People Analytics, also called Human Resource Analytics, Employee Analytics, Talent Analytics, and Workforce Analytics, is the analysis of employee data and statistics to improve work and business performance.

With a surplus of company data just waiting to be mined, what could the future of People Analytics look like and how can it help executives empower happier, more productive teams?

But first, let’s dive into the past.

The Inception of People Analytics

In the early 1900s, Frederick Winslow Taylor published “The Principles of Scientific Management.” Here he narrated the time he was a mechanical engineer and started to apply engineering principles to the work of factory employees.

According to Taylor, workers could improve productivity if: one, their task matched their capabilities, and two, they reduced actions that are unnecessary to the completion of their task (Saylor Foundation, 2013). Following Taylor's advice was successful businessman and car manufacturer Henry Ford.

Taylor observed Ford’s workers and came up with ways to increase efficiency in car production; Ford applied the recommendations to his production process. And so, People Analytics was born!

Fast-forward to People Analytics in 2016

In 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. (Sounds like a handful!)

Basically, we are introduced to the idea of Big Data and Business Intelligence, with Big Data pertaining to massive amounts of data sets and Business Intelligence being the process of making sense of said data. This gave rise to a slew of tools and practices that allow us to quickly filter and analyze the information so it is useful, of quality, and of value to a business.

The difference between Human Resource Metrics and People Analytics

Human Resource (HR) Analytics and People Analytics are often used interchangeably and both describe the use and analysis of data on employees and/or their issues, to understand their effect on business outcomes. On the other hand, HR Metrics are ways to quantify and measure the success of HR policies.

Both are indeed helpful to businesses. But more and more, we find People Analytics winning the race to fame as it is broader, encompasses management as well as HR policies, and takes into account the overall success of the business.

General Impact of People Analytics

You may be wondering how People Analytics impacts an organization so we’ve listed a few benefits below. However, it’s important to note that, like many programs and strategies, their positive impact is felt when done right. Yes, People Analytics can drive profitability and success! But done wrong (like with unreliable data or analysis, for example), it wastes time and money; and can even result in detrimental business decisions. 

Benefits of People Analytics:

  • Employee retention: turnover is mitigated by 17%!
  • Employee’s attributes and sentiments are incorporated in decision-making.
  • Compensation profiles, performance ratings and incentive scores
  • Know who your top contributing talents are, based on data and not just gut feel.
  • Understand which candidates are best for the job when hiring.
  • Invest in programs that are working; don’t waste time on those that are not getting results.
  • Increase engagement, productivity, and profitability.
People Analytics Environment
Photo  fauxels in Pexels

Today’s Tech-Driven People Analytics

With no choice but to embrace the work-from-home (WFH) set-up during the pandemic, companies were compelled to try, test, and adapt online digital tools for communication, organization, and management. The trend is no different for HR tools and People Analytics in particular. Apart from having more tech options to turn to for People Analytics, this shift to online and digital tools also means a higher volume of raw, unbiased data.

In the past, employee surveys and manual performance ratings were our data sources. Today we accumulate employee data with every email, message, document, and even with every click!  The trick is to make the most of the raw data while respecting data privacy and ensuring anonymity.

Find out how Erudit maximizes communications data and feeds you helpful People Analytics, while maintaining anonymity and strictly adhering to privacy guidelines.

With unbiased data--and tons of it collected daily!--People Analytics is expected to become even more reliable, accessible, and valuable. In 2020, the People Analytics market was valued at over 2 billion US dollars. The forecast for 2026? More than double!

The future of decision-making and value-creation in businesses incorporates People Analytics, absolutely.

Can you do People Analytics yourself?

Yes, you can. But is it worth it? How long does it take before you get the analysis you need to make an informed business decision? Let’s take a look at the process.

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.

There are 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 project sponsors need. A well-articulated proposal makes an excellent impetus for change.

4. Use the results to improve

All people analytics projects have their starlight moment. It often happens as the project's findings are presented to the sponsor or other stakeholders. This is the moment that finally informs decision-making.

Quick, automated, reliable People Analytics

While there are things that do take time, and even get better with time, the bottom line of People Analytics is data-driven business decisions that move the company and its people towards success. And these days, in an increasingly global, fast-paced market, time is of the essence.

If done right and in time for key management decisions, there is no doubt that People Analytics empowers businesses to build a winning team and achieve success for both the business and its workforce.

Track employee engagement, burnout risk, and more on your Erudit dashboard. Book a demo to see real-time People Analytics!

Updated content: