People analytics, when used broadly, refers to the HR department’s pursuit of data-driven insights about a company’s workforce. People analytics is the science that transforms these data into useful insights that increase the effectiveness of the organisation. Frederick Winslow Taylor’s 1911 book The Principles of Scientific Management, which attempted to apply engineering principles to the administration of people, is where the concept of people analytics, the application of scientific and statistical approaches to behavioural data, first emerged.
The amount of data accessible to analyse and forecast employees’ behaviours will continue to rise tremendously, opening even greater potential for management through technology and data in a world of work that is increasingly virtual. The identification, development, management, and control of an organization’s employees can be transformed through people analytics. “People analytics” thus refers to a novel, quantitative, evidence-based, and data-driven approach to managing the workforce. This strategy seeks to improve the effectiveness of key human resource (HR) responsibilities such as workforce planning, recruitment, development, and training in addition to optimising both employee and organisational performance. People analytics is also known as HR analytics or workforce analytics. In recent years, there has been a significant rise in the adoption of people analytics as organizations recognize the value of data-driven insights for improving their human resource management practices. Advanced organisations that have highly developed people analytics processes outperform their contemporaries. This superior performance is a result of the organization’s highly developed people analytics practices and solutions, amongst other factors. Across all large organizations, the majority (54%) use people analytics to improve HR effectiveness today. Here are some key trends and factors contributing to the rise of people analytics:
- Increased availability of HR data: With the digitization of HR processes and the widespread use of human capital management (HCM) systems, organizations now have access to vast amounts of HR data, including employee demographics, performance metrics, engagement levels, turnover rates, and more. This data can be analysed to gain insights into various aspects of the workforce and inform HR strategies and decision-making.
- Advancements in technology: With the advent of big data, cloud computing, and advanced analytics tools, organizations now have the ability to collect, store, and analyse vast amounts of data related to their workforce. HR departments can leverage these technologies to gain insights into employee behaviour, performance, and engagement, leading to more effective HR strategies and practices.
- Focus on employee experience: Employee experience has become a top priority for organizations as they seek to attract, retain, and engage top talent. People analytics can provide insights into the factors that impact employee experience, such as work-life balance, diversity and inclusion, and career development, helping organizations create a more positive and engaging work environment.
- Emphasis on workforce planning and talent management: Workforce planning and talent management are crucial for organizations to ensure they have the right talent in the right place at the right time. People analytics can help organizations identify skill gaps, forecast future talent needs, and assess the effectiveness of talent management programs, enabling them to make data-driven decisions to optimize their workforce and talent strategies.
- Predictive analytics: People analytics is moving beyond descriptive analytics to predictive analytics, which uses historical data and statistical algorithms to forecast future workforce trends and outcomes. Predictive analytics can help organizations anticipate talent needs, identify high-potential employees, and mitigate workforce risks, enabling them to make proactive decisions and optimize their workforce strategies.
- Privacy and ethics: As people analytics rely on employee data, organizations need to ensure that privacy and ethical considerations are addressed. Compliance with data protection regulations and local data privacy laws, is critical to ensure that employee data is collected, stored, and used in a responsible and ethical manner.
The rise of people analytics can be attributed to factors such as increased availability of HR data, the need for evidence-based HR practices, focus on employee experience and engagement, emphasis on workforce planning and talent management and the drive to gain a competitive advantage through data-driven HR. As organizations continue to embrace data-driven decision-making and leverage the power of analytics, people analytics is expected to play a crucial role in shaping the future of human resource management. However, it needs to be borne in mind thar while coaches, consultants, and trainers continue to advise organizations to foster a culture of empowerment within their workplaces, surveillance for people analytics may have the opposite effect and lead to a hostile work environment. Companies should emphasize in discussions with employees how monitoring and analysis can be utilized holistically — as opposed to a narrow perspective — to help employees develop as individuals. Therefore, it is important to understand that gathering and analyzing employee data can be beneficial to the company, but only if it doesn’t primarily treat employees like quantifiable objects in a machine-driven world. People analytics have been gradually changing the way HR functions over the last ten years. We hope that HR continues to advance into a more data-driven and evidence-based discipline where choices are made in the best interests of all stakeholders, including employees leading to a better understanding of human behaviour in the workplace.