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What is people analytics?

What people analytics is, how it’s different from HR analytics, how to build capability

Published by Orgvue 

People analytics has grown in popularity in recent years. It’s now the most quoted skill on LinkedIn for HR managers and many large organizations have a dedicated people analytics team. In this article, we look at what people analytics is, how it’s different from HR analytics, and how to build capability and overcome common obstacles.

Interest in people analytics has grown significantly in recent years. In 2017, Deloitte found that 69% of companies are using data for people analytics, whereas in previous years this figure was 10–15%[1] and analytics was considered a niche discipline.

Now, people analytics is the most quoted skill on LinkedIn for HR managers[2] and many large organizations have a dedicated people analytics team.[3] Research makes a compelling business case: a study by Nucleus Research shows that people analytics returns US$13 for every dollar invested[4].

Defining people analytics

So, what exactly do we mean by ‘people analytics’? Let’s start with a simple definition.

According to industry expert David Green, people analytics is “using insights from data to support decision-making [that] drives business strategy, improves productivity, and enhances the employee experience[5].

As a point of comparison, CIPD defines people analytics as the “use of people data in analytical processes to solve business problems” and “inform more evidence-based decision making.”[6]

With Orgvue, we see people analytics as the practice of extracting information from people data and business data to provide enriched insights into the workforce, how it operates, how much it costs, and how it changes over time.

People analytics vs HR analytics

People analytics is often used interchangeably with HR analytics, but there are some clear distinctions. HR analytics relates to engagement, performance, and retention. It essentially helps HR managers to quantify and measure their success.

People analytics on the other hand is tied directly to business strategy. It combines HR data, such as payroll and absence, with business information like operations performance data to inform decision-making on business outcomes, such as employee productivity and profitability.

This video summarizes the industry view on what people analytics is and how it differs from HR analytics.

Delivering business impact with people analytics

People data is critical to helping businesses make decisions such as whether the organization has the right number of employees and skill levels to deliver on the business strategy, says David Green.

Research by the Human Capital Institute found that effectiveness in core people analytics capabilities, including data aggregation, skills training, and analytical insight, encourages stronger revenue growth.[1]

Investing in people to bring in new skills, establishing collaborative relationships between HR and the wider business, and using technology to collect, integrate, and dynamically visualize data are foundational to building a solid people analytics capability.

Blockers to effective people analytics

We find that organizations often struggle with data quality and integration because they’re trying to use their HR system of record for analytics. The trouble is these systems don’t have access to all the necessary data sources or technology features, which results in insight for HR rather than strategic impact for the organization.

Meanwhile, not having the right people to develop capability is holding organizations back. 62% of HR professionals say that acquiring the right skills is single biggest barrier to people analytics [2].

Poor collaboration between HR and Finance also stifles progress with people analytics. As a minimum, you need to integrate HR and financial planning to deliver business impact. Good collaboration should be systemic and process-driven, but it will also require some cultural change to embed this way of working.

Steps to building capability in people analytics

Building a people analytics capability is the first step on a journey to a new, forward-looking approach we call organizational planning and analysis (OP&A). Although this may take time and there will be stages to the journey, here are a few pointers to get you started.

  • Begin to integrate and aggregate data from multiple sources and aim to automate this process.
  • Start with smaller projects, be hypothesis driven, and use data to test your assumptions.
  • Build a multi-skilled team to address skills gaps and look for support from other parts of the business and outside experts if needed.
  • Collaborate regularly with colleagues in Finance and across the business to ensure analytics projects are aligned with business outcomes.
  • Identify data-driven actions that can demonstrate return on investment. If you’re not clear what business outcomes your analytics will produce, then reassess before you start.

[1] Human Capital Institute (2017) Developing people analytics capabilities

[2] Making people count: 2019 study on people analytics

[1] Deloitte (2017) High-Impact People Analytics

[2] LinkedIn (2018). The Rise of Analytics in HR: The Era of Talent Intelligence is Here. EMEA, North AmericaAsia Pacific.

[3] Corporate Research Forum (2017) Strategic Workforce Analytics

[4] Business Wire (2014) Business Analytics Returns $13.01 for Every Dollar Spent, Up from $10.66 Three Years Ago, Nucleus Research Finds

[5] David Green (2019) The rise of people analytics

[6] CIPD (2019) People analytics factsheet