Published: 27 June 2024
Contributor: Keith O'Brien, Amanda Downie
People analytics is the act of collecting and analyzing human resources (HR) data to better understand how employees are performing in the work environment. Analyzing the collected data points is a key component of an organization’s data-driven decision-making and employee experience strategy.
People analytics helps organizations better understand employee performance and allocate resources to maximize people management. People analytics, which typically incorporates HR analytics, talent analytics or workforce analytics, is a cornerstone of workforce planning.
Organizations are using workforce data analytics more frequently to plot business goals and help understand the future of work in their organization. The ultimate goal of this data-driven approach is to create the right initiatives to improve business outcomes.
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Many organizations use people analytics to refer to the holistic approach of using data and analytics to study everything that impacts their employees. Two other categories of analytics that fit under the topic of employee management are:
There are several types of people analytics that organizations can use to either review previous situations or predict future occurrences.
These analytics involve analyzing past events and data to understand the current state of affairs. For example, organizations can look at current and historic time-to-hire rates to see whether new initiatives have improved their processes.
These analytics involve modeling what might happen in the future based on historical and industry data. Predictive analytics helps anticipate future issues, like increased employee turnover, if certain criteria were to occur. For example, decreased attendance at meetings or work events might imply that employees are disengaged and at risk of leaving the company.
These analytics measure potential future outcomes and provide solutions that aim to maximize results. For example, lower efficiency can mean there’s a skills gap, and the organization’s leaders can fix this with extra employee training.
Organizations tap into several different types of latent and real-time data, some of which they can access on HR data dashboards.
Many organizations use people analytics platforms like human resources information systems (HRIS), or HCM software, to track analytics and establish key performance indicators (KPIs). This application incorporates talent planning, management and analytics in a single system. The software provides human capital management solutions at scale, especially when powered with AI. Organizations can also use data visualization tools to make sense of it the data collected by HR systems.
There are various stakeholders whose collective actions contribute to people analytics. Some organizations build specific people analytics capabilities, led by executives. Others approach it more collaboratively.
Different organizations take varying approaches to their people analytics strategy, but most follow a straightforward pathway.
There are many important benefits to incorporating the data from people analytics into an organization’s strategy.
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1. Talent at a turning point: How people analytics can help (link resides outside ibm.com), McKinsey, 24, February 2022