Why are we losing our top performers? How can we make sure all hires are good hires? What can we do to improve our managers? These are just three of the questions companies are now turning to data to answer rather than emotions or experience. Organizations and HR departments are using people analytics to improve and refine their strategies.
What is People Analytics?
People analytics uses data and analysis to inform “people practices, programs and processes,” according to Google’s re:Work. From surveys to experimental research, people analytics covers a wide swath of methods and applications to solve personnel problems and grow as a company.
Applications of People Analytics
The employee recruitment industry has skyrocketed with the increase in people analytics as it allows recruiters to find and present job-seekers with opportunities that best suit them. Candidates can rejoice in feeling that they are being placed in a position, team and company that shares and appreciates their values.
Employers and recruiters can use predictive tools to determine if that employee will be a good fit for the position, team, and company by searching for indications that the employee’s job expectations match the company’s operations and environment.
For example, according to an article in the McKinsey Quarterly, a professional services firm that was overwhelmed with its applicant numbers turned to a machine learning model to help cut down on the costs incurred by the screening process. By taking into account data such as past applicant resumes, whether or not those people were extended an offer and if they accepted the offer, the model was able to successfully identify candidates most likely to be hired and passed them through to the next stage of the recruiting process. The savings delivered a 500% return on investment and also improved gender diversity in recruitment.
Tracking how employees are spending their time creates a better idea of what time spent wisely looks like, as well as time wasted. By compiling information from schedules and email traffic, people analytics can highlight patterns of overtime, excessive meetings and underworking; and therefore provide companies with the ability to see what they can do to increase productivity.
For example, according to a case study by McKinsey, a quick-service restaurant chain used people analytics to examine productivity and found that shifts longer than six hours resulted in a significant drop-off in performance. While longer shifts made things easier for managers, they hurt productivity.
The case study also looked at personalities and performance for training and hiring purposes. Using psychometric assessments and online games, data scientists were able to paint a cohesive picture of extrinsic traits, including demographics, commute distance and former job experience, as well as intrinsic traits, including personality characteristics and cognitive skills.
The analysis found that, out of these characteristics, personality traits and commute distance affected different outcomes, including customer satisfaction, revenue growth and speed of service. In particular, the research proved that different clusters of personality traits resulted in varying levels of performance. Not only does this provide information on how to optimize performance, it also informs recruiting and training.
Researching Employee Engagement
Employee engagement is an important component of productivity and organizational success, yet companies typically know little about engagement levels or what makes employees tick. Geetanjali Gamel, who leads Workforce Analytics and Planning at Merck & Co., Inc., told Google that Merck uses analytics to make the employee engagement survey results more meaningful for leadership.
First, they examined high performing employees and the positive business outcomes tied to them. Then, they not only analyzed opportunities and challenges from the survey results, but they also supplemented them with in-person focus groups. With this data, they used content and sentiment analysis techniques to extract actionable insights for leadership.
Identify Top Performers
As mentioned, Merck is just one of many organizations using people analytics to identify top performers and determine what makes them so. According to the McKinsey Quarterly article, a bank in Asia wanted to identify top performers and their characteristics to inform their hiring practices. They used thirty data points from five different categories – professional history, performance, tenure, branch information and demographics – to identify commonalities among high and low performers.
Using this data, they were able to create a profile of what a successful employee might look like. This is just one use of identifying high performers – the banking company was also able to determine which roles contributed the most to organizational success, and restructured teams to support these high-impact professionals.
Guiding Employee Development
Employee development is an essential component of employee engagement and loyalty, yet it is often overlooked. According to an article in the Harvard Business Review, “dissatisfaction with employee-development efforts appears to fuel many early exits” for young top talent. In their survey responses, workers said they specifically desired formal development, including coaching, training and mentoring.
Sometimes employee development programs are viewed as too costly, so people analytics can be used to ensure they are more effective by better informing program creation and measuring effectiveness.
The NYC Department of Education (DOE) did exactly that with the development programs that they based on surveys and employee feedback. As explained by a case study on Google’s re:Work, the DOE’s Organizational Development Unit (ODU) gathered input from employees to establish an understanding of their employee’s development needs. They found that employees greatly desired career development opportunities within the organization, including more management and leadership development, more clarity on the organizational structure and more opportunities to develop professional and technical skills. After gathering even more information through focus groups and an advisory committee, the ODU used their findings to develop several new programs for employees as well as career pathways.
Determining Employee Benefits
Knowing which benefits are important to your employees is not only important for employee satisfaction, but also for cost efficiency. Using analytics can help you “stop guessing what your employees value most,” as CEB puts it on their website. Supermarket chain Wegmans commissioned CEB, a workforce analytics company, to determine how employees value different components of their healthcare program as well as why employees join and stay at the company, according to another case study on Google’s re:Work.
Their analysis found, among other details, that health benefits were a factor in employees’ decision for joining and staying. Wegmans also realized that providing healthcare coverage to currently ineligible employees would increase how employees value healthcare.
Improving Management Training
One major U.S. insurer wanting to lower attrition rates decided to create a profile for high-risk employees, according to the McKinsey Quarterly article. In their analysis, they found that, in trying to convince these higher-risk employees to stay, more support from a strong manager was a key factor, along with greater development opportunities. Bonuses barely had any effect. So, the company used the money previously allocated to bonuses for improved management training and employee development. The result? An improvement in performance and retention as well as cost savings.
People Analytics: Just Getting Started
While people analytics may seem new to companies now, others have found it to be integral to different components of success. Dawn Klinghoffer, who leads the HR Business Insights team at Microsoft, told Google that Microsoft’s people analytics play a critical role in their employee development programs: “It’s hard for us to imagine how we could have made progress without it.”
Google’s People team aims for “all people decisions at Google to be based on data and analytics,” according to The Atlantic article.
As this ideology becomes the standard in human resources departments across organizations and industries, more companies should be able to cultivate a workforce of cooperative, efficient and happy employees. Used to its full potential, people analytics could also drive the world’s workforce to seek better, more fulfilling opportunities.