Evolving market trends, Economic downturn, and focus on profitability.
These are all factors that have brought modern businesses to a difficult crossroads—how to recruit and retain top talent while maximizing their productivity?
The answer lies in People Analytics.
HR teams need to walk away from traditional methods to build a data-driven strategy for effectively hiring, managing, and engaging the workforce.
People Analytics empowers HR teams to leverage employee data to make informed decisions and improve the employee experience. But here’s the kicker: research shows only 22% of HR professionals believe their companies have a strong people analytics setup.
That’s why we created this exhaustive guide covering the what, why, and how about People Analytics. We’ll share actionable tips to design and implement your data-driven strategy.
Understanding People Analytics: Why it matters
People Analytics involves collecting and analyzing internal talent data from various sources to enhance overall organizational performance through actionable decision-making. A people analytics setup reviews employee performance, workforce processes, employee experience, and divisional changes to derive meaningful insights and make business-critical decisions.
Essentially, People Analytics removes guesswork and intuition from decision-making to help HR teams think more strategically about different aspects of the entire employee experience.
Carla Arellano, Partner at McKinsey, explains that People Analytics is a data-based framework to answer key questions about your workforce—what matters the most to them, what drives optimum performance, and more.
How to get started with People Analytics: A 7-step framework
While 57% of surveyed HR leaders believe People Analytics leads to better business outcomes, many companies don’t have the right roadmap to build their analytics setup. Creating your strategy can be fairly technical and lengthy with so many moving parts.
So, let’s break down the crucial steps for building your People Analytics strategy from scratch.
Outline the problem statements you want to solve
As the first step, you have to find the business problems you want to tackle by carefully collecting and analyzing employee data. Audit your current state and pinpoint specific issues hindering organizational growth that you want to solve through data-driven decisions.
You can start this exercise by evaluating a few questions like:
- Which employees are most likely to leave the organization?
- What factors are adversely impacting employee experience?
- What are the biggest factors holding a team back from success?
- What are the crucial decisions you need to make in the next 3-6 months?
- Are there skill gaps that need to be addressed through training or hiring?
- Are there inefficiencies in how resources, including manpower and budgets, are currently allocated?
Answering these questions will give you a deeper understanding of where your org is currently lacking. It’ll also reveal areas to prioritize in your People Analytics strategy for improving business performance.
For example, if you identify high employee turnover as your biggest pain point, you can dive deeper into metrics related to employee attrition and satisfaction.
Define clear guidelines to build an ethical strategy
People Analytics deals with first-hand employee data about their demographics, compensation, goals, performance, and other aspects. This data can potentially impact their privacy and work opportunities in the future.
That’s why you need guidelines to ethically collect, analyze, and store this data as part of your People Analytics function.
Once you’ve identified your priorities, you should inform employees about:
- The kind of data you’re collecting
- How you plan to use this data
This transparency is important to build a level of accountability for the HR team to protect the employee data. As a best practice, you should also take employees’ written consent after informing them about how you’ll use their data.
Successful HR teams also create a code of ethics for their employees to safeguard everyone’s privacy without compromising the quality of data.
Get all data in one place
A successful People Analytics strategy draws data from multiple channels. It collects data points like employee age, gender, role, salary, tenure, performance KPIs, goals, feedback and more.
You need to break data silos within your organization to create workflows for seamless data collection and consolidation across the board. Your People Analytics platform should pull relevant data from:
- Different tools—like ATS, HRIS
- Engagement surveys
- Talent management
- Payroll platform
- Spreadsheets
Combining these data sources will help you build unified databases for accurate analysis and strategic planning. You can build your models to dig deeper and gain critical insights.
So, start by defining the priorities of your People Analytics strategy—what do you want to change or improve? Your goal can be to hire more strategically, to reduce absenteeism, or to solve any critical pain point for your org.
Based on your objectives, you can pull people data from:
- HRIS
- Employee surveys
- Performance management tool
- Payroll and compensation platform
- Spreadsheets
- BI Tools
For example, if you want to minimize employee turnover, look at metrics like employee satisfaction score, training completion rate, compensation comparison, performance levels, and more.
Focus on your goals to identify which data to zoom in on!
Perform data sanity checks to clean up your data
Consolidating data is only half the battle. The successful analysis calls for clean, structured data. You have to build a consistent dataset to conduct your analysis and extract insights.
So, convert that raw, disconnected data into a clean and structured dataset with your data sanity workflows. You should set up:
- Transactional database: Record your day-to-day operations data into a single database to track employee behavior. This database will include transactional entries like when employees clock in and out, how many leaves they take, their training records, and more.
- Central data repository: Create a single repository to store all your employee data. This will be a centralized hub integrated with different data channels, like your ATS, payroll platform, HRMS, and more.
Additionally, you also need a set of guidelines and best practices for collecting data. While you can automate parts of the process, you should create SOPs to make the data collection process error-free. Then, set up data analysis workflows using your chosen People Analytics software.
Build multi-stakeholder dashboards with real-time updates
A critical part of the People Analytics process is extracting meaningful insights to make strategic decisions.
When you’ve processed all the data, you have to visualize it for easy interpretation and derive insights relevant to your objective.
For example, if you’re tracking employee satisfaction and you review two graphs for engagement rate and turnover ratio, you can find the correlation between these two metrics. Then, use that insight to plan the best course of action ahead. You have to set the agenda or create your strategy based on your learnings from this data.
At this stage, your goal is to thoroughly understand your data, identify trends or patterns, and make realistic predictions about your workforce.
You can visualize this analysis through dedicated dashboards for different stakeholders, like the CEO, Culture Managers, HR Leaders, Department Heads, and more. This makes it easier for each stakeholder to consume only the most relevant insights and make the right decisions.
Dynamic Org Charts will come in handy to identify the metrics you should cover in dashboards for each of these stakeholders. These charts will give you real-time guidance on what data points to change or shift based on the current structure within your company.
Whether you’re using a spreadsheet or tools like PowerBI, your dashboard can cover components like:
- Turnover and retention: Demonstrate the rates at which employees are leaving or continuing to work with your company to preempt any crises.
- Employee movement: Track internal mobility and explain how employees are getting promotions or transfers to aid their career path planning.
- HR effectiveness: Evaluate the impact of different HR initiatives and policies on employee performance and organizational growth to build an action plan.
- DEI evaluation: Map the impact of your Diversity, Equity, and Inclusion program to find areas of improvement and track progress.
Each stakeholder can zoom in on a specific dashboard to get more insights about one aspect of the workforce and modify the overall business strategy.
For example, department managers might look at employee movement data to create a better-suited progression plan for their team. A Culture Manager would pay attention to the DEI data to improve the program.
Translate insights into action items & data-driven decisions
The final step is to document all the insights gained from the analysis process and convert it into actionable agendas. You have to identify your core learnings from the data and set targets to drive business growth.
For example, if your data signals problems with hiring, you can take a second look at your hiring process and make informed decisions to iterate your recruitment strategy.
This is where you can use a solution like Peoplebox to guide your decision-making process based on People Analytics.
Peoplebox connects with various sources to get people and business data in one place to build actionable analytics to drive better business outcomes. It helps you easily create dashboards for CXOs, HR Head, HRBP, and People Managers to deliver the right insights at the right time.
3 essential capabilities to build a mature People Analytics setup
Pivoting from a traditional HR strategy to a data-driven setup calls for a significant investment in your team. Your HR team should develop critical skills like design thinking, adaptability, data storytelling, and agile learning to get the best out of People Analytics.
While you can start small, you’ll need to invest in these three key areas for building a robust and mature People Analytics setup.
Dedicated data engineering and management teams
People Analytics involves heavy data creation, cleaning, and quality checks. You need data engineers and analysts to handle operations at this scale. These teams should be able to manage large data repositories effortlessly and work with advanced technology to build a sophisticated analytics infrastructure.
Working with data engineers will also allow you to establish a strategic foundation for your People Analytics setup because they’re more proficient at managing data than an HR executive.
Robust analytics capabilities and data-science talent
Data science lies at the core of a successful People Analytics function. You need the right technology and talent to build airtight analytics workflows. You can hire data scientists from various backgrounds and encourage them to work cross-functionally to evaluate your master dataset.
Strong knowledge transfer strategy and workflows
While it’s clear that People Analytics is a highly technical part of the HR function, your HR team should have the skills to contribute to the analytics process.
Create channels to upskill your HR team and equip them with the necessary knowledge to strategically participate in People Analytics. You can set up weekly or monthly syncs with your analytics team to share crucial insights and learnings for strengthening your team’s capabilities.
5 top use cases to start with People Analytics
Wondering how People Analytics can benefit your team? Here are five key areas where a good People Analytics strategy can change the game for you:
- Making strategic hiring decisions: Use insights to identify key skills and write a targeted job description for each position. You can also create an ideal candidate profile and frame interview questions aligned with this profile.
- Boosting employee satisfaction: Analyze employee feedback and attrition rate to launch initiatives for better recognition, team building, and engagement.
- Optimizing talent management: Create personalized career plans for each employee and strengthen your training programs to help your team address specific skill gaps. You can also evaluate individual performance and compa-ratio.
- Enhancing workforce planning: Leverage predictive analytics to plan your hiring campaigns and build onboarding or training plans based on the recruitment timeline.
- Improving diversity & inclusion: Stay on top of your workforce composition and design DE&I policies to create a more constructive work environment. You can also plan workshops on particular topics based on employees’ awareness levels.
The bottom line: People Analytics enables HR teams to get a pulse of their employees and make strategic decisions to drive business growth. It also reveals how effectively they’re able to hire, train, engage, and retain the workforce.
Do’s and Don’ts of a People Analytics Setup
If you’re ready to create your People Analytics strategy, here’s a primer on the Do’s and Don’ts when building + implementing this strategy.
✅ People Analytics Do’s
- Identify specific goals to address in a given period through employee data analytics
- Combine HR data from multiple channels with business metrics for holistic analysis
- Offer hands-on training to different team members on tools like Tableau or PowerBI
- Build workflows and systems to regularly refresh your employee data for accuracy
- Create visualizations to present your findings and critical data in a consumable way
❌ People Analytics Don’ts
- Use outdated or incomplete data and avoid quality control to check data quality
- Ignore data protection laws and don’t take consent from employees about their data
- Overlook problem identification and look at all data points without any clear targets
- Neglect employee awareness and randomly push everyone to embrace new workflows
- Continue with the same strategy for years because it’s the only playbook you’ve built
Set your team up for organizational excellence with People Analytics
People Analytics has become the critical differentiator between high-performing and average teams.
As we see it, this analytics setup will become increasingly important for improving employer-employee relationships, ramping up work productivity, and fostering an environment of workplace synergy. The good news is, with Peoplebox’s dedicated People Analytics platform, you get the tools designed to navigate all aspects of People Analytics—from project planning and KPI tracking to employee performance and engagement. Book a demo to learn more.
