5 Crucial Components of People Analytics (and 7 Steps to Create a Robust Workforce Analytics System)

Part 1

What Is People Analytics?

People analytics is a blend of technological practices and methodology that allows business leaders the opportunity to see the return on their investment in human resource management.

  • How do you know your human resource management systems are working?
  • Do you know if your workforce is set up for success through your personnel procedures?

People analytics is meant to answer these questions, often this can be done through statistical modeling and software.

Workforce analytics also lets leaders see who the right people are in various positions in the company. There are two types of workforce analytics:

  • predictive
  • prescriptive

Predictive people analytics predicts which employees are likely to do well within the organization, and which ones are the most likely to leave.

Prescriptive workforce analytics helps leaders put together plans to develop and retain essential employees. The data from predictive analytics allows leaders to establish these plans.

Related: Components of People Analytics (Key Elements)


Why Is Workforce Analytics Significant to Companies?

In today’s society, we are taught to keep data on everything —sales, marketing metrics, operational practices, inventory, and the list could go on — however, we forget about keeping track of a company’s most potent resources: it’s workers. How companies choose to react to those working for them needs to be backed by data. As many have said, “nothing can be improved unless it is measured.” This quote could not be truer regarding human resource management.

People analytics provide dynamic and real-time data about employees. This is needed for the more complex nature of today’s workforce. Voluntary turnover and labor costs are on the rise, and disengagement is at an all-time high. There are a lot of reasons companies need to invest in workforce analytics to better understand and serve their employees. This list of statistics definitely tells a story about employee turnover, and the need for data to prevent it.

  • Only 16 percent of workers said they felt “engaged and connected” to employers.
  • It can cost 33 percent of an employee’s salary to replace him or her.
  • 75 percent of the causes of employee turnover are preventable.
  • 17 percent of companies utilizing HR technology are trying to decrease turnover.
  • 81 percent of employees would consider leaving their company for the right offer.

Employee turnover is a challenging reality of the workplace, and companies are having to pull at straws to learn the formula to keep workers. However, employees are unlikely to go into detail about what they need, so it takes a robust human resource analytics system to create ways to develop and retain workers.

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Related: How to Create a Workforce Analytics System

Part 2
5 Crucial Components of People Analytics

It is easy to talk about the importance of collecting employee data, but some still may wonder which statistics to measure. The data collected depends on the needs of the company and the data that would most help them address HR issues, but there are some standard metrics leaders should think about monitoring.

  1. Engagement

    — How engaged are employees?
    — Are they taking a long time to finish tasks or are they continually showing up late?


    While there could be other explanations for these questions, it is likely they can also be disengaged.
    Taking the time to measure same-day callouts, late arrivals, task completion times, and other engagement statistics can give leaders a picture of who is thriving and who may not be the best fit.

  2. Job Satisfaction

    — Are workers satisfied with their current roles, or do they feel burned out and unfulfilled? Surveys and focus groups can help get to the bottom of this statistic.
    — Do workers feel that what they do is meaningful to the company?
    — How likely are they to refer this company to a friend?
    These are all questions that a focus on job satisfaction can help answer.

  3. Job Performance

    — Are workers going above and beyond the call of duty, or are they just barely meeting goals?
    — Is there a particular group that always surpasses goals and objectives?
    — Why are they so much more successful than their peers?
    Job performance is a critical statistic that business leaders should pay attention to. It can reveal some crucial patterns so business leaders can make decisions.

  4. Personality Correlations

    — For the workers who are performing at a high-level, is there a specific set of personality traits that correlate to this success?
    — Do they have a particular skillset or past work experience that is common between them?
    Keeping track of this will help leaders understand who is the best fit for the organization. If they know the right qualities to look out for then they can hire people according to this profile.

  5. Budgetary Impact

    While it is an uncomfortable truth, people do leave organizations. Everyone is not going to be a fit, and instead of being blindsided by this fact, companies can prepare by knowing how much money it takes to train someone for the position that someone may leave behind. This information could be factored into the budget so companies can be ready for it when it does happen. On the other hand, companies should also track how much money it takes to keep someone.

Part 3
How to Create a Robust Workforce Analytics System

  • Step 1: Become Aware of What You Can Measure

    This is a significant step leaders need to take before moving on to developing a plan or vision. Leaders need to become aware of privacy laws and procedures for collecting data. Employees need to know what data is being collected from them and how it is being used. It might make sense to talk to a lawyer to prevent any legal trouble down the road.

  • Step 2: Discuss Initial Plans with HR

    Since HR will be managing most of this information, it is a good idea to get their buy-in and make sure they understand the significance of why this is necessary to do. They will likely be the office delivering surveys and working with any analytics software, so talk to them about what trends they see and the metrics they should begin capturing.

  • Step 3: Create a Workforce Analytics Plan

    Now is the time to bring together relevant stakeholders to have a conversation about developing a workforce analytics plan. This is where leaders can solidify the statistics that need to be measured, determine how this information will align with business goals and objectives, and create an outline for the vision and return on investment. Once everyone is on the same page, and each person can voice their concerns and ideas leaders can move forward knowing everyone is on board.

  • Step 4: Have a Conversation with Employees

    Leaders need to be transparent with workers about the reason for this workforce analytics plan. A lack of clear communication can breed resentment and a lack of clarity on the side of the employee. They should be informed about why data is being collected, what it is being used for, how it will help their workplace experience, and how it connects to the overall company mission. Once they know the purpose, it will make it easier to get their buy-in and begin to collect authentic data.

  • Step 5: Research and Select a Workforce Analytics System

    Leaders should look into all options before deciding on a particular software system. They need to weigh the cost with quality effectively. Does it need to be cloud-based? What is the budget? Can it efficiently measure all the qualities leaders need? Does it have to be customized or can it come straight out of the box? Leaders should work directly with HR and the IT team to make sure they are purchasing a product that meets all the requirements.

  • Step 6: Meet with Stakeholders to Discuss Results

    After the software is implemented, leaders need to routinely meet with all relevant stakeholders to discuss the results and which metrics they need to continue to take and which can be discarded. Is there a return on investment? Is this software not an exact fit for what the company needs? Conversations like these can help leaders figure this out.

  • Step 7: Be Transparent with Employees

    Share appropriate metrics with employees. If there are statistics that can help employees perform at a higher level, explain these results to them. Also, if there are chronic problems such as absenteeism, meet with those who are violating these procedures to stop the behavior.

The key to workplace analytics is never to stop measuring and always stay transparent with employees and stakeholders. Once everyone understands the importance of tracking this information, then it will be easier to continue to get the needed information to make informed HR decisions.

Part 4
People Analytics Best Practices

  • Automate as Much as You Can

    Most leaders will not have time to collect every piece of data manually. Therefore, leaders need to select a system that can automatically receive metrics. One great example is timecard management when an employee arrives in or out of the workplace managers can immediately see how long they were at work, if they arrived on time, and what breaks they took. This information will help get a sense of overall productivity (when matched up with other metrics).

  • Measure the System

    Is there a decrease in productivity at the same time every day? Are workers having a challenging time getting work done on a particular software? Performance lags may not always be on the part of the employee. Leaders should monitor how employees are interacting with the system so any problems can be fixed.

  • Train Stakeholders on Predictive and Prescriptive Analytics

    Sometimes, individuals need to understand the intricacies of concepts before they can fully become comfortable with using it. Leaders should arrange for stakeholders to become familiar with these concepts and understand their benefit in collecting workforce analytics.

  • Make Sure the Software Is User-Friendly

    Everyone should be able to access the analytics easily. Stakeholders shouldn’t need an involved technological background to interact with this data. Dashboards should be easy to read, and reports should not be challenging to collect. This will increase the satisfaction of using the software and make it more likely that HR managers will use the information.