People analytics is a data-driven method that aims to improve business decisions regarding team members and customers. Rather than solely relying on instinct or anecdotal experience, people analytics provides HR leaders with comprehensive data to make evidence-based, strategic decisions. 

People analytics integrates HRIS software to assemble and examine extensive information, predict trends, and provide valuable insights relating to the different stages of the employee lifecycle. Also known as talent analytics, companies use people analytics to match the right talent to appropriate roles.

Why is people analytics important?

People analytics assesses data to enhance the following areas:

Talent analytics is a function that all departments, not just HR, are beginning to adopt. This is a transformation that heralds an increase in HR automation: HR leaders must be ready to embrace these changes to deliver up-to-date, accurate results. 

Leveraging HR automation tools enables HR leaders to make informed decisions that elevate the employee experience and promote company objectives. In a competitive, sink-or-swim market, HR leaders must demonstrate agility as they continuously adapt to innovations within the workplace. 

Examples of people analytics

People analytics in HR encompasses various aspects of the employee lifecycle. Examples of people analytics include:

  • Attrition prediction. This involves analyzing historical data to identify patterns and factors leading to team member turnover, giving you the ability to predict which of your people are at risk of leaving.
  • Recruitment optimization. People analytics can help with refining recruitment approaches to attract and retain top talent.
  • Performance analysis. This involves evaluating performance data such as key performance indicators (KPIs), goal achievement, and competency assessments to gain insights that aid in identifying high-performing individuals along with the factors that contribute to their success.
  • Employee engagement. Survey data and sentiment analysis provide insights into employee satisfaction, engagement levels, and the factors influencing them. This information helps organizations design initiatives to improve engagement and create a more positive work environment.
  • Learning and development. Analytics can track training outcomes, skill acquisition, and performance improvements resulting from educational programs, helping you optimize training investments that align with business goals.

Key people analytics metrics

  • Early turnover rate. This metric refers to the percentage of people leaving within the first year of working at a company. It helps with assessing retention efforts.
  • Absence rate. This measures how often a person is unexpectedly absent from work, whether that’s due to sickness, stress, or other personal circumstances. A high absence rate among team members can indicate dissatisfaction in the workplace. 
  • Engagement scores. These capture how committed and satisfied people are about their work and the organization as a whole. 
  • Performance ratings. These evaluate individual or team performance against predefined metrics and goals.
  • Cost per hire. This assesses the total expenses of the hiring process, including advertising, interviewing, and onboarding costs.

How to use people analytics to make decisions

The effectiveness of HR people analytics depends on putting the insights gleaned from data into action. The steps below will help you make clear and knowledgeable decisions for your organization:

  1. Define objectives. Clearly outline the specific organizational challenges you aim to address using people analytics.
  2. Data collection. Gather relevant data from your HRIS or HCM, performance reviews, surveys, and other sources.
  3. Analysis. Employ statistical methods, visualization tools, or a people analytics platform to draw meaningful insights from the collected data.
  4. Identify patterns. Look for correlations and trends in the data that offer insights into workforce behaviors and the causes of your organization’s challenges. 
  5. Make informed decisions. Use the insights you’ve gathered from the data to make evidence-based decisions that help your organization reach its objectives.

People analytics dashboard

A people analytics dashboard is a visual representation of key HR metrics and data. It provides critical information at a glance, such as turnover rates, engagement scores, performance data, and recruitment statistics. 

A dashboard empowers HR leaders and managers to track and understand workforce metrics so they can easily make informed decisions. A user-friendly and informative dashboard allows stakeholders to access and interpret essential data swiftly without having to rely exclusively on an IT department or analyst.

How to successfully implement a people analytics system

Incorporating talent analytics into multiple departments demands that HR leaders step up to guide others through this new initiative. HR leaders can support the integration of people analytics by implementing these practices:

  • Lead by example. Demonstrating proficiency in, or at least an understanding of, people analytics allows HR leaders to use it effectively and set an example for others as they learn the ropes. 
  • Observe. HR leaders can identify the level of data collection they currently conduct at their organization and take note of the prevailing data analysis methods the company uses, e.g., data collection techniques and categories and which HR leaders are accountable for the data.   
  • Introduce all HR professionals to people analytics. Providing people analytics “basic training” for all HR personnel will improve their knowledge of the system. Acquainting HR professionals with people analytics empowers them while infusing this method into the company culture and mindset. 
  • Train the analytics team. It’s important to educate people analytics specialists on how to read and scrutinize data, watch out for inaccurate data, and make data-informed decisions. These HR professionals determine the effectiveness of the talent analytics system. 
  • Be aware of potential pitfalls. Companies can use an HRIS platform to simplify, filter, and present the data in a digestible manner to managers. Another challenge to be mindful of is the essential protection of people’s privacy through data encryption and adherence to an honest, fair, and transparent policy.

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People analytics vs HR analytics

Professionals use the terms “people analytics” and “HR analytics” interchangeably. However, there’s a difference between the two:

HR analytics focuses on leveraging the HR department’s data to understand and manage the workforce. It delves into individual team members’ behaviors, performance, and engagement, aiming to optimize various HR processes across the employee lifecycle. 

While people analytics also uses HR data, its focus extends beyond this to wider data sources across the organization, such as overall business performance, finance, marketing, and sales. It gathers a broader spectrum of data to gain deeper insights that inform strategic decisions.

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People analytics trends

The extent to which organizations embrace people analytics and the ways they use it are already changing:

  • Focus on employee experience. There’s a shift toward improving the overall employee journey, emphasizing aspects like wellness and productive remote work experiences.
  • Ethical data use. With the increased concern around data privacy, there’ll be greater emphasis on ethical considerations around data usage and maintaining transparency in data collection and analysis.
  • Platform integration. People analytics tools will integrate data from an organization’s different software and apps to make it easier to get all the necessary insights from a single source. 
  • Diversity, equity, and inclusion. There’s a greater focus on using people analytics to improve diversity, equity, and inclusion within organizations and this will only continue to grow.
  • AI integration. People analytics platforms are starting to integrate AI-driven tools to streamline data analysis and derive deeper insights from complex data sets.

How can people analytics improve company culture?

People analytics provides HR leaders, managers, and executives with data to support the alignment of employee performance with company objectives. Effectively assessing and acting on this data contributes to effective hiring and training tactics, employee engagement, and in turn, a robust company culture.