Unleashing the Power of People Analytics

People analytics represent the marriage of data analytics and human resources: using the principles of data analytics to make data-driven decisions about recruitment, employee performance, and overall productivity. A 2021 study by Deloitte found that 70 percent of companies invested in people analytics tools in the 12 months before the survey, with another 50 percent planning to purchase similar tools in the coming year [1]. People analytics is important because it can impact any industry that uses human resources. 

Explore how people analytics empower companies to optimize recruitment strategies, increase revenue, inform employee policies such as compensation, manage employee performance, and more before discovering methods you can use to implement people analytics in your company. 

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What are people analytics?

People analytics, also known as HR analytics, is a term used to describe collecting and analyzing data about your human resources. For example, you might track your employees' skills to determine who would be a good fit for a new project requiring a novel combination of competencies. You might use people analytics to determine which sales team members are performing at the highest capacity and what characteristics or work habits they have in common. You can also use data analytics in recruitment, engagement, DEI, performance management, and more. 

To gain the insights needed to make these data-driven decisions, consider using one of four primary types of HR analytics: 

• Operational reporting: People analytics that reports on what has already happened. For example, you might use operational reporting to evaluate employee performance last quarter. 

• Advanced reporting: A more profound, sometimes automated people analytics process that compares variables and explores potential outcomes for the company or employees. It’s different from operational reporting in that advanced reporting is a continuous process that looks forward instead of at the facts of the past. 

• Strategic analysis: Strategic analysis is a type of people analytics you might complete to measure how a specific element of your business strategy works. For example, you might measure employee engagement in response to initiatives to improve employee culture. 

• Predictive analysis: Predictive analytics can help you forecast what might happen in the future to guide your business strategy. It differs from advanced reporting because it lets you get a bigger view of your overall position by using multiple variables to predict future outcomes. 

Read more: Training Needs Analysis: A Tool to Drive Team Performance

How does people analytics improve business performance?

People analytics can help improve business performance by giving you the information you need to make data-driven decisions to optimize employees’ productivity and engagement while supporting employee retention. Some of the benefits of people analytics include the following: 

• Enhancing talent acquisition and recruitment: People analytics gives you a broader understanding of the candidates that best fit your current workforce needs. You can create a chart of the skills required for each position in your company and use that information to look for competency gaps or to hire quickly when an opening arises. With people analytics, you can move away from hiring when you have a need and intentionally seek out the best talent. 

• Driving employee engagement and satisfaction: To measure employee engagement, you can use metrics like productivity, attendance, profitability, and customer satisfaction. You can then use this data to gain insight into what resources or programs, like a targeted learning and development program or one-on-one coaching, could help your employees feel more connected to their work. 

• Improving retention strategies: You can use people analytics to help locate employees at risk of leaving your company, such as individuals who have not received a raise in some time. Using HR data, you can investigate why people leave your company and take steps to correct any problems you encounter. 

• Performance management: You can use people analytics to weigh various employee variables—engagement, productivity, development, competency, and more—to understand how well your employees perform. This data also gives you a framework to discuss performance with your employees, outlining your expectations and highlighting employees’ results. 

How to implement people analytics 

No matter where you’re starting from, you can begin gathering and analyzing human resource data to solve problems and work toward your company goals. Good people analytics won’t happen overnight but after a repeating improvement process.  The following offers a closer look at the steps you’ll need to take to begin:

Step 1: Understand your purpose. 

Decide what you want to achieve with your people analytics, which will help provide the framework for the next steps. For example, you could use operational reporting to help you understand the current landscape and some combination of advanced reporting, strategic analysis, and predictive analysis to help you gather the information you need to answer your question or understand your problem. In the planning step, you will identify the tools and resources necessary to collect your HR data. 

Step 2: Gather and analyze. 

The second step of the people analytics process is to gather and analyze the data according to the goals and objectives you outlined in step one. It’s essential to ensure the data is reliable and unbiased. Some examples of where you might gather HR data include surveys, interviews with employees, employee productivity levels, absenteeism, development, and work-life balance. 

Step 3: Review and recommend. 

When first implementing people analytics, many organizations need help understanding what to do with the data. That’s okay because you will improve your people analytics by learning to work with the data. For example, you may focus on building visualizations at first to spot trends easily in the future. Once you start to draw conclusions and recommendations from the data you see, it’s also essential to consider the implications of any strategic action you may take. 

Step 4: Implement changes or new systems. 

The last step is to implement changes based on your recommendations. While these changes will often reflect the goal of HR analytics, your data may also uncover unexpected results that inspire you to move in a different direction. The critical thing to remember is that any change you make or any new system you implement should drive the organization closer to its objectives. 

Challenges and opportunities in people analytics

Talent analytics can help you reach your company goals by making smarter decisions based on data, but they also present your company with challenges to overcome. The following offers a look at two of the common pitfalls of people analytics and how you can avoid them: 

People analytics as a self-fulfilling prophecy

In some cases, implementing talent analytics invokes some circular logic where the data serves as evidence of an outcome in the future that only happens in the future due to the manager’s predictions based on the data. For example, you might decide which employees will attend leadership training based on your HR data. 

The data is validated when those employees become leaders in the company. However, those individuals only became leaders once you provided them with leadership training. 

Solution: Use people analytics to gain perspective, but do not let it blindly inform your strategy. 

No connection to HR day-to-day

Many companies need help incorporating analytic activities into their daily responsibilities. Doing so is vital to continuously empowering the team to make data-driven decisions and providing access to quality data. 

Solution: Approach HR analytics with Agile principles of consistent, incremental progress with the whole team involved in the process. Consider investing in HR analytics tools to aid in data collection.

Getting started with Coursera.

People analytics can help you gain insight into your workforce in a whole new way. You can use people analytics to dig deeper into specific strategies, such as improving your company's retention and engagement or increasing productivity. You can also integrate talent analytics into your day-to-day human resources for continuous data-driven decision-making. 

To learn more about what your company can do with people analytics, consider taking an online course, such as People Analytics, offered by the University of Pennsylvania on Coursera.

Enable your people managers and HR teams to analyze and interpret data to drive faster, better business decisions with the Data & Analytics Academy from Coursera. With hands-on learning and expert instruction from leading organizations like Stanford, Google, Microsoft, Meta, the University of Michigan, and more, Coursera’s Data & Analytics Academy empowers employees at every level to build foundational data literacy. Explore Coursera for Business to learn how we can work together to build data proficiency across your organization.