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6 Reasons Why HR Needs Data And People Analytics

People analytics or HR analytics is described as the process of using data in analytical processes to solve business problems. This process uses employee-related data collected through HR systems, such as payroll, human resource management system and leave management system, and business performance indicators, such as operations performance data, to provide insights about the workforce and HR policies and practices. These insights ultimately facilitate evidence-based decision making.

The growing popularity of people analytics is evident. According to a report by Corporate Research Forum, 69% of organisations with over 10,000 employees now have a dedicated People Analytics team. Why have people analytics become an HR imperative today? Here are 6 reasons why:

Existing employee data can be harnessed for workforce insights

Analytics is built on the foundation of data. And data has been increasingly more accessible with technological advancements over the years. Cloud-based servers allow for almost infinite storage of data compared to physical storages. Automation facilitates easy retrieval of data depending on need and scenario. This data has traditionally been used for reporting key metrics and performance, such as number of resignees or new hires or timesheet tracking. With enhanced analytics tools today, this data can be further harnessed for deeper workforce insights, including trends analysis and even predictive analytics.

Consolidation of data from multiple sources for deeper and actionable insights

As business functions today transition to intelligence tools, this creates a network of information that flows in and out of multiple business systems. For example, human resource management system (HRMS) today is commonly linked to finance or leave management systems. Such a network creates a central repository of data where critical employee and workforce data are being collected and stored. Once HR is able to access this central database, it can unlock deeper workforce insights and trends that were previously not possible with just a silo HR system.

Predictive people analytics prepares the workforce for the future

As people analytics uncover historical insights and trends, this paves the way for predictive trends. With the vast amount of people data available, organisations can make reasonable assumptions about their workforce in terms of productivity levels, new hires, or turnover rates. These workforce predictions buy time for the organisation to prepare their workforce for the future, be it through provision of career development opportunities or creating targeted solutions based on respective departments or career levels.

Reduction in operational complexities with enhanced data and analytics

Aside from workforce insights, people analytics also offer a glimpse into the workforce’s productivity levels. If a particular team or department is not functioning at their optimum or attaining the targets set for them, it may be due to the incumbent itself, inefficient processes and workflows, or a combination of both. By integrating people analytics with operational metrics, business leaders are able to determine and take action to streamline potential work efficiency, thereby increasing the team’s and overall productivity levels.

Creation of an agile and engaged workforce

With The Great Resignation and increased talent crunch that organisations are facing today, it becomes increasingly important to engage employees while providing them with upskilling and cross-skilling opportunities in order to remain agile. This also helps with attracting and retaining key talents within the organisation. Organisations can start by identifying employee groups that are disengaged or unmotivated, and leverage analytics to determine the root cause. This two-pronged approach allows business leaders to tailor solutions and initiatives in order to boost employee’s happiness and engagement levels.

Cost reduction and operational efficiency

According to a report published by Oracle, human capital costs can account for up to 70% of a business’ operating expenses. By tracking key HR metrics and understanding its linkage to finance (such as revenue, profit margins, etc), organisations can optimise their human capital spend without compromising on quality. For example, businesses should track HR metrics such as turnover rates and measure its impact on operational or financial KPIs to better understand the overall cost impact. In short, look at financial and employee data simultaneously to determine key areas to focus and optimise spend.

While a successful people analytics function may seem to be reserved for large corporations with copious amounts of data, these takeaways apply to smaller organisations as well. People analytics today focus more on using data to draw linkages between employees and their impact on business value and operations. By embedding real-time people analytics into existing systems and applications, business leaders can leverage real-time data to derive insights and support the business in making data-driven decisions.


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