Leveraging people analytics to drive success

Organizations that leverage people analytics are powering successful talent management strategies and adding more value to the human resources function than ever before. They’re proving that when properly used, analytics enhance strategic decision-making, increase ROI and break down organizational silos.

In this article, we provide guidance for leaders who want to leverage their own people analytics to drive success.

Defining people analytics

People analytics is the process of analyzing people data together with business performance data to draw key people insights. The data collected can be quantitative and qualitative, and the process often involves internal and external data. Generally, the goal is to gain insights that leaders can use to improve people and business outcomes.

Some also refer to people analytics as “HR analytics” or “workforce analytics.” However, there’s a narrow distinction between people and HR analytics. HR analytics historically involves analyzing HR data to enhance specific HR functions. “People analytics” is a broader and more holistic term. It refers to analyzing all people-centric data that can be leveraged to improve people and business strategies.

Key benefits

People analytics offers several important benefits:

Improved decision-making

First, and most prominently, people analytics improves decision-making. In fact, according to a now well-known PwC survey of over 1000 senior executives, highly data-driven organizations are three times more likely to report improvements in decision-making than those in organizations that rely less on data. And according to findings from the Brightmine (formerly XpertHR) People Analytics 2024: Survey Report, organizations that used people analytics effectively were more likely to see improvements in key performance indicators.

Specifically, analytics promotes objective, evidence-based decision-making. This increases accuracy while saving leaders valuable time they would usually spend on research or consultants. People analytics, by way of advanced predictive analytics, also enhances strategic planning by identifying trends and patterns in workforce data that leaders can use to inform future decision-making.

Increased efficiencies

In addition to improving decision-making, people analytics helps create efficiencies in HR by revealing negative trends, gaps or other potentially inefficient practices. Once identified, leaders can take immediate steps to reallocate resources. For example, HR leaders can leverage specific talent analytics to evaluate the quality of their talent pools.

Functions and metrics

Business leaders can leverage people analytics to improve key functional areas in HR by measuring relevant metrics. Important functional areas include:

• Recruitment.
• Performance and development.
• Engagement and retention.
• Diversity, equity and inclusion (DEI).
• Compensation and benefits.
• Compliance and risk management.

Relevant metrics, which are specific quantitative measures that allow you quantify performance in a functional area, provide direction to an analytics strategy.

Which metrics you choose to measure in your people analytics project is important. It determines which insights you use to inform your decisions, and in some cases, from where you source your data. Fortunately, there is certainly no shortage of options. The table below reflects a few common metrics and the HR functions people analytics pros generally associate them with:

Common HR metrics by functional area

Functional area	Common HR metrics
Recruitment	• Cost per hire • Time to fill • Offer acceptance rate • Applicants per opening • Applicant diversity
Performance and development	• Revenue per employee • Performance review scores • Skill ratings • Customer ratings • Time to full competency
Engagement and retention	• Voluntary and involuntary turnover rate (particularly within the first year) • Retention rate • Average employee tenure • Internal promotion rate • Absence rate
Diversity, equity and inclusion	• Pay equity • Diversity of representation in specific job roles, locations, teams, levels, etc. • Accessibility ratings (website, software, building accommodations, etc.) • Rate of successful accommodation requests
Compensation and benefits	• Benefits enrollment rate • Benefits use rate • Employee benefits satisfaction rate • Average salary • Average total compensation • Compa-ratio

When reviewing and selecting metrics, remember:

• Metrics are multifunctional. People analytics teams often use metrics to evaluate performance in several HR functions. For example, organizations reviewing their DEI strategy often evaluate metrics in several HR functions through a DEI lens. A DEI leader may investigate whether trends exist along demographic lines in promotion, retention or even benefits use rates.
• Context matters. Even with advanced people analytics capabilities, measuring a single metric is generally not enough to paint an accurate picture. Be sure review metrics together with other relevant information to provide appropriate context. For example, you’ll want to measure at least a few people management metrics to evaluate a remote work program.

Acting on people analytics

Leveraging analytics to improve people decisions and business practices is no small undertaking. In addition to choosing metrics and analyzing data, people analytics teams need make the right preparations to take action. Specifically, they need to find the right partners, set clear expectations and ensure alignment with other business priorities.

Below are key considerations to keep in mind when transforming your analytics strategy into action:

Take a “data-first” approach

HR is rapidly becoming a data-driven practice. Because of this increased focus on data, it’s no longer enough to be data literate. HR teams must become data-first to be able to effectively leverage analytics to improve business processes.

Unfortunately, many organizations continue to struggle to make this jump to a data-driven approach. A well-known cause is the data skills gap within HR teams. Advancements in AI technology have further highlighted this gap. Employees just don’t have the knowledge or skills to collect, analyze and act on people data.

In fact, the Brightmine people analytics survey found that data literacy was one of the top cited skills gaps on HR teams that weren’t effective at using people analytics.

To become “data-first,” HR teams experiencing a skills gap will need to focus on upskilling team members. This will likely require internal training and personalized coaching on key analytics principles, best practices and technology.

Additionally, data-first HR teams use data as the foundation for key HR initiatives or projects. In these teams, instead of being something teams review retrospectively, data plays a central role from planning to execution.

Set clear goals

People analytics insights are vast, but to become actionable, they need direction. So, when shaping your analytics strategy, set long- and short-term goals. Also, understand how they align with the company’s people strategy and greater business strategy.

Your goal may be to improve certain DEI metrics, such as pay equity, within the next five years. Or, it may be to improve employee retention rates through internal career development and coaching. Whatever the goal, make it specific and tied to specific metrics that you can measure using accessible data.

Find the right partner

Finding the right advanced analytics software to help transform data into actionable insights is invaluable. The right analytics partner will enable you to do the following:

• Centralize, view, filter and manage data.
• Ensure data is high-quality data.
• Maintain data security and employee anonymity.
• Provide highly accurate results.
• Review results against personalized goals and targets.
• Include modeling and predictive data analysis capabilities.

Most software partners specialize in analyzing specific metrics or specific HR functions, such as pay equity or employee engagement. Because accessing several different software solutions is costly, determine whether your potential partner has the appropriate integration capabilities to plug into your existing software.

Work cross-functionally

One of the greatest benefits of people analytics is that it helps break down silos between HR and the rest of the business. Specifically, it helps leaders understand how people practices impact business outcomes. To reap this benefit, however, HR needs to ensure its analytics strategy aligns with the greater business strategy. This way, the organization can measure and act together towards the same goals.

So, when forging a new path with analytics, be sure to include stakeholders from across the business from the beginning. Including diverse stakeholders will help you gain buy-in for new resource investments. Also, gaining new perspectives may inform your team’s analytics strategy.

In addition to including stakeholders like the C-suite and department leaders, keep your in-house counsel in the loop. These projects often involve sensitive employee and business information that counsel can help protect.

Measure success

Finally, no people analytics strategy is complete without measurements of success. Measuring success can take many forms. The key is to ensure that you monitor metrics and investigate why they are (or aren’t) improving over time.

When measuring the progress of your people analytics project, consider the following questions:

• Do we have the resources we need to carry out our project’s goals?
• Is the data-quality high enough to produce accurate results?
• Does our people analytics software partner have the capabilities we need?
• Are there opportunities for case studies to showcase the impact of our project?

In addition to asking these questions, evaluate how long it takes to analyze an issue and produce actionable insights. If your approach to people analytics is taking you half the year, you may need to re-evaluate the strategy. Understanding your analytics “turnaround” and will help you evaluate efficiency and identify barriers.

Conclusion

People analytics can transform HR and business practices. In today’s data-driven workplace, an analytics strategy is crucial to driving people and business success. However, to effectively harness the power of people analytics, you need more than data. By prioritizing data-first HR teams, setting clear goals and finding right partner, you can leverage your people analytics to drive success.