You might think that a company’s greatest value is in its physical assets such as warehouses, machinery, software, or other tangible resources. However, Ocean Tomo found that intangible assets have reached 90% of S&P500 market value. Intangible value is a non-monetary value that is without physical substance. For example, the value that an idea sparked from an individual employee brings to a company is intangible. That’s where people analytics come in.
Defining people analytics
First, what is people analytics anyway? People analytics is the collection and analysis of workforce data that companies and organizations use to improve people-related outcomes. In short, these professionals help inform all people-related decisions within a company, from HR to talent acquisition.
An organization’s workforce data fuels people analytics. Professionals in this field utilize data on compensation, benefits, career path, skills, demographics, and just about everything else that has to do with people as they relate to the workforce. People analytics is also referred to as HR analytics, workforce analytics, talent analytics, and even human capital analytics (which focuses heavily on the capital humans bring to a company).
Expert, Amit Mohindra, stated, “People analytics describes and quantifies the people-related component of organizations’ intangible value to sustain and enhance it.”
Where should people analytics sit within a company?
In most organizations, people analytics sits within the HR department. People analytics aims to help HR define their company culture, find the types of employees they’re looking for, and improve the retention of high performers. HR focuses on developing a company’s people, and people analytics provides HR with the information to do just that.”
Think of it this way: talent acquisition focuses on finding new employees for a business or organization, whereas people analytics cares most about the current employees. Although, people analytics data can inform the talent acquisition process within a human resources department.
The number of people analytics professionals within an organization typically grows in scale depending on the number of employees. Some smaller companies have one person focusing on people analytics, while larger companies have entire people analytics departments. Typically, the larger the organization, the more people employed, the larger the people analytics department.
The human resources professional with a strong people analytics background and skill set is ideally positioned to offer leadership and guidance toward organizational strategy and provide valuable insight into company functions, especially regarding people. People analytics professionals are data experts, as well as strategists. They use analytics to understand and optimize workforce data which in turn improves people-related outcomes.
Five ways data assists people analytics
People analytics professionals should start with assessing their strategy and then allow data to drive their decisions and outcomes in key areas such as:
Let’s dig into each of these a bit further.
1. Workforce planning
Workforce planning encompasses everything involved with assessing your current workforce and planning for future needs. First, organizations assess talent skills and if they are in the right roles based on company needs and future goals. Then, people analytics professionals assess if their current workforce skills can be developed to fit future needs or if they need to recruit externally for skills or sheer workforce volume.
For example, let’s say a call center forecasts a big spike in call volumes and needs to hire more people. They should think through which roles they need filled, which skills are essential for those roles, what locations they should recruit for, and whether or not the positions can be remote. These type of answers also help employers determine whether they should pursue a full-time, part-time, or contract-based hiring strategy.
2. Compensation
When employees are considering where they will work, compensation is a crucial factor in their decision. Offering competitive compensation is vital in recruiting and retaining employees. Data regarding compensation assist people analytics professionals in ensuring their organization is paying competitive wages. How? Data can show what competitors are paying for similar jobs, what hiring stipends are being offered, and can even anticipate wage increases across the market. This is helpful not only in recruiting employees but in retaining existing employees as well.
3. Diversity, Equity, Inclusion, and Belonging
Organizations continue to invest resources and devote attention to diversity, equity, inclusion, and belonging initiatives. However, they may struggle to measure the success of those initiatives without applicable data. Data provides valuable insight that supports and measures DEI&B efforts. For example, a diversity profile, gathered from data, shows how their diversity representation stacks up against competitors.
More importantly, organizations can assess if their workforce diversity profile reflects the place where they are based with diversity benchmarking. Suppose the diversity profile of a company is 10% BIPOC (Black, Indigenous, and People of Color), but the demographics of the population within that city are 70% BIPOC. In that case, people analytics professionals know there is work to be done to bridge that gap.
4. Skill gap analysis
As people gain experiences, education, and training, they gain skills. Data can assist organizations in assessing what skills are most applicable to the current job market, which are gaining relevancy, and how skills translate to other jobs. In addition, data from a skills gap analysis can assist in determining skills needed for a job, skills a potential candidate has (within or outside of an organization), and identifying gaps. Many skills are either transferable between jobs or are developed through training. With this knowledge, data can lead people analytics professionals in making decisions about people-related goals for their organization.
5. Career pathways and internal mobility
Organizations can measure their existing workforce’s skills to make strategic career pathways for employees and internal mobility within their company. Industry and institutional knowledge are essential, so retaining employees is beneficial in many ways for organizations and employees. People analytics professionals assess all data regarding their current workforce to create career pathways that funnel employees through positions that further their skill set and experience each step of their career.
Investing in what matters most
Data can support several aspects of people strategy, such as talent management, performance management, and compensation management. People analytics professionals help organizations understand, manage, and engage their workforce. Investing in a people analytics strategy is investing in your people. Data helps you do just that. After all, people are the most intangible asset and valuable resource!