people analytics
People analytics requires companies to rethink data science across the organization — and it works. Pixabay

There is little doubt that every business experiences its fair share of HR struggles. From the frustration of losing talent to another company to the difficulty in addressing the valuable question of why it happened, businesses everywhere are looking for a solution.

Any manager familiar with employee turnover knows that outgoing talent takes significant value with them, and finding a worker replacement is often difficult and requires a lot of resources. So how can managers prevent employee attrition?

A key answer is a new approach to HR and business performance called people analytics. This emerging field explores, infers and communicates significant data patterns to initiate and support business decisions related to personnel.

Using Data Science to Understand the Workforce

Common questions that people analytics can answer include but are not limited to the following: How can we find more top performers? What do our most successful leaders do to excel at their work, and how can we replicate that across the organization? Which people are most likely to stay in the company or leave it?

Answering these questions cannot primarily depend on outdated methods like annual employee reviews. People analytics requires companies to rethink data science across the organization. In fact, people analytics takes inspiration from marketing, operations and finance, which have been practicing data science for years.

An essential element of making people analytics work is ensuring that it does not remain solely the responsibility of HR. Instead, a company needs to centralize data about employees throughout the organization, including HR, sales, operations, etc. While organizations must train HR professionals in new data science techniques, they must also cultivate a data-driven ethos throughout the company, making it routine for employees and managers to input relevant information.

Implementing People Analytics

While only large companies have typically had the capacity to employ data-driven HR strategies, this is thankfully changing. Many new people analytics solutions are simple to deploy and automate many tasks. Once companies integrate a core HR platform with other solutions, an organization can have a broad understanding of what employee-driven steps will yield the most results.

That said, there are several significant challenges to implementing people analytics throughout a company. An organization must make sure that the quality of data remains high. They also need to protect employees’ data privacy and stay up to date on cyber security regulations, particularly in the EU. Realistically, deploying these changes requires two to three years. But there is a lot to gain.

Improving Business Outcomes

A McKinsey case study highlights the surprising results that came from a restaurant chain using people analytics. Specifically, they wanted to identify which variables most contributed to the company’s success. One shocking conclusion was that servers who were the friendliest were not actually the best. This goes to show how important it is to partner data-driven techniques with good old-fashioned wisdom.

Deloitte’s Bersin recently found that organizations that use people analytics at a sophisticated level reported 82 percent higher three-year average profits than companies without a properly-deployed people analytics approach. For example, Chevron developed a new, centralized people analytics platform. It operates at a significantly lower cost than their previous decentralized HR system, all while increasing company productivity by 30 percent.

It is also worth mentioning that the best people analytics platforms not only collect information but also predict personnel-related business outcomes. Analytics teams are increasingly developing automated dashboards and tools to help key employees see relevant data in real-time, even if a manager didn’t ask for a specific insight.

Can you imagine what businesses could gain from automated suggestions that would improve their company’s bottom line? Thankfully, more and more people analytics solutions are within reach.

Littal Shemer Haim brings data science into HR activities to guide organizations’ decision-making about people using data, working alongside HR software company HiBob.