People Analytics 101: An Introduction to People Data
We now live in a data economy. Data is the new currency - and HR needs to make it work. Here is an introduction to people analytics and why it is increasingly important for HR.
TL;DR: People analytics uses data to answer critical business questions about your workforce and provides new insights. While perceived challenges include analytical skills and data availability, most companies already have useful data. Using people analytics helps HR leaders make data-driven decisions, securing their strategic role and gaining a competitive edge in talent management.
According to SHRM, organisations that use people analytics to inform talent decisions are 5 times more likely to make faster decisions and 3 times more likely to achieve cost reductions in HR operations compared to those relying on intuition alone. (SHRM)
We now live in a data economy. Data is the new currency and we have to work hard to acquire it - but more importantly, we need to make it work for us.
People analytics is the process by which we extract value from data. Value is created when we are able to answer questions that the business has about its people - but the greatest value is created by giving the business questions which they have not thought to ask.
What are the two big challenges with people analytics?
There are two big challenges with people analytics that hold most HR teams back from getting started.
- Analytical skills: There is a perception that to work with analytics you need a post-graduate degree in statistics. While there is some heavy lifting that needs to be done, we can start with some basic critical thinking by asking the 'what', 'how', 'why', 'where', and 'who' questions. The technical skills can be supported by tools and specialists - the most important skill is knowing what questions to ask.
- Data availability: Good quality data is notoriously difficult to find, maintain, and manage. The good news is that most organisations already have access to data that can tell useful stories - they just have not connected the dots yet. Start with what you have and build from there.
How has HR data management evolved?
Data is the foundation of analytics. The way data has been acquired, stored, and managed by HR has evolved significantly over time - from paper records to HRIS systems to cloud-based platforms.
The most important shift is towards an employee-centric, HR engagement model - where employees derive direct benefit from the data they provide. HR needs to provide technology that creates a user experience that makes employees want to give their data willingly. When employees see value in the process, data quality improves dramatically.
Why is people analytics increasingly important for HR?
HR has fought for a seat at the table for a long time. This is now a reality at almost all companies where the value of people strategy is recognised. But in a data economy, being data-rich is a critical quality that ensures that the people at the table are heard and trusted.
HR may have to manage soft issues, but there is hard data that can provide guidance on how to do that. The organisations that win the talent war will be those that use data to make better decisions about their people - faster, and with more confidence.
The biggest analytics gap Research from Bersin by Deloitte found that people analytics has the biggest gap between importance and readiness of any HR challenge - a 32-point difference. The organisations that close this gap first will have a significant competitive advantage in talent management.
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Frequently Asked Questions
What is people analytics and why is it important for HR?
People analytics is the process of extracting value from HR data to answer business questions about your workforce. It helps HR leaders make informed decisions, demonstrate strategic value, and gain a competitive advantage in talent management by providing data-backed insights.
What are the main challenges when starting with people analytics?
The two main challenges are perceived lack of analytical skills and difficulty with data availability or quality. However, basic critical thinking and starting with existing data can overcome these hurdles. Tools and specialists can support technical needs.
How has HR data management evolved?
HR data management has evolved from paper records to modern cloud-based HRIS systems. The most significant shift is towards an employee-centric model where employees benefit directly from providing their data, improving data quality and engagement.
How does people analytics help HR gain a strategic seat at the table?
People analytics provides HR with hard data to support decisions on soft issues. Being data-rich ensures HR's voice is heard and trusted at the leadership table, allowing them to confidently guide talent strategy and make better, faster decisions.