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As HR takes on a more strategic role in the business, People analytics plays a central role in linking HR strategy to business outcomes.
HR should use the data in their system to make scientific and more creative decisions that ensure better and happier employees and therefore better business results, says a report from Forrester Research, titled “Use HR People Analytics to Drive Business Results”.
Right from recruiting to employee training and succession planning, People analytics plays a key role in aligning HR practices to broader business objectives. However, despite being on the C-suite agenda for some time now, most organizations are yet to unlock the potential of their people data. The lack of knowledge about analytical methods and tools has been a key barrier for widespread adoption of People analytics. Additionally, insufficient team resources to collate people data and lack of alignment between People analytics and reporting to business outcomes have slowed down the adoption of HR analytics.
Four types of People analytics:
- Reporting: This looks at metrics like time-to-hire, employee turnover, average performance appraisal rating, or learning completion rate.
- Analysis: This helps to find correlation between managing people and business outcomes. This would mean summarizing metrics and drawing conclusions by comparing, for example, learning completion rates with employee tenure to find out if employees with longer tenures are training and skilling themselves.
- Predictive: These are sophisticated analytics that can help organizations predict future outcomes like risk of flight by top performing employees.
- Prescriptive: This is the most complex and sophisticated analytics and are in a nascent stage. They can provide suggestions or prescriptions to help/prevent the predicted outcomes. For example, it can prescribe promotion or a new training program or a change in location for an employee.
Six Steps to Get Started with People Analytics
- Centralize all Employee Data: Employee data typically resides across different HR systems, Excel spreadsheets, and paper records. Accessing data across disjointed systems is inefficient and time-consuming. To ensure the accuracy and consistency of data, it is crucial to have a single source of truth (centralized data repository). Once you’ve consolidated all employee data, you can now identify key performance indicators which will help you understand how their performance relates to business outcomes.
- Create an HR Dashboard: Data visualization is crucial to your analytics initiative. An HR dashboard functions as a one-stop shop for all the internal and external HR data. A graphical/visual rendition of all this data will enable you to monitor and benchmark the data to derive insights into HR metrics that define success.
- Build Analytical Capabilities: Most HR teams are still new to the concept of analytics and lack the necessary skills to lead successful analytics deployment initiatives. It is therefore imperative to develop the analytical capabilities of your HR team through training in conjunction with the organization’s business intelligence team.
- Put People Analytics into Practice: The next step is identifying a business problem that needs to be solved. It could be improving retention, identifying high-performers, or reducing cost-per-hire. The key here is to link analytics to clear business outcomes. For example, if you are trying to solve the problem of low employee engagement, you will want to quantify the business impact of low engagement – attrition, hiring/replacement cost, impact on productivity etc.
- Drive Continuous Improvement: Once you’ve begun using HR analytics to solve business problems, you must continuously monitor your analytics process for inefficiencies, errors, and risks, follow up on recurring issues and implement structural changes to prevent them in the future. After the process has been fine-tuned to weed out any inconsistencies, you’ll be able to move on to the next step – Predictive HR Analytics.
- Take tech support: New-age HR tech tools make real-time data easily accessible. And this is an opportunity that needs to be milked because today, agility and real-time intelligence can truly set you apart from the competition.
In people analytics, we think carefully about measurement and attribution for every program, policy, or process we evaluate.
- Proactively designing a measurement strategy prior to rolling out a new program or initiative
- When possible, do a smaller-scale test and learn pilots to more effectively assess ROI (and possible improvements) prior to making company-wide changes.
- Have a deep understanding of how the business works and how to connect people data and insights to business goals/objectives
- Designing test and learn studies allows teams to move quickly and optimize on the things that work and abandon things that don’t.
Organizations cannot afford to make people decisions without analytical understanding that business leaders require. Embracing People analytics is only the first step to building a more data-driven, evidence based, decision making culture. Hopefully, the framework outlined in this article can get your organization started on the People Analytics journey.
-By Swathi Narayan [Human Resources Manager, ATSG]