative.

Collecting data that meet the objectives of the business makes people analytics valuable. It’s also important to consider ethical concerns;  some have voiced humanitarian concerns over people analytics being used as a tracking mechanism instead of a drivers for improvement.

Using people analytics to benefit key stakeholders

It is clear how people analytics can help employees but stakeholders such as investors also stand to benefit.

Business growth is not simply based on previous profit margins so “understanding the performance areas…how engaged the employees are…and how the investment has been made to get them “future-fit” are of interest to stakeholders.