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What is People Analytics: Examples, HR Metrics & Analytics

Kate William

13 February 2022

10 min read

“It’s not the great resignation, but the great appraisal and re-appraisal.”

In our recently concluded virtual HR summit, Refine EX, Anisa Aven, the CEO of Turnkey Coaching & Solutions, perfectly started her webinar with this line. She highlighted that instead of the great resignation, the discussion should be about the great appraisal and re-appraisal that can happen because of people analytics.

Anisa has been one of the prime advocates of people analytics for close to 2 decades, and we knew we were on a knowledge ride in this webinar. From discussing the need for people analytics, in 2022 and beyond to the need for data here, she discussed it all. And this piece is all about her expertise and our research on people analytics. Don’t skip a word here. Read until the end, and you’ll thank us! Time to begin, then.

What Is People Analytics? – The Definition

As the name suggests, it is a data-driven process to study employees for their functions, aspirations, satisfaction, and potential. The goal is to help employees grow and achieve sustained business success. Simply put, people, or human resource analytics, focuses on business growth through its employees.

It is like the currency of hr folks that improves an organization’s growth. With this data-driven approach, the decision-making at all levels gets better along with the culture. That automatically plays a massive role in the overall growth of the company. So, the talent acquisition team gets to hire, appraise, and retain employees better using people analytics. Ain’t that amazing?

The Great Resignation! Why People Analytics Is The Need Of The Hour?

2020 was the year when the job market stumbled. Companies were on a firing spree to lower their losses, and most of them did that to some extent. But 2021 was the year of great resignation, as employees started leaving jobs to get to a better place. Even those who were out of jobs weren’t rushing to get back, and Anisa explains why:

“Initially there was this perception that people were getting paid to stay at home. So, the lazy folks do not want to work, but on closer inspection, we’re seeing that more and more people are having a conversation about quality of life, and their jobs played a huge role in that. That means, if they’re feeling, it’s time to find something better, more meaningful, they’re leaving jobs, and that’s leading to the great resignation. The same is with those who’re out of a job but can afford to wait.” 

We completely agree with her on this. The pandemic and the WFH culture gave employees enough time to think if they’re feeling appreciated at work? If they’re adding value to be proud of, and if their colleagues and managers acknowledge them for it or not? When working from a family setting, people realized their importance. The importance of being around with them staying happy. That further stemmed from the need for the right relationship between an employee and the employer. Otherwise, the employee was willing to leave.

Catch Anisa’s Webinar here:

The reason for the great resignation was that people finally had the time to think deeply about their priorities, and they were willing to find what was best for them. That has continued in 2022 too, but it can quickly change to the great appraisal and re-appraisal with the help of people analytics. That’s why it is the need of the hour for every organization going forward. But some of them have already reaped, and are reaping, its benefits. It’s time to see how they’re doing that.

HR Analytics Examples

Historically, companies that have used people or human resource analytics have always reaped outstanding rewards. Many have started using it the right way since the pandemic, but some companies have been using it for a long time with continued success. Let’s look at 5 such organizations here:

LinkedIn

LinkedIn provides outstanding solutions to HR professionals, but it also needs solutions for its employees. Ever since their stock started rising, they’ve grown at almost 40% yearly. But they didn’t have the manpower to match this rapid growth. Their talent acquisition team struggled to accurately forecast new hires that can meet the demand for such growth.

This is when they started using a well-planned people analytics process to improve the effectiveness of their recruitment process. After that, in just over a year, the talent acquisition team at LinkedIn predicted the future hires with less than 5% error. And they ended up saving an impressive 15% on their yearly recruiting budget. This is an impact nobody can ignore!

IBM

For years now, IBM has been using a people analytics program to boost retention. In this, structured analytics is used to predict which employee is likely to leave. We’ll discuss the top parameters used for such analytics later in this blog, but to say that IBM inspired the beginning of such programs won’t be far from the truth. Their program also finds out the best to retain every individual employee working under the IBM umbrella. And they’ve saved over $270 million with it. Can you believe it?

Nielsen

Using people analytics, the HR team at Nielsen calculated that a single percentage point of attrition represented $5 million in lost money. They changed that with their ‘Ready to Rotate’ program, where employees were empowered to take challenges and roles within the company, as that was the main reason why attrition was happening for them.

Their data clearly showed that 48% of employees will remain with Nielsen if allowed to take on new roles, challenges, and projects. Talk about an instant impact and that’s what happened next, as the company saw a massive 160% increase in their Ready to Rotate website, and their attrition rate was down by nearly half of what it was at the same time last year.

Walmart

Walmart has been using the power of people analytics for the longest time. They’ve been an advocate of such human resource analytics and have a team dedicated to it. The retail giant’s focus is on capability metrics where the processes are rolled out the way they’re designed to be. Post its launch, the processes are tracked and analyzed continuously to see if they’re giving the intended results. Timely changes are made to it if needed, which keeps every process as efficient as it can get.

They also focus on employee turnover and movement through their people analytics program, as it’s connected to their workforce metrics. The way they use HR analytics provides massive opportunities for employees to take newer roles and push their limits. The outcome is improved performance and efficiency of employees, and greater success for Walmart. A win-win for everyone.

Cisco

Data and analysis can be used for more than finding and preventing problems. It can also be used in increasing productivity and effectiveness at the employee levels. A great example of this would be the people analytics plan used in Cisco.

Cisco used to conduct annual employee engagement surveys to gauge employee satisfaction levels. Some 73,000 survey results were piled up for the HR team to analyze. It was a herculean task, one that took massive energy and time away from Cisco’s HR department. They’ve found a solution in people analytics in recent years, where they’ve shifted the focus of such engagement surveys from company levels to team levels. And every team’s leadership group is tasked to analyze the engagement results of their team members. The time taken is massively reduced and the needed actions or changes are made quickly. A great example of a people analytics program rolled out with a fantastic action plan!

How to be Good at People Analytics?

Since we’re a fan of Anisa, we’ll again start with what she said on this in the webinar:

“When we identify an unsatisfied employee, most companies don’t know what to do with that other than say, so and so is not satisfied. An organization needs to use data in the right process to pre-identify who is about to exit.”

That is true. Most companies, including the behemoths, don’t know how to resolve employee dissatisfaction. They resort to giving increased packages, bonuses, or vacations, but it’s often a strategy that works only once. For a permanent resolution, there needs to be an efficient people analytics strategy in place. And this is what we’re talking about here:

Step 1: Collect The Right Data

Recruiting, performance management, compensation & benefits, learning management, succession planning, talent development, demographic data, and exit interviews.

These are the different data types generated in a data driven HR process. The data your HR team focuses on depends on the business goals. Ask questions like:

  • Why are we collecting this data?
  • What business metrics will improve after analyzing this data?
  • Will the analytics process be incomplete without this data type?

Once you and the team have answered these 3, the correct data types will emerge. CRM, financial, and sales data might reap greater rewards in the people analytics process. So, don’t get restricted to only a select few data types. Find what’s needed, and collect everything that’s in there.

Step 2: Explore And Experiment

See, when there’s clarity on what’s needed, you’ll know the right data mining and HR analytics tool to use, and that’s massive! Especially in a crowded tech. market.

That is also a reason why choosing the appropriate data types is a crucial first step. There will, of course, be redundancy in the collected data. To find that out, and identify relevant trends, exploring and experimenting the market for the right tool is the first step.

Choosing the right people analytics tool by exploring the market, experimenting with all options, and analyzing which one’s the most suited is a step towards giving your organization a well-balanced HR analytics structure. There are fantastic tools like Tableau, Visier, and ChartHop that come with excellent data mining, visualization, and transformation techniques, with a great user interface. But these and other tools have their features and shortcomings that get revealed only after exploring and experimenting.

Step 3: Roll Out The Action Plan

A total of 4 things combine in this stage. The employee profiles, collected data, HR analytics tool, and the goals you wish to achieve. A people is not possible without these 4. And it’ll take time and constant iterations, too. Companies will need to engage and understand how an employee is thinking, how satisfied they are, and will be with such analytics, and so on.

As Anisa said, companies need a better way to engage their employees to retain them. Every employee has to feel like they matter, but one-on-one coaching at scale for all employees is not possible. We can listen to our employees better, and surveying them is the best way to do it. That’s where SurveySparrow does a fantastic job!

Here’s a quick employee engagement survey…

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So, we cannot create an action plan for the people analytics process without the employee profiles, and that can’t be done without engaging and listening to your employees. The easiest and the most cost-effective way to do that is through surveys. Remember that.

Step 4: Simple Strategies And Systems

With so much data and verticals involved, the people analytics process is anything but easy. The work can be complex, but the overall strategy needs to be simple. There should be a lean system for every step of the process, like real-time data update using the right HR tech tool.

Appropriate metrics should be set to refine the data. Employee profiles with recent engagements should be updated before using them. And finally, the latest dataset should run on the updated profiles to find relevant employee experience and satisfaction patterns.

These simple strategies and systems avoid complications on the flow of steps, time taken, or the repetitions of any sub-processes that are a common occurrence when there’s no system.

Step 5: KPI Assessment

For a people analytics plan to work well, periodic KPI assessment is the key. And for that to happen, the collected data should highlight trends that affect all KPIs correctly. A recurring KPI assessment is needed, and that’s what the last step of the process should be.

Such assessments allow faster pivoting based on the changing employee profiles and experience levels, resulting in changes to KPIs to maintain the overall effectiveness of the process.

10 Benchmarks Of People Analytics – The HR Metrics

When talking about people analytics, we can’t miss out on HR metrics. For all the different people analytics projects, HR metrics play a massive role. While discussing the process too, we mentioned the importance of choosing the right KPIs for a people analytics project. We’ll add choosing the right HR metrics as well. Here, we’ll give 10 such HR metrics that we, at SurveySparrow, and most of our clients follow when conducting people analytics. Let’s get down with it:

Total Workforce

This metric refers to the total number of employees in an organization. Generally, it does not distinguish between part-time and full-time employees. It’s totally up to your HR team to decide what type of data they want for this metric. Only when you know the total workforce does preparing employee profiles becomes possible. So, this metric needs to be there.

Cost Per Hire

Cost per hire is the average investment you put into onboarding new employees. This is a key metric, as the cost of this investment affects the bottom line directly. The higher the cost per hire, higher is the overall cost of recruitment, and lower will be spent on other business verticals.

CPH = (Total external cost + Total internal cost) / Total employees hired in a specific period

Now, if there are hiring and re-hiring for any open positions, it’ll add to the CPH. Why? Because the total cost goes up due to re-hiring while the employees hired remains same.

New Hire Turnover

It’s vital to figure out if keeping a position open because of the unavailability of the right candidate is better than hiring and re-hiring for it. Anisa said the same during our discussion, and it’s because of this metric. New hire turnover is the number of new employees that leave your organization within a certain period, typically in 3, 6, or 12 months.

Many times, someone feels very isolated in this virtual environment, and within 90 days if a company is not building a relationship, new joiners leave because of a lack of human connection. The WFH culture has enhanced this further. So, this metric effectively highlights if the onboarding process in a company is good or needs changing.

Human Capital ROI

This metric becomes crucial for human resource analytics, as it highlights the rate of return of 1 dollar invested for employee salary, benefits, training, and bonuses. This is how your HR team can calculate it:

HC ROI = (Revenue – (Operating cost – Employee costs)) / (Employee costs – 1)

KPI Achievement Rate

A satisfied and dedicated employee will zealfully work to achieve all the set KPIs. The HR team can monitor each employee’s KPI achievement rate to gauge their satisfaction levels correctly appraise them.

360-degree Feedback

One of the most important metrics that the HR team needs at their disposal is the complete 360-degree feedback on all the employees. Such feedback highlights how an employee is performing based on his peers, managers, and even customers. With this you know if an employee is right for a role, or he’s not performing to his full potential because of dissatisfaction.

eNPS

eNPS is the best assessment to find how loyal an employee is. This is done by asking them their likeliness on recommending your company to their friends and family. The questions in an eNPS are measured on a 10-point scale, where 1 represents the least likeliness of recommending, and 10 recommends the most. Clearly, those choosing a number less than 6 are not happy in the current setting and need greater attention from the HR team and even you.

Training Cost Per Employee

Training cost per employee is calculated by adding the cost of all training and development events (including online courses) and dividing it by the total employees. If this cost comes out to be overly exaggerated, the hiring process needs more effectiveness.

Attrition Rate

The most crucial metric for the people analytics process, in our perspective. The attrition rate is the loss of employees over a period of time, who need replacing. This is how it is calculated:

Attrition rate – (Total employees leaving the organization) – (Total employees at the start of a reporting period * 100) 

The main thing to keep in check here is the reporting period. The shorter it gets, the lower will the attrition rate because there will be less time for the employees to leave. An annualized attrition rate fits the bill perfectly, where the monthly attrition rate is multiplied by 12.

Exit Drivers

As an HR, you need to know the reasons behind why employees left? That allows you to address prevalent issues driving this turnover. That is also why exit interviews or surveys are essential for every organization. They reveal the hidden wrongs, if any, in an organization.

Over To You!

People analytics is the key. Yes, with everything we’ve discussed, what Anisa said at the beginning will come true. The great resignation people are talking about can be turned into the great appraisal and re-appraisal that benefits all, the organization, and the employees. We, at SurveySparrow, totally believe in that.

Thanks to Anisa Aven, most of our clients are incorporating people analytics into their business looking to reap its full benefits. Watch her session from here, and then… it’s over to you to efficiently use the people analytics process. We hope you do. Ciao.

Kate William

Content Marketer at SurveySparrow

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