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Why Is People Analytics Important for HR?

The essential role of a people analytics role in an organization is to collect and analyze data for insights into employees' motivations. This data can then enable better business decisions and greater impact from each hire, assignment or promotion. Employee attribute data is not the only aspect that counts; relational analytics also helps to convey insights about the interplay among people.

When companies evaluate both individuals and their relationship to the groups in which they work, leadership can improve the employee experience and business outcomes. People analytics provides a macro view of the impact that employees drive, and the conditions under which they can maximize their contributions. It identifies relationships, trends and patterns that enable leaders to make informed business decisions, spot problems and act effectively to improve business operations.

The value of people analytics is useful outside of silos within HR, too. People analytics embedded in software applications and in leadership methods enable the collection and application of more valuable data. Technologies — including software, AI and IoT devices — are accelerating the speed at which organizations can gather and analyze people analytics data.

Consider the Statistics

As organizations demonstrate the impact of people analytics, more companies are recognizing its necessity in a competitive marketplace, but there is still much room for growth. Take, for example, the following anecdotes from U.S. companies:

More than 70% of companies now say they consider people analytics to be a high priority. … However, only 9% of companies believe they have a good understanding of which talent dimensions drive performance in their organizations.Deloitte

About 69% of organizations with 10,000 employees or more now have a People Analytics team.Corporate Research Forum

For every dollar invested in people analytics, organizations receive a return of $13.01. Nucleus Research

How Is People Analytics Used?

  1. Understanding individual influence: According to Harvard Business Review, employees are not most influenced by their company's senior leadership, but by people in less formal roles who work closely with them. Surprisingly, staff who wield the most influence are not necessarily those whom employees cite as influential. Non-executive, tangential colleagues often have stronger connections to employees. Without people analytics, there would be no way to tap their influence when necessary.
  2. Measuring team chemistry: Without people analytics, teams are often constructed by joining specialists with complementary skills with other, highly skilled employees. However, analytics often reveals that this does not lead to the best interplay between workers, the most creative ideation or the most efficient project completion. Many other variables determine team chemistry and team success. These may include internal density (the amount of interaction among team members) and external range (the access members have to experts outside of the team).
  3. Understanding key performance indicators: Analysts can dive deeper into the metrics of employee performance, including revenue per employee, quality of hire improvement, performance turnover in key jobs, new hire failure rate and diversity hires in customer impact positions. It is important to arrive at these complex indicators through extensive data analysis.
  4. Improving success in attaining traditional HR objectives: Human resource departments are charged with a variety of goals including employee retention, improvement of the quality of hires, professional development, workforce planning and productivity enhancements. When companies can link data from each of these areas and others, they can focus on key metrics and calibrate performance to meet specific objectives. Results-focused leaders at every level can apply the insights gained to change the company's capabilities, culture and training.

Humans and data are valuable resources available to organizations. People analytics enables organizations to gather data insights on a company's most important resource – the humans who work there. Graduates of an advanced business degree program, like the HR-focused MBA offered by St. Thomas University, have an advantage. The core curriculum gives them the foundational knowledge they seek in an MBA program, with the Business Data Analytics course covering tools and applications for data-driven decision-making. The HR Management concentration courses given them the focused expertise they need to lead and thrive in the human resource domain.

Learn more about St. Thomas University's Master of Business Administration with a concentration in Human Resource Management online program.


Sources:

Deloitte: People Analytics: Recalculating the Route

Harvard Business Review: Better People Analytics

Insight222: Why Is People Analytics So Important for HR?

McKinsey & Company: Advanced Analytics for Better Talent and Business Decisions

Visier:
8 Benefits of Using People Analytics
The Power of People Analytics in Everyday Decision-Making


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