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What is people analytics – HR practices for the future

One of the key drivers of the change that HR is facing the last years is the adoption of people analytics. By leveraging data and analytical techniques, HR professionals can gain deeper insights into their workforce, enabling more informed decision-making and strategic planning.

Alexandros Pantelakis
Alexandros Pantelakis

HR content specialist at Workable, delivering in-depth, data-driven articles to offer insights into industry and tech trends.

What is the concept of people analytics, its distinction from traditional HR practices, and its importance in modern HR management

Let’s delve into one of the most interesting HR terms.

What is People Analytics?

People analytics, also known as HR analytics, workforce analytics, or talent analytics, refers to the practice of collecting and analyzing data related to employees to improve organizational outcomes. 

It involves using statistical methods and software tools to analyze various aspects of the workforce, such as employee performance, engagement, turnover, and more. 

The goal is to turn data into actionable insights that can enhance decision-making processes and drive business success.

Historically, HR decisions were often based on intuition and anecdotal evidence. However, the advent of people analytics marks a shift towards data-driven decision-making. 

This approach allows organizations to identify patterns, predict trends, and make evidence-based decisions that can significantly impact their operations.

The difference between HR and People Analytics

Traditional HR functions typically focus on managing employee relations, compliance, recruitment, and other administrative tasks. 

While these functions are crucial, they often rely on subjective judgment and lack the analytical rigor needed to uncover deeper insights.

In contrast, people analytics leverages data to provide a more objective and comprehensive view of the workforce. 

It involves collecting data from various sources, such as employee surveys, performance reviews, attendance records, and even social media activity. 

This data is then analyzed to uncover trends, correlations, and patterns that can inform HR strategies.

For instance, while traditional HR might identify high turnover rates as a problem, people analytics can delve deeper to identify specific factors contributing to turnover, such as job satisfaction, leadership effectiveness, or compensation discrepancies. 

By addressing these underlying issues, organizations can implement targeted interventions that are more likely to yield positive outcomes.

Importance of People Analytics for HR

People analytics is a crucial tool for modern HR management. Here are some reasons why it is important:

Enhancing talent acquisition and retention

According to research by McKinsey & Company, companies that effectively use people analytics reduce attrition rates by up to 50%. This is achieved through better understanding of employee needs, improved engagement strategies, and predictive analytics to identify at-risk employees.

By analyzing data from the recruitment process, HR can identify the most effective sourcing channels, predict candidate success, and streamline the hiring process. 

Additionally, retention analytics can help identify employees at risk of leaving and develop strategies to retain top talent.

Improving employee engagement and productivity

These analytics can provide insights into what drives employee engagement and productivity. By understanding these factors, organizations can implement initiatives that foster a positive work environment and enhance employee performance.

Research by Gallup shows that organizations leveraging people analytics to understand employee engagement and satisfaction experience 59% lower turnover, 41% less absenteeism, and 21% higher profitability.

Driving organizational success 

Data-driven HR practices enable organizations to align their workforce strategies with business goals. This alignment ensures that HR initiatives support overall organizational success, leading to improved performance and competitive advantage.

Maximizing cost savings

Predictive analytics in recruitment can reduce hiring costs by identifying the best candidates more efficiently and reducing the need for repeated hiring.

Getting started with People Analytics

Implementing people analytics can seem daunting, but with a structured approach, HR professionals can successfully integrate it into their operations. 

Here are some steps to get started:

1. Identify key questions and problems

Begin by identifying the key questions you want to answer and the problems you want to solve with people analytics. This will help focus your efforts and ensure that your analytics initiatives are aligned with organizational priorities.

2. Plan data collection and analysis projects 

Develop a plan for collecting and analyzing data. This includes identifying data sources, selecting appropriate metrics, and determining the analytical methods to be used. Ensure that you have the necessary tools and expertise to conduct the analysis.

3. Report and utilize results 

Once the data has been analyzed, report the findings in a clear and actionable manner. Use the insights gained to inform HR strategies and make data-driven decisions.

Best practices and strategies

To maximize the benefits of people analytics, HR professionals should adopt best practices and strategies that enhance the effectiveness of their initiatives. 

Here are some key considerations:

Integrating people analytics into strategic decision-making: Ensure that analytics is not a standalone activity but integrated into the broader strategic decision-making process. This involves collaborating with other departments and aligning analytics initiatives with organizational goals.

Ensuring data quality and comprehensive analysis: High-quality data is crucial for accurate analysis. Invest in robust data collection methods and regularly audit data quality. Additionally, use comprehensive analytical techniques to uncover deeper insights.

Building a people-centered and long-term oriented approach: HR analytics should focus on long-term outcomes and be people-centered. This means considering the impact of decisions on employee well-being and aligning analytics initiatives with long-term organizational goals.

Future trends in People Analytics

The field of HR analytics is continuously evolving, with new technologies and methodologies emerging. Here are some future trends to watch:

Emerging technologies and methodologies: Innovations in technology, such as artificial intelligence (AI) and machine learning, are enhancing the capabilities of people analytics. These technologies can provide more accurate predictions and deeper insights.

Predictive analytics and AI in HR: Predictive analytics uses historical data to forecast future outcomes. In HR, this can mean predicting employee turnover, identifying high-potential employees, and more. AI can further enhance these capabilities by automating data analysis and providing real-time insights.

Future challenges and opportunities: As HR analytics continues to evolve, HR professionals will face new challenges, such as data privacy concerns and the need for upskilling. However, these challenges also present opportunities to further integrate people analytics into HR practices and drive organizational success.

Implementing people analytics requires careful planning and a strategic approach, but the benefits it offers make it a worthwhile investment for any organization.

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