People Analytics: What it is and why it’s important

20 de May, 2024

In recent years, we have seen significant advances in data analysis. The ever-increasing amount of data that organizations are able to obtain and analyse has a very profound potential impact on their business. But it can also have an impact on the management of their human capital.

The knowledge that companies accumulate about their candidates and employees can make them better able to manage their people more effectively. It all depends on how prepared they are to collect, analyze and take advantage of the data they have.

Come and find out what people analytics is and what its great added value is for organizations.

What is people analytics?

People analytics refers to the collection and analysis of data related to people and the organization, with the aim of optimizing results in critical areas for the company. O people analytics allows HR managers to make decisions based on data and improve processes related to talent management, thereby enhancing the employee experience.

The data that HR managers have at their disposal can help them better understand employee behavior, expectations, needs and motivations. By working this data well, it is possible to draw insights that can be very useful for improving processes in areas such as recruitment and selection, performance management, productivity, engagement, compensation and benefits, among others.

Why is people analytics important?

Data-driven human resources management is seen as one of the major challenges for HR professionals in 2024. The dynamism and competitiveness of today’s job market demand it.

Aspects such as the new working models established during the pandemic, the entry of new generations into the workforce or the shortage of talent in some sectors highlight the importance of companies supporting their HR strategy with technology.

Harnessing the power of data allows companies to become more focused on their people, gaining competitive advantage and attractiveness in the job market.

1 – Recruitment and selection

Collecting and analyzing data should begin even before professionals become employees of the company. Even in the candidate attraction and recruitment phase, data can be very useful for measuring metrics such as:

Candidate experience: are recruitment processes too long? Are job advertisements not clear enough? Do interviews reveal any unconscious bias? It’s essential to store and analyze these types of perceptions so that you can optimize all these points of contact with candidates.
Cost of acquisition: this refers to the calculation of all recruitment costs, both internal and external (with recruitment companies, for example). Some costs may be more difficult to calculate – for example, the time spent by the HR team during the recruitment process – but this quantification is crucial for the company to know how efficient it is in hiring new workers.
Quality and efficiency in hiring: the existence of a history of data analysis allows companies to be more efficient in hiring, selecting candidates who are suited to the roles in question and the organizational culture. At the end of the day, this will help to reduce turnover.

2 – Productivity and performance

People analytics also plays a key role in monitoring the performance and results of the professionals who make up the different teams, making it possible to take decisions with a view to optimizing processes and the business:

Workload: monitoring employees’ projects and their performance can detect problems of excessive workload or, conversely, cases in which more tasks can be accommodated.
Productivity: analyzing historical data also makes it possible to correlate the execution of a given task and the average time spent doing it. Based on this history, it is possible to make forecasts and set individual and collective objectives.
Skills: people analytics also allows companies to assess the current skills of their employees and compare them with the skills needed in the future, according to the evolution of the business and the market. This analysis should make it possible to identify any gaps and help identify opportunities for upskilling or reskilling.
Absenteeism at work: absenteeism refers to the number of unplanned absences on the part of employees, which can be due to factors such as physical illness, mental health problems such as depression, stress or burnout, the need to support family members, among others. Although some of these absences cannot be avoided, a high rate of absenteeism can indicate problems in the workplace (reduced flexibility in working hours, toxic working environment, etc.). It is essential to analyze the reasons for absence and compare attendance levels between workers, and between teams, in order to identify potentially problematic aspects.

3 – Turnover

People analytics is also important for measuring certain metrics related to how many employees are leaving and for what reasons, the average turnover rate per department or the company’s retention rate. This data also makes it possible to carry out predictive analyses of which employees are most likely to leave the company.

All this data can be very valuable for developing strategies to reduce turnover. For example, let’s say you realize that a significant proportion of the IT team leaves the company after a year or so because they find better salary conditions in other companies. This means that, in order to retain and engage talent in this area, it may be necessary to review the compensation and extra-salary benefits policy.

Engagement rate: employees who enjoy working for the company and are involved in its mission and business objectives tend to perform better. For this reason, it’s important to monitor employee engagement levels and assess any discrepancies between teams. The engagement rate can be measured through an employee NPS, satisfaction surveys, or metrics such as productivity, collaboration or attendance and punctuality, for example.

4 – Diversity, equity and inclusion

According to the Workmonitor 2024 study, developed by Randstad, diversity, equity and inclusion are aspects that are increasingly valued by employees: 65% of respondents highlight gender pay equity as an important practice for them in an organizational context and 42% reiterate the importance of a diverse workforce.

Here too, people analytics can be very valuable. Use the data to understand where your organization stands in terms of gender parity (across the board and in management positions), the inclusion of people from different age groups, races, nationalities or the inclusion of people with some kind of disability or incapacity, etc.

If there is room for improvement in some or all of the topics, try to design a strategy that intrinsically promotes diversity, equity and inclusion.

5 – Cost optimization

Ultimately, rigorous and continuous analysis of internal data can also help companies reduce costs.

Whether it’s through greater efficiency in hiring, a reduction in acquisition costs or in the number of recruitment processes needed to meet the company’s needs, the implementation of measures that boost productivity or the investment in skills development plans that enhance the performance of professionals… these and other analyses can, on the one hand, help the company save money and, on the other, achieve better business results and grow.

We know that human resources data can often be confusing, scattered and difficult to aggregate and work with. However, that can’t be a reason not to start taking advantage of people analytics as soon as possible.

Continuing to put things off could cost you your company’s differentiation and competitiveness in the job market.

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