People Analytics : Is It Really The Future Of HR?

People analytics is the latest hot topic in HR but with many companies still getting to grips with the basics of recruiting software, what does this emerging trend mean?

What is people analytics?

It’s estimated that over 98% of all the information in the world is now stored digitally. This data is created on a daily basis, for example, in e-mails, online browsing and social media but  like most information it only means something if it can be analysed.

Predictive analytics has transformed consumer marketing by analysing and predicting consumer behaviour based on analysis of this data. Decisions on future marketing campaigns are now frequently data driven so it was inevitable that analytics would eventually permeate the world of HR.

People analytics uses data and analysis – often provided by recruiting software - to understand a broad range of issues related to employees including performance management, leadership and recruiting.

For employers, the key is to ensure decisions relating to hiring and employee development are based on proven criteria. Companies who understand the benefits of this analysis coupled with the way in which workforce metrics influence their bottom line and help to drive and predict future success will have the edge over their competitors.

Three stages of evolution

People analytics is gradually beginning to filter through into the talent acquisition strategies of employers. Its evolution can generally be traced in three stages:-

Need for answers : In the race for talent, hiring managers begin to ask questions of the efficacy of their hiring strategy such as, ‘Where are my most successful hires coming from?’ How effective is my employee referral programme?’ Traditionally, answers have been found in pooling data manually from spreadsheets or perhaps relying on outdated recruiting software. Two issues exist with these methods. With the majority of spreadsheets containing errors, the reliability of the data provided is uncertain. Secondly, questions are often asked in isolation, without reference to the complete hiring process.

Is this important? With the global talent pool shrinking, recruitment must become more efficient. Attracting, hiring and retaining new employees is costly. Persistent bad hiring habits lead to unhappy candidates expressing their dissatisfaction on social media.

Recruiting software cannot prevent a bad hiring decision but it will streamline the overall process and provide HR with the tools to begin its data analysis.

Data analysis : Data is accessed through talent recruitment systems which offer comprehensive recruitment analytics enabling HR to understand a range of issues affecting recruitment. For example, applicant tracking software provides an instant history of a candidate’s experience to date. Analysis of this data means constructive decisions can be made, allowing more effective engagement with talent through e-recruitment channels.

Predictive analytics : For advanced organisations the third stage leads to predictive modelling. At this point, all data is contained in one location, typically applicant tracking software.  Historical data is then used to produce a predictive model. In talent acquisition terms, hiring managers can identify and predict their most effective sources of talent while streamlining and focusing hiring efforts towards those sources. 

Taken to the next logical step, predictive analytics enables businesses to anticipate the outcome of proposed changes. For example, how will amendments to your employee referral policy drive more talent into e-recruitment channels?

Moving a step further, people analytics will predict a ‘what if’ scenario related to a range of workforce issues, from anticipating the effects of an across the board pay rise to a change in working hours and more.

The ‘geeks’ are here

With the exception perhaps of a handful of organisations epitomised by Google, HR has traditionally been the lowest ranked user of metrics and analytics in the corporate world. That trend is now changing. With vacancies for HR data analysts on the rise Josh Bersin has begun to talk about the arrival of the ‘geeks’ in HR. The potential is enormous.  More than $4 trillion is spent on payroll alone around the world, making HR and big data very big business. 

Is HR ready for people analytics?

People analytics in HR is in its infancy, with only an estimated 14% of HR teams taking advantage of the breadth of recruitment management systems and recruitment analytics available to them. CIPD CEO Peter Cheese identified people analytics and HR data as key themes for HR during 2015, stating that the focus must be on “analytics, better numbers and being able to better measure what is really happening in organisations around human capital”.

Ongoing changes are evident in the latest CIPD research which concludes that HR professionals must focus on developing skills in data, analytics and social media in order to “future-proof” their careers.  This further supports the CIPD HR Outlook Survey which calls for ‘greater specialist abilities’ in data awareness, commercial acumen and people analytics.

All are essential in order to shape a high performance organisation, share knowledge and encourage a culture that supports innovation and collaboration.

‘Evidence based’ HR

The shift from traditional HR reporting to people analytics brings with it a degree of understandable caution. There's a stark difference in applying analytics to sales figures and market trends when compared to people.

Concern quite rightly exists over the seeming removal of the ‘human’ element from HR but in terms of talent acquisition and management people analytics teaches us about behaviour, potential and performance, all valuable insight.

People analytics is ‘evidence based HR’.  Hiring problems resulting from human error, intuition and gut feeling are all removed from the process. 

Without the right questions, data is worthless. Analytics must be understood in order to create a positive impact on a company and its people but when managed effectively the benefits are significant. A 2013 study carried out by the Harvard Business Review suggests that businesses which managed their workforce using people analytics most effectively improved company profit by up to 65%.

Can HR afford not to embrace people analytics? The evidence suggests not.

Getting started with recruiting software

The first step towards people analytics is the implementation of a modern recruitment management system.

Sophisticated recruiting software offers the following benefits:-

Simple metrics : Metrics form a fundamental part of successful talent acquisition strategies.  Time to hire, the best source of hire, employee retention rates, this is basic information provided by applicant tracking software in today’s talent recruitment systems, yet some companies lack this essential knowledge.

Understand your hiring process : If you advertise a job for 30 days, applicant tracking software will provide indispensable statistics on when the largest volume of candidates apply to your vacancy and how long candidates wait for an employer response. Information on the ratio of total views to applications received is provided together with a breakdown of female/male candidates. Are you attracting a balanced selection of candidates to your vacancy? If applicants are predominantly male, what is deterring females from applying to your jobs?  Online recruitment data and an analysis of your talent community will provide more insight.

Best candidate source : Where are your best hires coming from? Whether it’s online recruitment, job boards, your talent pool or social media, you cannot be certain without firm data provided by recruiting software. Without this knowledge, it is impossible to improve your hiring process.

Source of your next hire : Once the source of talent is identified on an ‘evidence’ basis, people analytics can predict the source of your next new hire based on retrospective data analysis. Applicant tracking software is an essential referral point to improve talent acquisition strategies and enable effective planning.

If used with insight people analytics will drive evidence-based decision making – removing the reliance on “gut feeling” from recruitment - and enable HR to talk confidently about workforce needs at the highest level.

Analysis resulting from data provided by sophisticated recruiting software informs ongoing talent acquisition, succession planning and performance management. Can HR really afford to ignore people analytics?

Get serious about recruitment and people analytics. Talk to Advorto today.

You might also like to read:-

HR Technology : Changing Your Perspective

5 Reasons Your Business Needs Recruitment Analytics

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