Big data is increasingly referred to as the new oil of the 21st century. But is data really as valuable as oil? That depends on how you use it.

The reality is that organizations have been collecting and storing big (and small) data for years. In fact, many businesses gather a wide range of data pertaining to their current and potential employees, such as demographics, performance indicators, behaviors, personalities and motivators. The difference today is that these organizations now have the advanced computing capabilities to transform this data into analytical results, referred to as people analytics.

Before you can maximize the power of this business strategy, you must first understand what people analytics is and the value it can bring to your company.

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what is people analytics?

In basic terms, people analytics is the strategic process of collecting and analyzing data pertaining to talent in order to make informed HR and business-related decisions. For years, organizations have used customer analytics to learn more about consumer shopping behaviors and motivators. This data and analysis allow companies to tailor product offerings and marketing strategies to fit the needs of target consumers or customers. 

Today, employers can use this same data-driven power to better understand employee behaviors, needs and motivators. Businesses are using this analytical data to make faster and smarter decisions pertaining to workers and the business as a whole.

For example, global chemical producer BASF used people analytics to build diversity and inclusion within the workplace. By using the right analytical data, the company was able to set clear goals and metrics for measuring success as well as develop a tailored strategy for attracting and engaging with high-quality candidates. This combination allowed the company to meet stakeholders’ goals and objectives. 

Another example of how people analytics can help organizations make data-driven decisions can be seen in the creation of compensation packages. A robust people analytics strategy helps your company identify the optimal salary range for a position or offer and determine what benefits your target candidates find most desirable. Creating a competitive compensation package that drives results can improve the company’s recruitment efforts and retention rates.

people analytics vs HR analytics

If your company is already using HR data analytics, don’t mistakenly believe that this is the extent of people analytics. While many seem to use the terms HR analytics and people analytics interchangeably, they are not the same in scope or purpose. It’s important to understand the difference between these two strategies to maximize the potential of your people analytics efforts.

While HR analytics uses some of the same data points as people analytics, it’s strategically designed to improve HR functions and the performance of the HR team. It also solely focuses on employees at work. For example, it tracks basic HR metrics, such as turnover rates, retention rates and time-to-hire rates, to assess the performance of the HR team.

People analytics is similar but goes one step further. This strategy focuses on overall business performance and studies the whole employee, not just on-the-job metrics. For instance, it might include a comprehensive analysis of work-life balance and what it means to your employees or take a closer look at employee wellbeing.

The goal of people analytics is to help organizations make data-driven decisions that help meet HR goals, such as better hiring outcomes, improved performance and increased retention rates, and overall business goals, including building a diverse workforce and effective workforce planning

Man and woman sitting at table having a chat, while woman working on a tablet.
Man and woman sitting at table having a chat, while woman working on a tablet.

why is people analytics important today?

Over the last few years, organizations have dealt with a global pandemic, ongoing labor shortages, growing skills gap, increased turnover rates and supply chain disruptions. If these challenges have taught us one thing, it’s the need to remain resilient during times of disruption. This desire for resilience has shifted both organizational objectives as well as workers’ expectations.

For example, a recent global study reveals that two-thirds of organizations are planning to increase automation within the company. As these companies make the shift to automation, their workforce needs to significantly shift. The size of the workforce may shrink, and the type of skills needed in the workforce will change. On the people side of things, the disruptions over the last few years have brought a push for higher wages and the desire for greater flexibility in scheduling.

What we’ve learned during these times of disruption and change is that traditional HR metrics, such as time-to-fill, overtime expenses or absenteeism rates, failed to show the whole picture. In fact, these metrics were often skewed by forces that were outside the company’s control. For example, frequent quarantines and shutdowns significantly impacted absenteeism rates, but it didn’t mean that the company had an attendance problem outside of these pandemic restrictions.

This is where people analytics plays a vital role in building a resilient workforce. This strategy doesn’t just look at basic metrics that show a snapshot of a certain point in time. Instead, it looks at the why behind the numbers. For instance, people analytics strategies can help your company determine why turnover rates are increasing. With this information, your company doesn’t have to tackle its turnover problem blindly. It can use robust analytical data to develop an effective talent retention strategy.

Since people analytics is an ongoing process, analytical data obtained allows your company to quickly adjust to any shifts in workers’ demands, changes to the way of work or disruptions in the marketplace. When used correctly, people analytics can be a game changer for your company and provide it with the competitive edge it needs to remain successful today and in the future.

what value does people analytics bring to your company?

Is people analytics really the superpower your company needs? It can be. In fact, it can bring value to your company in several areas.

the recruitment process

Talent analytics, a subdivision of people analytics that primarily focuses on talent acquisition, can improve the recruitment process by playing a crucial role in every stage of hiring, including:

  • candidate sourcing: People analytics can provide insights into what motivates your target candidate as well as their online behaviors. This information can help you determine the best methods to source and communicate with prospective candidates, such as social media, job boards, emails or text messaging.
  • application process: HR metrics can help you determine if potential candidates are getting stuck in the application process, but people analytics can help you discover why this is happening. For example, is the application process too long or is the process not clear enough?
  • interview process: Using standard interviewing techniques alone can lead to bias hiring decisions. However, when you combine structured interview techniques with people analytics, such as personality, interest and expectations, you can obtain a clearer view of each candidate. These insights give your HR team the power to hire for job and boss fit.
  • selecting the right candidate: A data-driven talent acquisition strategy can help you identify which candidates are the best fit for the role and your company.
  • compensation package: Selecting the right candidate is only half the battle. You also must entice the candidate to accept your offer. If your company’s offer acceptance rates are lower than desired, people analytics can help you tailor compensation packages to meet the expectations of target candidates.
  • new hire retention: One of the best ways to track the success of your recruitment strategies is through new hire retention rates. While basic HR metrics can help you track these rates, people analytics allows you to determine why new hires are leaving, such as inadequate training or toxic managers.

Data analytics in recruitment lets you better understand the why behind the metrics, so your company can identify parts of the hiring process that are working and aspects that need adjusting.

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workplace productivity

People analytics provides real-time insights so your organization can make business decisions based on the current state of the workforce. This capability is critical when building a resilient workforce. For instance, real-time analytics gives your company the advantage to pinpoint skills gaps within the workforce, enhance employee engagement on all levels, configure and allocate teams, and identify workers that are ideal for promotions.

For example, the growing skills gap is forcing companies to focus on upskilling and talent growth within the company. Studies show that performance reviews can do more harm than good and tend to be a poor indicator of talent. The problem is that some things can’t be rated on a performance review and results are often opinion-based rather than fact-based. People analytics, on the other hand, pulls all the information about a worker together, such as special training, production levels, leadership roles, quality and previous jobs, to provide a higher-level view of the employee’s overall talent.

Whether you’re viewing analytical talent data on an individualized basis or on your entire workforce, this real-time data allows your company to make informed decisions that can significantly improve productivity.

diversity building

Recent studies show that companies with diverse workforces tend to outperform other companies by as much as 36%. If your company, like many, has set diversity, equity and inclusion goals, people analytics can help it achieve these objectives. It’s important to use current analytical data to determine if there are reasons why your organization is struggling to attract and retain diverse candidates.

Perhaps your company lacks female leaders, for example. Using talent analytics to better understand what is keeping female workers from applying for management roles can help you develop effective strategies to meet company diversity goals.

cost savings

Ultimately, real-time insights based on talent acquisition analytics can help your company save money. First, improved hiring outcomes can reduce recruitment and onboarding costs. Secondly, being able to accurately predict future talent needs allows your company to prepare for upcoming shifts.

man presenting to team members
man presenting to team members

obstacles to people analytics

People analytics is a methodology that revolutionizes how employee data is stored, analyzed and used so businesses can make informed decisions. However, there are a few things you need to be careful of when planning your people analytics strategy.

tech without touch

Analytical data can provide a wealth of valuable information, but it can’t replace the human aspect. It’s crucial that your company refrains from focusing so much on technical data that it fails to work towards building relationships with its workers. At Randstad, we know that it’s only through the combination of tech and touch that meaningful change can take place.

bias in analysis

There is also a danger of bringing bias into the people analytics process. In some cases, business leaders already have a preconceived notion regarding the data they are collecting. While oftentimes unconscious, this type of mindset can alter the results. It can entice you to only collect the data and analytical information that matches your opinion. It’s critical to set up parameters to ensure this type of bias doesn’t impact your results.

privacy issues

Any type of data collection process brings with it privacy concerns. It’s vital that your company takes these concerns seriously and develops a system that is compliant with all employment laws and GDPR requirements.

talent needs

Before you effectively manage a people analytics strategy, you must acquire the right skill sets to properly collect and analyze this data. While some members of your HR team may have taken an HR analytics course, people analytics requires a higher level of experience. Consider bringing in talent with a people analytics certification.

When utilized effectively, people analytics can make your business resilient enough to overcome current and future disruptions to the workplace.

Download our guide, things you should know about people analytics, to learn more about how this innovative analytical tool can help your company.

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want to know more about people analytics?

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about the author
Bas van Tinteren
Bas van Tinteren

Bas van Tinteren

global portfolio coordinator

Bastiaan is responsible for training in Strategic Portfolio Management (SPM) worldwide and he is involved in the development of the SPM tool (ServiceNow) in the role of business analyst. Bastiaan's background within randstad is particularly in training and process management, both from staff positions and from process manager roles in the business.

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