Big data is increasingly referred to as the new oil of the 21st century. But is data really as valuable as oil? That depends on how you use it.
Organizations have been collecting and storing big (and small) data for years, including a wide range of information on current and potential employees, such as demographics, performance indicators, behaviors, personalities and motivators. The difference today is that these organizations now have the advanced computing capabilities to transform this data into analytical results, referred to as people analytics.
Before you can maximize the power of this business strategy, you must first understand what people analytics is and the value it can bring to a high-volume company.
what is people analytics?
In basic terms, people analytics is the strategic process of collecting and analyzing data pertaining to talent in order to make informed HR and business-related decisions. Organizations have used customer analytics for years to learn more about consumer shopping behaviors and motivators. This allowed companies to tailor product offerings and marketing strategies to fit the needs of target consumers or customers.
Today, employers can use this same data-driven power to better understand employee behaviors, needs and motivators. Companies, especially those with a high-volume workforce, can use this analytical data to make faster and smarter decisions about workers and the business as a whole.
For example, BASF, a global chemical producer with operation sites in the United States and Canada, used people analytics to build diversity and inclusion within the workplace. By using the right analytical data, the company was able to set clear goals and metrics for measuring success as well as develop a tailored strategy for attracting and engaging with high-quality candidates. This combination allowed the company to meet stakeholders’ goals and objectives.
Another example of how people analytics can help organizations make data-driven decisions can be seen in the creation of compensation packages. A robust people analytics strategy helps your company identify the optimal salary range for a position or offer and determine what perks your target candidates find most desirable. Creating a competitive compensation package that drives results can help improve the recruitment process and the company’s retention rates.
people analytics vs HR analytics
If your company is already using HR data analytics, don’t mistakenly believe this is the extent of people analytics. While many use the terms HR analytics and people analytics interchangeably, they're not the same in scope or purpose. Therefore, it’s important to understand the difference between these two strategies to maximize the potential of your people analytics efforts.
While HR analytics uses some of the same data points as people analytics, it’s strategically designed to improve HR functions and the performance of the HR team. It also solely focuses on employees at work. For example, it tracks basic HR metrics, such as turnover, retention and time-to-hire rates, to assess the performance of the HR team.
People analytics is similar, but goes one step further. This strategy focuses on overall business performance and studies the whole employee, not just on-the-job metrics. For instance, it might consider how Canadian workers feel about their work/life balance or their training and development opportunities.
The goal of people analytics is to make data-driven decisions that help meet HR goals, such as better hiring outcomes, improved performance and increased retention rates, and overall business goals, including building a diverse workforce and effective high-volume workforce planning.
why is people analytics important today?
Over the last few years, Canadian industries have dealt with a global pandemic, ongoing labor shortages, a growing skills gap, increased turnover rates and supply chain disruptions. If these challenges have taught us one thing, it’s the need to remain resilient during times of turmoil. This desire for resilience has shifted both organizational objectives and workers’ expectations.
For example, a recent Capterra survey reveals that Canadian businesses expect to devote 56% of their 2023 annual budget to technology and digital enhancements. As these companies make the shift to digital transformation and adopt new technologies, their workforce needs to shift significantly. As a result, the size of the workforce may shrink, and the type of skills required in the workforce will change. When you’re making decisions about a changing workforce, people analytics can help you identify the employees who have both the productivity metrics and personal mindset to help them succeed in implementing new skills and processes.
On the people side of things, the disruptions over the last few years have brought a push for higher wages and the desire for greater flexibility. Randstad’s 2022 Workmonitor Report found that Canadian workers overwhelmingly want flexibility in their working hours (82%), while 72% want flexibility regarding their working location.
During these times of disruption and change, we've learned that traditional HR metrics, such as overtime expenses or absenteeism rates, failed to show the whole picture. In fact, these metrics were often skewed by forces outside the company’s control. For example, frequent quarantines and shutdowns significantly impacted absenteeism rates, but it didn’t mean that the company had an attendance problem outside these pandemic restrictions.
People analytics plays a vital role in building a resilient high-volume workforce by looking at the 'why' behind the numbers. For instance, people analytics strategies can help your company determine why turnover rates are increasing. With this information, your organization doesn’t have to tackle its turnover problem blindly. Instead, it can use robust analytical data to develop an effective talent retention strategy.
Since people analytics is an ongoing process, analytical data obtained allows your company to quickly adjust to any shifts in workers’ demands, changes to the way of work or disruptions in the marketplace. When used correctly, people analytics can be a game changer for your company and provide it with the competitive edge it needs to remain successful today and in the future.
what value does people analytics bring to your company?
Is people analytics really the superpower your business needs? It can be. In fact, it can bring value to your company in several areas.
the recruitment process
Talent analytics, a subdivision of people analytics that primarily focuses on talent acquisition, can improve the recruitment process by playing a crucial role in every stage of hiring, including:
- candidate sourcing. People analytics can provide insights into what motivates your target candidate as well as their online behaviors. This information can help you determine the best methods to source and communicate with prospective candidates, such as social media, job boards, emails or text messaging.
- application process. HR metrics can help you determine if potential candidates are getting stuck in the application process, but people analytics can help you discover why this is happening. For example, is the application process too long, or is the process not clear enough?
- interview process. Using standard interviewing techniques alone can lead to biased hiring decisions. However, when you combine structured interview techniques with people analytics, such as personality, interest and expectations, you can obtain a clearer view of each candidate. These insights give your HR team the power to hire for job and boss fit.
- selecting the right candidate. A data-driven talent acquisition strategy can help you identify the best candidates for the role and your company. After interviewing manufacturing talent, people analytics can pull together a more robust picture of which candidates have the technical knowledge and hands-on skills for the roles you need to fill.
- compensation package. Selecting the right candidate is only half the battle. You also must entice the candidate to accept your offer. If your company’s offer acceptance rates are lower than desired, people analytics can help you tailor compensation packages to meet the expectations of target candidates.
- new hire retention. One of the best ways to track the success of your recruitment strategies is through new hire retention rates. While basic HR metrics can help you track these rates, people analytics allows you to determine why new hires are leaving, such as inadequate training or toxic managers.
Data analytics in recruitment lets you better understand the ‘why’ behind the metrics, so your company can identify parts of the hiring process that are working and aspects that need adjusting.
People analytics provides real-time insights so your organization can make business decisions based on the current state of the Canadian workforce. This capability is critical when building a resilient workforce. For instance, real-time analytics gives your company the advantage of pinpointing skills gaps within the workforce, enhancing employee engagement on all levels, configuring and allocating teams, and identifying workers ready for promotions.
As an example, consider the growing skills gap, which is forcing companies to focus on in-house upskilling and talent growth. In a recent survey on workers’ skills, Statistics Canada found that over 90% of large companies report skills gaps, and 66% admit to difficulty in finding new talent. When looking within the company for talent, many companies rely on performance reviews.
However, performance reviews may not be the best indicator of who would benefit from upskilling or reskilling. The problem is that some things can’t be rated on a performance review, and results are often opinion-based rather than fact-based. People analytics, on the other hand, pulls all the information about a worker together, such as special training, production levels, leadership roles, quality and previous jobs, to provide an overall view of the employee’s talent.
Whether you’re viewing analytical talent data on an individualized basis or on your entire workforce, this real-time data allows your company to make informed decisions on allocating talent to improve productivity.
Recent studies show that companies with diverse workforces tend to outperform others by as much as 36%. If your company, like many high-volume employers, has set diversity, equity and inclusion goals, people analytics can help it achieve these objectives. Current analytical data can also help you determine why your organization is struggling to attract and retain diverse candidates.
Perhaps your management team lacks female leaders, for example. Using talent analytics to better understand what is keeping female workers from applying for management roles can help you develop effective strategies to meet company diversity goals.
Ultimately, real-time insights based on talent acquisition analytics can help your organization save money. First, improved hiring outcomes can reduce recruitment and onboarding costs. Secondly, accurately predicting future talent needs allows your company to prepare for upcoming shifts in operations, such as automation.
obstacles to people analytics
People analytics is a methodology that revolutionizes how employee data is stored, analyzed and used so businesses can make informed decisions. However, there are a few things you need to be careful of when utilizing people analytics tools.
tech without touch
Analytical data can provide a wealth of valuable information, but it can’t replace the human aspect. It’s crucial that your company refrains from focusing so much on technical data that it fails to work toward building relationships with its workers. At Randstad Canada, we know that it’s only through the combination of ‘tech and touch’ that meaningful change can take place.
bias in analysis
There's also a danger of bringing bias into the people analytics process. In some cases, business leaders have preconceived notions about the data they're collecting. While oftentimes unconscious, this type of mindset can alter the results. It can entice you to only collect the data and analytical information that matches your opinion. Setting up parameters to ensure this type of bias doesn’t impact your results is critical.
Any type of data collection process brings with it privacy concerns. It’s vital that your company takes these concerns seriously and develops a system compliant with Canadian employment laws and GDPR.
Before effectively managing a people analytics strategy, you must acquire the right skill sets to correctly collect and analyze this data. While some members of your HR team may have taken an HR analytics course, people analytics requires a higher level of experience. Consider bringing in talent with a people analytics certification or use Randstad's Inhouse Services to make the best use of your data and budget.
When utilized effectively, people analytics can make your business resilient enough to overcome current and future disruptions to the workplace.
Download our guide, 7 things you should know about people analytics, to learn more about how this innovative analytical tool can help your company.