Practical people analytics: How to analyse your HR data

What is people analytics?

People analytics is the data-driven approach to optimising various aspects of your workforce. It involves the collection and analysis of employee data, often referred to as workforce data, talent data, or people data, to help make important organisational decisions.  

These decisions span the entire spectrum of HR functions and have a profound impact on the overall success and competitiveness of an organisation. 

HR analytics vs people analytics – what’s the difference? 

While people analytics, HR data analytics and workforce analytics are often used interchangeably, they do have their own focuses and objectives. 

They all involve the collection and processing of data, but HR and workforce analytics will focus more on resources and processes while people analytics will focus more on understanding and enhancing the holistic employee experience. It delves deep into employee data, to gain insights into the well-being, satisfaction, and engagement of employees. 

What is the importance of people analytics in HR? 

In a KPMG study, 80% of surveyed HR executives agreed that HR can provide value through analytics.

The importance of people analytics lies in its ability to transform traditional operational HR practices into data-driven, evidence-based strategies.  

It does more than use data to answer standard questions, like the amount of holiday an employee has accrued or whether they’re up to date with their training. Diving deeper into the data can demonstrate the benefits of what you do, or where you might need to improve, to justify continued, new or increased investment. 

Take employee training as an example – perhaps it increases engagement, improves performance or saves you money on rectifying errors, and you can prove this through the key data you collect and analyse. Another example is employee engagement. Rather than storing data about performance, you can dissect and analyse it to gain valuable insights that help shape company-wide decision making. Where are the biggest flight risks? Which employees are most engaged? When do people become most engaged during the employee lifecycle? 

What are the benefits of people analytics?

HR will always be needed in a business, but utilising data can elevate the department from a necessary function to one that adds true value. When used strategically, there are many ways organisations can turn their data insights into practical actions that will ultimately solve specific challenges.

Benefits of people analytics include:  

Insight into retention and satisfaction

By looking into the data surrounding employee turnover, satisfaction and overall performance, you can optimise recruitment processes, onboarding experiences and create effective retention strategies.  

Improves employee experience

When an organisation has access to employee engagement metrics, it can help them to understand what may be missing and what needs to be done differently to boost morale.  

L&D and training initiatives

Using data to pinpoint skills gaps and tailor learning paths to individuals can transform training into an effective and results-driven process.

Strategic alignment

Using data can help link HR objectives to wider business goals, demonstrating how these initiatives contribute to the overall success of the business.

Since using Access HR software, the David Ross Education Trust has benefited from comprehensive reporting capabilities, contributing to reduced absence and disruption. The Trust is one of 11 system leaders nationwide but without HR software, it was struggling to access relevant data and report on key areas including payroll, absence and appraisals. Now, the Trust can easily track and monitor absence which helps them to reduce it across their schools and academies. As well as this, it has the ability to generate reports and investigate triggers that may warrant further investigation. 

Developing a people analytics strategy

A well-crafted people analytics strategy is crucial when looking to achieve data-driven HR management with actionable insight.  

The aims of a people analytics strategy are to: 

1. Connect people data with business data to guide business leaders in decision-making. 
2. Empower HR leaders to use insights for HR planning and actions.  
3. Assess HR's performance in meeting its goals.

A combination of quantitative and qualitative metrics should be used when setting targets for your strategy. Quantitative metrics like KPIs, retention rates, and cost data, offer numerical insights into workforce performance. Qualitative metrics come from sources like open-ended surveys and employee feedback which help to contextualise the data and contribute towards HR understanding the all-important "why" behind trends and behaviours. Together, these metrics provide an overall view of the workforce, enabling HR to make informed decisions and enhance employee satisfaction and organisational performance. 

What skills are required to analyse HR and people analytics? 

Analysing HR data effectively requires a mix of skills within HR, data analysis and technology. The decision of where these skilled individuals or teams are positioned within the organisation — such as HR, the IT department, or a dedicated data team — may vary depending on the size and complexity of your organisation. However, it is a crucial role that drives data-informed decision-making so they must have visibility and influence.  

General skills required to analyse HR and people analytics:

• Analytical skills. You should be able to conduct thorough, fair research as well as performing statistical and quantitative analysis. 
• Data processing skills. You should be able to evaluate and interpret data – often large amounts of it. 
• Business skills. General business skills will help to interpret, use and apply analytics. Good communication and business strategy skills are particularly beneficial. 

HR software often includes people analytics functionality, meaning relevant teams can analyse HR data without increasing headcount or following complex manual processes. With the right software, your data becomes more automated and reports are easier to run. 

However, it is also common for larger businesses to utilise both sophisticated HR software with built-in data reporting abilities, and experienced data analysts to help interpret the data. It is those data experts that should be involved in the stakeholder team responsible for reviewing and choosing HR software. 

Using people analytics software to support HR data analysis

People analytics software can help make it easier to store, manage and interpret key HR data. However, it is usually part of a wider HR and payroll software suite with integrated modules ensuring your data across different areas is connected, and therefore accurate. 

People analytics software can help HR gather information about the following topics:

Recruitment

These might include time to hire (average number of days between a job posting and a successful hire), acceptance rate (the number of job offers made vs the number of job offers accepted) and time to productivity (the amount of time it takes for new hires to start working at their full productivity level). 

Engagement and retention 

A measure of how many employees remain in your organisation, as well as how satisfied they are with their role and the organisation. You may also measure how engaged people are with the company culture using surveys, productivity metrics and key performance indicators (KPIs) such as the number of referrals they make. 

Turnover 

The opposite of retention, turnover measures the number of employees who leave your organisation. You can measure average turnover year-over-year or even month-over-month to identify trends. 

Absenteeism 

A measure of the amount of time employees take off from their jobs, as well as how often this happens. You may notice this increasing in line with falling engagement, or vice versa.

Training and development 

Training is easier to measure, as courses can be set and results monitored for each employee. Development is more difficult to track and will likely be done more manually by setting objectives and measuring employee performance against them over time. 

Value and performance 

You can look at the revenue generated per employee, as well as company performance or the performance of different departments. 

By joining up the data and analysing it in the right way, you can address current challenges, enhance employee satisfaction and ultimately drive business success. 

Four types of people analytics

People analytics can be grouped into four types: 

1. Descriptive analytics 

The collection of data that already exists and the examination of historical data patterns. This can be analysed and used to make future decisions, but is always focused on existing data. 
 

2. Diagnostic analytics 

Data that is collected to answer a particular question or solve a problem, such as a high turnover rate. 
 

3. Predictive analytics 

The use of data to forecast future probabilities. It can answer specific questions, such as “what should the employee retention rate be next year?”, or it could focus on general trends like employee engagement or satisfaction. 
 

4. Prescriptive analytics 

The next stage on from predictive analytics, where a particular course of action is proposed to prevent problems from arising or to achieve specific business outcomes. The process can involve statistical modelling to explore different scenarios and find the best outcome. In an HR Research Institute survey, only 29% of respondents said they were good or very good at making positive changes based on their data, so there’s industry-wide room for improvement in this area. 

Transforming HR with data

People analytics has transformed HR management by shifting the focus from simple data collection to a holistic understanding of employee needs. By harnessing the power of these insights, businesses can unlock the full potential of their workforce and drive sustainable success. 

If you’ve started to use your HR data to inform your strategy you might be considering the additional functionality you could get from integrated HR and people analytics software. The right system can help support future HR planning and strategy, helping to develop culture and a winning employee experience.