Leveraging people analytics to drive success

Leading organizations that leverage people analytics are powering successful talent management strategies and adding more value to the HR function than ever before. They’re proving that when properly used, analytics can enhance strategic decision-making, increase returns on investment and break down organizational silos.

In this article, we provide important guidance for leaders who would like to leverage their own people analytics to drive success.

Defining people analytics

People analytics is the process of analyzing internal quantitative and qualitative people data together with business performance data to draw insights that can be used to improve key people and business outcomes.

Some may also refer to people analytics as “HR analytics” or “workforce analytics.” There is, however, a narrow distinction between people and HR analytics. While HR analytics historically involves analyzing HR data to enhance specific HR functions, people analytics is a broader, holistic term that involves analyzing all people-centric data that can be leveraged to improve the organization’s people and business strategy.

Key benefits

People analytics offers several important benefits:

Improved decision-making

First, and most prominently, people analytics improves decision-making. In fact, according to a now well-known PwC survey of over 1000 senior executives, highly data-driven organizations are three times more likely to report improvements in decision-making than those in organizations that rely less on data. And according to findings from the Brightmine (formerly XpertHR) People Analytics 2024: Survey Report, organizations that used people analytics effectively were more likely to see improvements in key performance indicators.

Specifically, analytics improve strategic decision-making by increasing accuracy and objectivity while saving leaders valuable time they would usually spend on research or consultants. People analytics, by way of advanced predictive analytics, also enhances strategic planning by identifying trends and patterns in workforce data that leaders can use to inform future decision-making.

Increased efficiencies

In addition to improving decision-making, people analytics helps create efficiencies in HR by revealing negative trends, gaps or other potentially inefficient practices. Once identified, leaders can take immediate steps to reallocate resources.

Functions and metrics

People analytics can be leveraged to improve key functional areas in HR by measuring relevant metrics. Important functional areas include:

• Recruitment.
• Performance and development.
• Engagement and retention.
• Diversity, equity and inclusion (DEI).
• Compensation and benefits.
• Compliance and risk management.

Relevant metrics, which are specific quantitative measures that allow you quantify performance in a key functional area, provide direction to an analytics strategy.

Which metrics you choose to measure is important, as it determines which insights you use to inform your decisions. And there is certainly no shortage of options. The table below reflects a few common metrics and which HR practice areas they’re generally associated with:

Common HR metrics by functional area

Functional area	Common HR metrics
Recruitment	• Cost per hire • Time to fill • Offer acceptance rate • Applicants per opening • Applicant diversity
Performance and development	• Revenue per employee • Performance review scores • Skill ratings • Customer ratings • Time to full competency
Engagement and retention	• Voluntary and involuntary turnover rate (particularly within the first year) • Retention rate • Average employee tenure • Internal promotion rate • Absence rate
Diversity, equity and inclusion	• Pay equity • Diversity of representation in specific job roles, locations, teams, levels, etc. • Accessibility ratings (website, software, building accommodations, etc.) • Rate of successful accommodation requests
Compensation and benefits	• Benefits enrollment rate • Benefits use rate • Employee benefits satisfaction rate • Average salary • Average total compensation • Compa-ratio

When reviewing and selecting metrics, remember:

• Metrics are multifunctional. Metrics are often used to evaluate the performance of several practice areas. For example, organizations reviewing their DEI strategy often use several metrics across the spectrum of HR functions and evaluate them through a DEI lens (e.g., investigating whether trends exist along demographic lines in promotion, retention or even benefits use rates).
• Context matters. Measuring a single metric is generally not enough to paint an accurate picture. To get to the root cause of an issue, or to accurately forecast future outcomes, review key metrics together with other relevant information to provide appropriate context.

Taking action with people analytics

Leveraging analytics to improve people and business practices is no small undertaking. It involves not only choosing metrics and analyzing data, but also finding the right partners, setting clear expectations and ensuring alignment with other business priorities. Below are key considerations to keep in mind when transforming your analytics strategy into action:

Take a “data-first” approach

In a time when HR is rapidly transforming into a data-driven practice, and the high-impact benefits of people analytics are well-proven, it’s no longer enough to be data literate. HR teams must become data-first to be able to effectively leverage analytics to improve business processes.

Unfortunately, many organizations continue to struggle to make this jump. A well-known cause, which was further highlighted by the recent expansion of AI technology, is the data skills gap within HR teams—employees just don’t have the knowledge or skills to collect, analyze and act on people data. In fact, according to the Brightmine people analytics survey report, data literacy was one of the most frequently cited skills gaps among HR teams that were not effective at using people analytics.

To become “data-first,” HR teams experiencing a skills gap will need to focus on upskilling team members. This will likely require internal training and personalized coaching on key analytics principles, best practices and technology.

In addition to having the right skills, data-first HR teams generally use data as the foundation for key HR initiatives or projects, rather than an additional tool or something to be used only retrospectively. In these teams, data plays a central role from planning to execution.

Set clear goals

People analytics insights are vast, but to become actionable, they need direction. When shaping your analytics strategy, consider the organization’s long- and short-term analytics goals and how they align with the greater people strategy.

Your goal may be to improve certain DEI metrics, such as pay equity, within the next five years. Or, it may be to improve employee retention rates through internal career development and coaching. Whatever the goal, ensure that it is specific and tied to selected metrics that can be measured using accessible data.

Find the right partner

Finding the right people analytics software to help transform data into actionable insights is invaluable. The right analytics partner will enable you to do the following:

• Centralize, view, filter and manage data.
• Maintain data security and employee anonymity.
• Provide highly accurate results.
• Review results against personalized goals and targets.
• Include hypothetical modeling and predictive data analysis capabilities.

Most software partners specialize in analyzing specific metrics or specific HR functions, such as pay equity or employee engagement. Due to the large investments required to access several different software solutions, determine whether your potential partner has the appropriate integration capabilities to plug into your existing software.

Work cross-functionally

One of the greatest benefits of people analytics is that it helps break down silos between HR and the rest of the business by helping leaders understand how people practices impact business outcomes. To reap this benefit, however, HR needs to ensure its analytics strategy aligns with the greater business strategy. This way, the organization can measure and act together towards the same goals.

So, when forging a new path with analytics, be sure to include stakeholders from across the business from the beginning. Including diverse stakeholders will help you gain buy-in should new resource investments be required, and it will help your team gain new perspectives that may inform your analytics strategy.

Also, since these projects often involve sensitive employee and business information, be sure to keep your in-house counsel in the loop as well.

Measure success

Finally, no people analytics strategy is complete without measurements of success. Measuring success can take many forms. The key is to make sure that you don’t just monitor metrics over time. Instead, be sure to zoom in on whatever interventions or changes the organization made and investigate how those changes made (or failed to make) an impact.

Conclusion

People analytics has the potential to transform an organization’s HR and business practices, and in today’s data-driven workplace, they’ve become a crucial strategy for driving people and business success. To effectively harness the power of analytics, you need the support of a data-first HR team, clear goals aligned with your people and business strategies, the right partner, and cross-functional buy-in.