People analytics in a changing environment: How to do it right
People analytics play an important role in improving employee performance and driving business results. Learn how to do it right.
Before we dive into this topic, let’s recapitulate some of the history of People Analytics. In the early 1900s, Frederick Winslow Taylor published “The Principles of Scientific Management.” He narrates the time he was a mechanical engineer and started to apply the engineering principles to the work that factory employees did.
According to Taylor, workers would be more productive when their task matched their capabilities and a reduction in activities and movements extraneous to the task's completion (Saylor Foundation, 2013). One of Taylor's followers was car manufacturer Henry Ford, a successful businessman who produced many different cars.
Taylor observed Ford’s workers and came up with efficiency-increasing ways to make new cars. Ford studied Taylor’s observations and applied his principles of scientific management to his production process. This led him to recalibrate tooling techniques in other areas to compensate for the longer waiting times (Saylor Foundation, 2013).
Basics of people analytics
We have been doing a lot more since the times of Henry Ford or Frederick Taylor, now, moving to 2016, a study conducted by Heuvel and Bondarouk showed that People Analytics had become a systematic identification and quantification of the people who drive the results of a business with the aim to make better decisions.
It is not simply a tool that magically contributes valuable data. Significant research strategies are required, such as Big Data and Business Intelligence. Big Data is the term used to describe the massive amounts of data whose growth speed is such that obtaining this information with conventional non-technological methodologies is practically impossible.
On the other hand, Business Intelligence is the process by which the data generated by Big Data makes sense. This process includes tools and practices that allow us to filter the information to be useful, of quality, and gives us value to make the best decisions.
HR Metrics vs. people analytics
People and HR analytics are often used interchangeably. Both terms are about the statistical analysis of People Data.
Of these terms, HR analytics became the most popular. Google searches of HR analytics average around 1600 per month. But people analytics is placed first, with around 2600 hits per month in 2021.
However, People Analytics has recently become increasingly popular. This has a few reasons:
- HR analytics is overused: HR analytics is not a new concept, but it has become more popular in the last few years. Many software providers sell HR analytic tools and claim to have people analytics capabilities as well, like determining which employees will be most successful on their team or improving employee retention rates. Only focus on key HR metrics and don’t include analytics functionalities.
- The term HR analytics is too narrow: The HR analytics industry is changing. They were once an exclusive resource for Human Resources, but they are quickly becoming a much broader tool that includes not only financial and other data; it can also be used to find new talent or identify areas for process improvements.
Why is it essential to the organization? General impact
You may be wondering what the benefits of establishing an HR Analytics system in an organization are. Beyond all the usefulness that we have previously commented, the implementation of this methodology brings great benefits such as:
- Employee retention mitigates turnover by 17% compared to other companies.
- Compensation profiles, performance ratings and incentive scores.
- Include employee’s attributes.
- HR analytics can help your organization know who are their best candidates
- Learning and development analytics connect the impact of training and development on business outcomes and enable organizations to ask the right questions and get the correct answers.
- Increasing diversity gives organizations more visibility into diversity initiatives.
- Optimize the workforce planning
- Improve spans and layers, which can reduce costs and improve revenue.
- Increase productivity
How to use people analytics in a changing environment
Jonathan Ferrar conducted research on how successful organizations use workforce analytics to improve business performance. He found examples of successful analytics projects. In each case, success was derived because there were two essential components: firstly, a rigorous and meticulous model was used, and secondly, a vital project sponsor was identified for the project.
We will give you four steps to follow when implementing a people’s analytics strategy.
1 Choose your main topics
Essentially, know why you are undertaking the specific analytics exercise. Or, in other words: “What is the business reason?”. Building and clarifying a hypothesis is necessary for “testing” beliefs about the causes of business issues.
2 Analyze relevant data
This is where analysis methodologies and statistics are applied to data in order to test the hypotheses and provide the basis for insights.
According to the research, “the data gathering step requires identifying the most relevant data for testing the hypotheses and determining whether data quality is sufficient to proceed”. Without performing analysis, the fundamental building blocks of any analytics project do not exist, and patterns in data will never be discovered.
3 Report the results
Workforce analysts must uncover insights. Without insights, executives and project sponsors might draw their conclusions to fit their preconceptions best. But only recommendations will help improve the business.
Recommendations are what business leaders and, in this case, project sponsors need. A well-articulated proposal makes an excellent impetus for change.
4 Use the results to improve
All analytics projects have their starlight moment. It often happens as you communicate the project's outcomes to the sponsor or other stakeholders to get your point across. This is the moment when you can inform others about decision-making. It has three discrete aims:
- It ensures that decisions are made as a result of your project.
- It formulates actions for implementation based on those decisions.
- It facilitates evaluating the project against whether it returned value to the organization.
Here are a few mistakes to avoid:
- When organizations are unsure how best to approach analytics, they unnecessarily put the onus of sophisticated analyses - such as predicting turnover or using machine learning algorithms. This is unrealistic and unfair to HR Reporting teams that already have their hands full with routine reports.
- Hiring data scientists and asking them to "do people analytics": Some people incorrectly believe that analytics is supposed to be a solution for every problem, while others don't understand how it's used in business. These so-called "analytics leaders" must have a good understanding of the goals and key performance indicators specific to their organization before they can solve any problems with data.
- The average HR professional plays a critical role in the success of your analytics department. The best companies have effective teams and reporting teams that are closely connected to their employees, but even they can make slow progress without an understanding of how crucial this connection is for everyone involved.
A successful analytics function starts with a core group of HR professionals who can see how the better use of data helps with business decision-making. It is essential to understand that when your most valuable (and most expensive asset) is human capital, you do what it takes to ensure them. HR analytics becomes the shield for this investment when you put it into daily practice.
A process that takes away guesswork and predictions, making people's operations data-driven, finding out what is going on with your human resource. Nonetheless, HR analytics should not be the sole deciding factor.
Keep in mind it is a powerful tool to be balanced, not to be a complete answer.
Want to know more about how to improve your employee performance with People Analytics? Erudit AI can be the answer. Contact us!