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The People Analytics Revolution

The use of data in HR is come to the fore

13Apr

Adoption of analytics in HR has, to date, been relatively slow in comparison to other departments. However, this situation appears to be changing, as HR departments begin to appreciate the impact that people analytics can have. According to Deloitte’s report ‘Global Human Capital Trends 2016’, 77% of all organizations believe that people analytics is important, while 82% of HR respondents view analytics in general as either very important or important. This is being reflected in some of the big investments being made in people analytics companies, such as Shoreditch-based specialists, Saberr, which recently raised £1m in a funding round led by the Angel CoFund.

Human capital is one of the hardest assets to quantify, yet is one of the most necessary components of corporate success. If you and you competitors are on a completely even footing, it’s human capital that your rivals will find hardest to replicate. People analytics pulls together HR and business data from all departments to build a picture of employees. It is addressing a wide range of challenges - analyzing flight risk to best ensure employee retainment, ensuring the highest performing candidates are recruited and promoted, and analyzing engagement and culture for optimal team dynamic.

In a Bloomberg Business article, author and Humanyze CEO Ben Waber points out that it only takes a minor behavioral adjustment, a slight tweak in workplace procedures and conditions, to make employees happier, healthier, and better at their work. Waber noted, ‘People analytics transforms our understanding of socialization in the workplace, the impact of office layout, and even concepts as ‘soft’ as creativity.’

Companies are now leveraging the insights from their HR data to great effect in a number of ways. Recruitment is one area where companies are seeing success. When Foot Locker faced high turnover in its retail athletics stores in 2010, the company adopted analytics to profile retail salespeople most likely to stay with the company on a long term basis. They then used a cloud-based software system to scan applicants’ online assessments and determine how closely candidates’ behaviors align with this profile. Not only has this system helped improve employee retainment, according to the retailer, it also means the company’s store managers spend less time trying to hire the right candidates.

Another of the most important areas where people analytics is having an impact is in improving culture and team dynamic. Research has found that 83% of venture backed start-ups in the US fail, and 65% do so as a result of team dynamics. By looking at algorithms, such as Saberr’s, organizations can judge whether a potential candidate will fit into a team, and whether adjustments need to be made to the dynamic to help staff work better.

eBay is an excellent example of a company that has used analytics to rectify cultural issues in the workplace. They put in place a team of organizational development experts and data scientists to measure the strength and adoption of its cultural values, using a mix of internal and external data metrics, as well thematic analysis and natural-language-based analysis on news articles and Glassdoor to get a view of the external market perspective of eBay’s culture.

The use of predictive analytics is not just useful for pinpointing issues though, it also helps to determine the best possible solution. For example, should an HR department find in the data that an employee’s behavior is indicating that they are likely to leave in the near future, they can use analytics algorithms to establish whether it would be best to offer them a pay rise, international redeployment, more leave, and so forth.

One of the main things that has held back people analytics in the past has been the lack of technical expertise in HR departments, but people with analytics backgrounds are slowly working their way in. Companies, like eBay, now employ industrial and organizational psychologists, statisticians, and analysts in their HR departments, using the sales pitch that it is an exciting and new area that never stands still. For HR professionals, it is up to them to facilitate the influx of this talent, and share skills and knowledge to develop both their own standing as analytics experts, while boosting the knowledge of those coming in around HR.

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