How to Measure the Value of People Analytics

According to Google Trends, the search term “people analytics” was almost nonexistent until about 2008. Since then, the term has seen a continued upward trend in interest. What does that mean? It means that people analytics has become part of the conversation for many businesses.

Based on Deloitte research, “77% of all organizations believe people analytics is important.” More than half (52%) of organizations that use people analytics rate themselves as excellent at conducting multi-year workforce planning, while an additional 38% rate themselves as adequate.

77% of all organizations believe people analytics is important. Click To Tweet

What is People Analytics

But before we go any further, it’s important to define exactly what we’re talking about. What is people analytics? It’s the use of people-related data, from a range of sources, to guide strategic decision-making throughout an organization. Essentially, it involves analyzing people’s current behaviors to predict future behaviors.

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That analysis can be applied to any number of areas: Recruiting, which candidates will fit best with the company; development, which current employees will be the most effective managers; turnover, which employees are most likely to leave within the next six to twelve months; performance management, which policy/process changes will lead to more effective, productive employees; culture, what changes can be made to improve morale and boost engagement.

For businesses, the value comes in being able to predict which strategies or initiatives will show the highest ROI. This can help leaders determine what to invest in and what the smartest use of resources would be.

The progression looks like this: Data collection; people analytics; data-driven decision-making; improvement in employee hiring, development, and engagement; improved workforce productivity; return on investment; competitive advantage.

Common People Analytics Metrics

The following are some areas where people analytics can be applied:

Employee Engagement

  • Percentage of employees who feel they have the necessary tools and resources to perform well
  • Percentage of employees who report that they are happy at work

Recruitment

  • Average time to hire
  • Turnover rates within the first year
  • New hire demographics
  • Number of candidates from various recruiting efforts (LinkedIn, Career Fairs, etc.)
  • Manager satisfaction with new hires

Leadership

  • Percentage of employees who feel their manager demonstrates strong leadership skills
  • Average number of one-on-one meetings per week/month
  • Average tenure of each manager’s direct reports
  • Average employee engagement ratings for each manager’s direct reports

Retention and Turnover

  • Average tenure of employees, broken down by demographics
  • Turnover in management positions
  • Diversity turnover
  • Overall cost of turnover

Workforce Productivity

  • Dollars spent on employees per dollar of revenue

HR Monetary Impact on Business

  • Dollars spent on HR initiatives per dollar of revenue, YoY
The goal of analytics should always be to relate people analytics directly to organizational goals. Click To Tweet

These numbers alone won’t tell the whole story, but they provide a starting point for in-depth analysis. The goal should always be to relate people analytics directly to organizational goals, so HR leaders should consult with executives to determine which metrics would make the strongest strategic impact on the business.

Want to learn more about HR Analytics? We’ve got you covered. Check out our post, ‘Everything You Need to Know About HR Analytics’ next!

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