From Business Insider:
Despite lots of hype about it, people analytics is still a relatively new concept for HR directors and professionals.
Finance and marketing teams have been using analytics for years to monitor the performance of the business – and to track and predict customer buying patterns.
The benefits of “big data” can equally be applied to people challenges, from recruitment and development to performance management, engagement, compensation, workforce planning and retention.
Doing this can transform the effectiveness of organisations. However, too many HR teams miss out on this opportunity because they don’t know how to capitalise on the data they have available.
Talent data is one component of this. However, people analytics is a broader concept because it encompasses all of an organisation’s employees, not just those who have been identified as “talent”.
Correlating employee data against business outcomes provides actionable insights that can help HR leaders make more informed people decisions.
So how can you make the best of the data you have, and act on it to benefit the business?
To create effective people analytics, usable data is needed. You’ll undoubtedly have data on your employees, such as demographic data, their length of service and their prior experience.
You’ll also have performance data, such as their line manager ratings, sales figures, customer service feedback and even details of their punctuality, absenteeism and their disciplinary record.
You may have assessment data – such as personality or ability test results – from when they were recruited; you may even have survey data on their level of engagement. The first step is to clarify exactly what data you can access on your employees.
Essentially, you want your people data to tell you something useful. You could perhaps identify whether there’s a connection between the eye colour of your employees and their performance – but this wouldn’t really help you. Instead, you need to concentrate on creating insights that will enable you to take action.
The more data you have, the more questions you’ll be able to answer. But initially you might start with queries such as: What do our high performers have in common?
Where do we tend to source our high performers from? How long do high performers tend to stay in our organisation? Asking questions – or creating a hypothesis around a challenge you’d like to explore – will help to focus your attention.
Your questions could be very specific, such as why are we not recruiting so many female technicians? Or they could be more general, such as why do we have early attrition in our organisation or are we attracting the right people?
This is where it gets interesting. For example, your performance data will reveal the top performers in different parts of your business. By analysing the pre-hire assessment data from those employees, you may find some commonalities.
One of our clients found that their top salespeople were empathetic, consultative and supportive. This surprised them, as they were expecting their top sales people to be confident extroverts.
Knowing the key characteristics, competencies and motivations of your top performers can help you to create a “success profile” of what it takes to succeed in your organisation. You can then recruit and develop people against this profile. This is an area where people analytics can pay real dividends, if you have the skills in place to take advantage.
If you’re going to make decisions on your data, or present it to the board, you have to be confident about its quality.
If you have missing data or if your sample size is small, you may still be able to partly answer your question or support your hypothesis. However, you’ll need to highlight the imperfections of your analysis, as you won’t have full information.
Don’t make changes in your business unless you can fully trust the results of your analysis.
Assuming that you’re confident in what your data is telling you, the next step is to create a solution to the issue you’re addressing. For example, let’s say you wanted to encourage more women to apply for technical roles in your organisation.
You’ve analysed your existing recruitment channels to identify where your current female applicants are coming from; you’ve examined your application process to see if a high percentage of females are dropping out at any stage.
You’ve also looked at the characteristics of your existing female technicians; you’ve tried to understand what attracted them to your organisation, what engages and motivates them to work with you and why they stay.
You can then create a hypothesis of why you think you have too few female technicians. This may be related to how you’re describing the job, how you’re promoting it, where you advertise or how you’re managing your selection process.
You can then take some action to rectify the situation. Focus on one or two measures that you expect will have an impact but involve low effort on your part.
After implementing your intervention, track and monitor the situation to assess the business impact. Don’t just implement the intervention and hope for the best. Collect evidence of what has changed, so you can correlate that change to your intervention.
Without an approach like this the business won’t be able to say for certain what actually caused that change. Tracking your progress and regularly monitoring the results will help you to draw accurate and justifiable conclusions.
Your interventions may not wholly address the issue or problem but you may be able to show that they’ve helped to tackle or minimise it.
Let’s say you’ve created a successful initiative to attract people for certain roles, having identified what makes a “good performer” in your organisation.
If when hiring managers you start to see a higher ratio of better candidates – or if you’re recruiting people who are performing better in their first six months – then you’ll know the method has had an impact.
It’s important to share this success internally. If you can show the tangible benefits of people analytics, you can more easily gain additional investment, so you can gradually scale-up to address other challenges.
People analytics is an important topic for HR because it can help organisations to recruit, develop, engage and retain the right employees. Beware though, because it’s easy to be misled by your data.
You may reach reasonable conclusions that turn out to be flawed. If you don’t have the capabilities to analyse and manage data in-house then take expert advice to help you ask the right questions, draw appropriate conclusions and choose the right interventions.