People analytics enables organisations to make strategic decisions that positively impact employees, and thereby boost efficiency. Through targeted analysis, companies can identify the workforce’s needs and potential areas of growth. It supports employee development and fosters a culture built on transparency and engagement.
According to a recent survey, only 22% of HR professionals believe their organisation is effectively using people analytics. The global data analytics market is continuously growing at an annual rate of 28.9%, and HR analytics is likely to be a key part of this growth. Read on to learn more about becoming an early adopter of people analytics:
What exactly does people analytics mean?
People analytics is the targeted collection and analysis of data about employees. It addresses questions such as “What boosts performance and satisfaction within the team?” and “What does the age distribution and skill set look like?”
Specialised analyses, like workforce structure analysis, provide a clear overview of the workforce – from age, to qualifications, to skill gaps – and help with workforce planning. By employing data-driven HR strategy, organisations can create strategic value by streamlining employee development and resource deployment.
Is it gut feeling or data? – Quality and collection are key to people analytics
In many departments, like finance or marketing, the use of data-based analysis tools is well established. However, HR departments often lack digital analysis, meaning that crucial decisions regarding employee development and retention are frequently based on experience and intuition.
This ‘gap’ is particularly noticeable in strategic decisions such as succession planning or analysing the causes of high absenteeism.
A valid and up-to-date data foundation is therefore the first step toward robust analysis and strategic HR management. For an impactful analysis, it is not only large volumes of data that matter but, above all, high-quality, well-structured data. Information about the workforce must be reliable, relevant, and well-maintained to yield actionable insights. Analysis tools like SAP SuccessFactors help centralise, update, and connect data through its various functional modules.
Why effective people analytics is worthwhile
Employing people analysis to gain insights into the workforce offers a range of tangible benefits:
- Making informed decisions: People analytics provides insights into employee behaviour and needs. This data allows decisions to be based on facts rather than assumptions.
- Boosting productivity: By identifying common blockers to productivity such as skill gaps and time spent on non-productive work like meetings, organisations can streamline processes and increase productivity.
- Minimising risks: Early warning signs, such as declining satisfaction and rising turnover rates, can be proactively identified and addressed before they negatively impact the organisation’s performance.
- Attracting and retaining talent: By strategically deploying people analytics, organisation’s can provide tailored support to employees, including employee development and learning programs, incentives for high performers, and defined career lattices. A continuous focus on their growth strengthens employee retention.
- Insights into organisational culture: People analytics can reveal how the workforce perceives the organisation, and gauge their satisfaction with the organisation.
Read more on the topic
The three pillars of people analytics
An effective people analytics strategy is built on three essential pillars:
1. Employee data
In addition to personal data, this includes performance and development metrics, turnover rates, satisfaction, and engagement scores. These data points provide insights into what is working well in the organisation, and where there is a need for action.
2. Analytical tools
Reporting and analytical tools, including tools that are built into your HRM solution, enable large-scale collection and analysis of people data. Such tools make it easier to consistently capture data and make it centrally accessible.
3.Culture of people analytics
Successful companies foster a culture that values transparency and accountability. Leaders and employees alike should be encouraged to learn from data-driven findings and use it for improvement. Achievements and errors must both be viewed as opportunities for growth and development.
The process of people analytics: Five steps to success
A systematic approach to implementing people analytics boosts efficiency and fuels data-driven decision making:
1. Collect data: Data from HR systems, feedback tools, and performance evaluations are consolidated in a central location. Systems like SAP SuccessFactors Workforce Analytics play a role here, collecting and connecting data.
2. Clean data: The collected information is cleared of errors and duplicates and formatted uniformly. This lays the foundation for reliable analysis.
3. Develop analytical models: Statistical and data science methods help identify patterns and analyse relationships – for instance, between motivation and turnover or performance and engagement.
4. Interpret results: Results are prepared in reports and dashboards, providing leaders with a basis for decision-making, highlighting key concerns and opportunities.
5. Implement and monitor actions: These insights are used to inform actions, and continuously monitor their impact. Further analyses allow for adjustments and help identify new challenges early on.
Types of people analytics
Diagnostic analysis
This type of analysis investigates the causes behind certain phenomena, such as high turnover rates within specific departments or age groups. It examines the impact of background, motivations, and other influential factors on employee behaviour, aiding in the development of appropriate countermeasures.
Descriptive analysis
Descriptive analysis outlines the current situation and key metrics of the workforce, capturing aspects like turnover rates, age distribution, and the ratio of full-time to part-time employees. This provides the organisation with an overview of the status quo and ongoing trends within the workforce.
Predictive analysis
Using historical data and forecasting models, predictive analysis aims to anticipate future developments. This allows companies to detect trends early, such as skills shortages in specific areas, and take proactive steps, like implementing targeted training programs.
Prescriptive analysis
Prescriptive analysis goes a step further by deriving specific recommendations for action from the insights gained. Based on the analyses, suggestions are developed on how to improve employee performance, motivation, and satisfaction—such as adjusting compensation, enhancing leadership culture, or implementing tailored employee development programs.
Workforce structure analysis
This analysis provides insights into the composition of the workforce—such as age, gender, departmental affiliation, or salary levels. It helps companies identify potential imbalances and implement measures to promote diversity and equal opportunities.
SAP SuccessFactors: The tool of choice for people analytics
To fully harness the potential of people analytics, companies need not only valid data, but also powerful tools that can analyse this data and provide clear insights. SAP SuccessFactors offers a central solution to capture, structure, and utilise complex HR data as a foundation for strategic decisions. Unlike isolated systems, SAP SuccessFactors integrates all relevant HR data on a single platform.
SAP SuccessFactors provides a central solution to capture, structure, and uses complex HR data as a basis for strategic decisions. Unlike isolated systems, SAP SuccessFactors centralises all relevant HR data in a single platform.
- Interactive dashboards and reports: SAP SuccessFactors offers personalised reports and dashboards that allow managers and HR professionals to view key metrics at a glance. This helps in making quick, informed decisions.
- Drill-down function: This feature enables data filtering by specific categories or dimensions to gain detailed insights. For example, decision-makers can examine turnover rates by department or age to uncover deeper patterns.
- Standardised HR metrics: SuccessFactors provides over 2,000 HR metrics that companies can use as a foundation for their analyses. The standardised definitions create a unified data foundation, enabling various management levels to interpret and utilise data accurately.
- Talent and competency management: SuccessFactors not only assists in filling vacant positions with the right talents – it also supports strategic succession planning. Pre-configured profiles and a competency catalogue show, at the push of a button, the distribution of skills and qualifications in the workforce and how these can be further developed.
Targeted, data-driven people analytics provide valuable insights into employee satisfaction and performance, among many other areas. This helps to base business decisions on a reliable foundation. Data-driven analyses strengthen HR strategy and contribute to developing a long-term successful and motivating organisation culture.
Zalaris can help you supercharge your HR strategy
As an Expert SAP Partner with over 25 years of experience with SAP implementation, we support your efforts to modernise your HR analytics. We can help you accelerate your digital transformation with a pre-configured, ready-to-implement solution: PeopleHub powered by SAP SuccessFactors, boasts impressive reporting and analytical functions. Reach out to us for a free consultation and start your HR transformation journey today.