The use of people analytics in the business world

By: Keithly Tongai | Posted On: 2020-02-23 15:00:00 | Updated On: 2021-11-27 19:49:13 | Views: 369

People analytics, also known as HR analytics is the use of data and data analysis methods to identify, develop and manage the business side of the people.

In today’s data-driven world, HR analytics is helping to guide talent, management, and hiring decisions for organizations of all sizes and in all industries. Most organizations use metrics in HR to determine how they hire, retain, and compensate employees. Management of human resources takes a critical part within any organization, it features in any organization and is specifically designed to focus on the success of the employee in support of the strategic objectives of a company.

As Deloitte's Global Human Capital Trends 2016 study states, "77 percent of managers already view human analytics as a core priority ... In turn, companies are building human analytics teams, quickly eliminating legacy systems and merging different analytics categories inside HR into one strategic role." The same report found that 44 percent of the organizations surveyed using labour data to predict buses.

HR analytics help the managers of human resources become real strategic leaders. HR analytics is thus transforming the Department of Human Resource and the HR managers to function more like business partners and achieve organizational success. HR analytics empowers HR managers with detailed predictive analytics that determine the future, especially for companies that are looking for a more strategic position in driving business strategies.

In March 2015, the Wall Street Journal published an article titled: “The Algorithm That Tells the Boss Who Might Quit”. The article showed how Credit Suisse was able to predict who might quit the company using analytics. In addition, managers were trained to retain high performing employees who had a high flight risk. In total, this program saved Credit Suisse approximately $ 70,000,000 a year.

Other uses of people analytics

  1. Employee performance

This system allows a company to track its key performance metrics in real-time and measure each of its workers independently. Data analysis often identifies potential errors and work-related flaws which is a helpful insight that can be used to make things right in the short run. This is essential because Glassdoor’s research (2017) revealed that even the smallest increase in performance can grow company profit by almost $2.5 thousand each year.

  1. Financial compensation

Financial compensation is the basic factor of employee satisfaction. Employees have to make a decent living and their salaries are the first things they think about when they are looking for a job. HR analytics team will determine the best financial model for each member of the organisation using advanced analytics. It is especially relevant for large multinational organisations with many international branches, where salaries at all levels of the hierarchy are difficult to balance.

  1. Marketing

Most marketers may not know how to measure investment returns, which simply ensures they may not realize the ultimate results of their market campaigns. It is difficult, in such circumstances, to figure out if they are doing a good job. Data science can quickly solve that problem. It measures the reach and influence of all marketing activities, in particular those carried out through online advertising.

  1. Planning

Big data is not just important to keep the operations going in the short run. It is also important for future business planning and long-term outlook. It helps creates comparative advantage and helps companies to outdo their competitors in the near future. People analytics is extremely insightful and has the ability to predict future patterns, allowing companies to update and plan their human capital even faster than others.


The rise in the use of analytics has been caused by three main factors

  1. The boom of technology and data analytics due to technological and software upgrades. Recently this acceptance was seen in the restructuring of the sales and marketing divisions.
  2. Many HR teams rely on piles of workplace details like demographic data, performance data, work history, benefits, and preparation. Before recently, companies have still to use the data efficiently and strategically.
  3. Human resources teams are constantly being asked to justify their decisions on the basis of measurable results. This has resulted in the push to make business decisions based on analytics and data, rather than using gut instinct and subjective judgment.

The benefits of using analytics in HR

Studies in the Harvard Business Review found that using an algorithm improves recruiters ' ability to find the best-qualified applicants by over 50%. The correlation between recruiting data and business data allows the acquisition of talent to become a strategic activity by supplying the company with actionable insights

 Analytics have also shown some benefits in HR:

  1. attrition rates decreased by 35%
  2. performance increased by 20%
  3. revenue per employee improved by 4%

However, HR analytics has its downsides. A Harvard Business Review study of executives, one-third being HR experts themselves – showed that "reporting unreliable, incomplete or hard to obtain involving too much manual handling" was the biggest obstacle to making effective use of data. 47 percent claimed that "lack of strategic acumen or expertise among HR practitioners" was the main obstacle.

While analytics will not solve every HR challenge, it can provide an understanding of business functions and help trained HR professionals develop plans to optimize investment while monitoring recruitment, development, engagement, productivity, accountability, retention and many other workplace initiatives effectively.

Keithley Tongai is a Consultant intern at Industrial Psychology Consultants (Pvt) Ltd, a business management and human resources consulting firm.









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