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People Analytics: meet one of the top HR trends!

Renan Araújo

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According to Harvard Business Review, about 70% of companiesregard people analytics as an important priority in their agenda. Nevertheless, according to a trend report prepared by Great Pleace To Work, the discipline of people Analiytics appeared as one of the main challenges related to people management.

Our experience talking to more than 500 of the Most Innovative Companies in Brazil confirms this: one of the biggest challenges in HR is how to make better decisions based on facts and data. And the answer invariably is to use  People Analytics tools more.

With that in mind, we have prepared this material so that you understand what people Analytics is, what its importance is for the business, as well as checking out some companies that stand out in this area.

What is People Analytics?

Defining People Analytics is very simple: use statistical insights from employee data to make people-and business-related decisions.

People Analytics applications

Companies produce a huge amount of data about their employees. And this data until recently was hardly accessible to HR areas. More recently, with the adoption of cloud and data analytics technologies, it has become easier to use that data to make better decisions.

However, people analytics can be used in different ways and for different purposes depending on the type of problem to be solved:

  • Descriptive Analysis — in this type of analysis, the key question to ask is ” what happened?”. To get this answer, one must rely on past and current data;
  • Diagnostic analysis-here, the question to be asked is “Why did this happen?”. From this answer, there is the possibility of exploring the causes and identifying components that led to the success or failure of different situations;
  • Predictive analysis — in this case, the question “What can happen?” will be useful for an assessment of the current context of the company to generate forecasts of what may happen in a given near period;
  • Prescriptive analysis — “what can happen if we follow this path?” is the key question. Again, through data, there is the possibility of raising hypotheses about certain decisions.

The People Analytics process

The People Analytics process takes place from the following steps.

1. Collection

As its name says, it is the phase in which the professionals of your team collect the data. In the HR area, they can come from different sources, such as:

  • number of people interested in a given position;
  • people engagement survey of your company;
  • performance management tool; among others.

2. Calculation

Collecting data, by itself, will allow your team to have access only to the diagnosis. For this reason, in the calculation phase, the team will analyze this collection, contributing to actions that are taken based on the evaluation made.

3. Analysis

Through an in-depth analysis of the data collected and the responses to the calculations performed, there is the possibility of defining strategies with a greater foundation. Thus, there is the possibility of discovering gaps in your company that must undergo modifications, identifying the observed strengths in your team, as well as the weaknesses that must be addressed — both of teams and of the company as a whole.

4. Modeling

In modeling, you will perform the crossing of previously collected data, numbers and variables. In performance appraisal, for example, there is the possibility of identifying who the high performers of your company. That is, those professionals who stand out the most.

In this sense, there is the possibility of crossing these data with the level of satisfaction of this group, measured through an organizational climate survey. In light of this analysis, there is the possibility of tracing actions if there is the identification that these people are dissatisfied, contributing to the retention of talents.

What business challenges can be solved with People Analytics?

People Analytics tools are useful as they solve business problems for companies. And one of the main challenges we’ve identified in the market is that a lot of people want to use the tools but don’t know exactly what they’re for. Let’s talk a bit about the main challenges that can be solved with People Analytics.

Cost reduction

The first differential is linked to the cost reduction provided by data analysis. According to an article published by Fast Company, the Nielsen company found, in its analyzes, that with each 1% reduction of turnover it is possible to avoid $5 million in business costs. In addition, this same evaluation identified that internal mobility between teams can be considered as one of the main factors for talent retention.

In this way, by having access to data for decision making, your team has the possibility to plot strategies based on the points identified — according to the reality of your business. 

In Nielsen’s case, for example, as internal mobility would provide retention, the company built an internal recruitment program, helping the organization Save More than.10 million in the first eight months.

Talent retention

This gain is directly linked to the previous one. From People Analytics, there is the possibility of retaining talents, precisely because it leaves room for the identification of points of improvement — which cause a high turnover, if they are not perceived.

Let’s return to the example of performance evaluation linked to climate and engagement research. 

The first strategy refers to structured assessment of the individual performance of the employee in a given period of time. By adopting this methodology with 9 — Box-a visual tool that allows you to analyze in more detail the result of an evaluated person -, the team will have effective inputs for people’s decision-making:

  • promotions;
  • layoffs;
  • pay rise;
  • training; among other points.

In this scenario, it is possible to identify the professionals who perform best and get the diagnosis on their perception in relation to the company. 

Organizational climate research

But after all, what is the perception of these people in relation to the most diverse aspects of their experience? There are risks, for example, of them being dissatisfied with remuneration and benefits, or believing that their leaders should work closer to them.

The answer to this question will be through climate research, which can be applied to an entire company or to employee samples, contributing to map out strategies and assess whether they have had effects on the organizational climate and business results.

Something similar was disclosed by Wall Street Journal there in 2015. In the news report, there was an explanation of how Credit Suisse was able to understand who could leave the company, in addition to identifying why they would ask for resignation. Thus, its leaders were able to reduce the risk factors, causing Credit Suisse to save about 7 70,000,000 per year.

Increased profitability

By investing in the development of its staff members, consequently, it will invest in the development of the company as a whole. This is what  Visier’s research showed: organizations that have an advanced investment in people analytics outperform start-ups with profit margins up to 56% higher. In addition, there is a 22% higher return on assets.

More aligned hires

Another important point about People Analytics is related to the most aligned hires. The HR area will have an accurate understanding of who are the people needed for their open vacancies. In addition, it has the possibility to search for people who best match the Organizational Culture to identify themselves with the work profile and enable a higher retention rate.

Improvements to quality of life at work

As we have observed, there is the possibility of identifying the perception of employees on the most diverse aspects of the company. Consequently, there is the possibility of implementing improvements that contribute to a better quality of life at work.

According to a survey conducted by Gallup, the best companies to work with are twice as likely to succeed in relation to the most distinct topics, such as:

  • more attractive financial results;
  • increased customer satisfaction;
  • team retention;
  • reduction of absenteeism; among others.

How to implement People Analytics in your business?

Now that you know a bit more about the importance of people Analytics for the company, we will share some tips on how to implement it in the business. Check it out!

Define key performance indicators

For effective analysis of a company’s data, one must select, synthesize and evaluate based on performance indicators.

Example: according to a survey also conducted by Gallup, 29% of professionals fully agree that their performance evaluations are fair. In addition, 26% fully agree that they are accurate. 

By knowing these percentages, there is the possibility of tracing more strategic measures so that they are more expressive, which will contribute to increasing: 

  • employee engagement;
  • talent performance;
  • turnover motivators; among others.

Organize existing data

To guide leaders more accurately in data are at stake, there is a need to audit and organize them in relation to their sources, years, among other relevant information in a centralized database.

We must take into account that organizations produce a large number of data on a daily basis. For this reason, for them to be analyzed correctly, it is necessary that they are easily identified — since it will optimize the work of the entire team.

Connect data analytics to long-term business goals

People Analytics will be even more beneficial to the business if deliveries are tied to results at the organizational level. In this way, HR will have the possibility to bring predictable, measurable and successful results to companies.

Empower your employees

Developing research methodology skills in your HR professionals will help you conduct data analysis more effectively. Also, always encourage employees to look for strategies to get to know the people, skills and motivations of the team as a whole.

Count on a performance management tool

Throughout the material, we briefly mention some methodologies that can be applied in your company. Performance evaluation and organizational climate research these are just a few of them — when there is data crossing, the possibilities widen, contributing to greater satisfaction team members, increasing talent retention and making the HR sector even more strategic.

In this sense, by having a performance management platform, you have the possibility to:

  • run evaluation cycles in an intelligent system;
  • organize and track company goals;
  • cross data; among others.

Which companies stand out with People Analytics?

Check out below some of the companies that stand out with People Analytics.

1. Google

One of the best known cases of applying People Analytics is Google. Through Project Oxygen, the company sought answers to the following question: “do managers matter?”.

Since its creation, the company has had in its staff a significant majority of Engineers. In this way, some of the company’s top names were skeptical about the importance of person managers. For this reason, in order for the matter to be definitively resolved, it was necessary to bring arguments based on a statistical analysis with clear evidence.

In this sense, the study was conducted in two main steps. In the first one, the team decided to expand the annual survey (GoogleGeist) so that it could cover ratings from subordinates to leaders. As a diagnosis, it was noticed that there was a large dispersion of employees in relation to their direct managers:

  • well-perceived managers counted on teams with a higher performance (measured through performance evaluation;
  • small increase in the quality of managers brought positive changes to the performance of the areas;
  • well perceived managers counted on teams with greater satisfaction;
  • well-perceived managers had teams with lower turnover rates;
  • well-perceived managers had teams with which they balanced their personal and professional lives better.

By having the answer that management actually mattered, the next step was to understand what well-rated managers did differently: “what do our best managers do?”.

In this sense, through research with teams, professionals, former employees, there was evidence that good management makes a difference for the company, in addition to demonstrating the fundamental aspects for good leadership-all this from the use of data to reach the answers to the main questions of the team.

2. Nielsen

Throughout this post, we briefly mentioned Nielsen. Through a study, the company identified that reducing turnover would significantly bring a cost reduction to the business. In addition, it was identified that internal moves would contribute to increased talent retention, ensuring the gains this brings to the business — far beyond costs.

To reach this result, the team initially identified what would be the key indicators for analysis. The initial focus was not on bringing complex metrics, but on having solutions to the questions that would bring an answer to how critical turnover was in the organization.

Besides identifying the motivators of voluntary friction, the team also saw trends. The first of these is related to the importance that the first year exercised for talent retention. It was also noticed that lateral position changes were more effective than promotions — as we explained above.

Other Nielsen projects using People Analytics:

  • Strategic workforce planning, whose main objective is to retain employees who have the skills necessary to exercise the demands of today and in the morning;
  • analysis of most successful hires undertaken in universities;
  • greater representation of women in leadership roles.

3. McKinsey

High turnover rates were also a problem faced by research consultancy McKinsey. Through People Analytics, the team sought to assess what were the main reasons that led to layoffs, having the opportunity to outline strategies to increase the retention of their talents.

Initially, the team believed that aspects related to performance evaluations and remuneration could be among the main reasons. However, when there was a more detailed analysis of the company’s data and the information collected, there was the identification that coaching and mentoring programs would bring more impacts to people’s retention.

4. Embraer

When we talk about people management, we must take into account aspects prior to the hiring of professionals. If recruitment and selection processes are not optimized, for example, there may be the difficulty of professionals in the human resources sector to act more strategically, hindering the development of the area and, consequently, the company as a whole.

In the case of Embraer, a commercial jet manufacturer, the difficulty was precisely related to the applications for selection processes. The high volume of applications and the workload that this generated caused difficulties for the team, bringing the need to define the best profiles for the company through smarter screening — possible through the application of people Analytics.

In this post, you could understand what people Analytics is, what its importance is, as well as check tips on how to implement it. It also analyzed some companies that stand out with the use of people Analytics. As noted, it is essential to look for tools that optimize processes and make the HR sector more strategic, contributing to the area can act more and more directly for the growth of the business.

If you want to know how a performance management tool contributes to this and can assist in the management of people in your organization, please contact us, talk to our professionals and ask your questions!