A new force has emerged in the HR and recruiting world that is transforming the workplace – people analytics. 

People analytics refers to using data analysis techniques to understand and improve processes that affect human capital. This requires collecting, cleaning and making sense of employee data to make informed business decisions. 

HR is slowly becoming a data-driven function. 

Why? The unhappiness or misalignment of your employees can lead to productivity downfalls. In a talent-strained economy, HR and recruiting leaders need to leverage every resource they can to align their departments with the overall objectives of the business. This makes data an increasingly important resource and workplace trend.

Properly used people analytics can accomplish a myriad of business goals.

People analytics can help companies lower turnover rates by identifying which employees are most at risk for leaving the company and determine what areas of your company you can improve by analyzing employee satisfaction.

One example of this is Google’s Project Oxygen. It helped create statistically significant improvements in managerial effectiveness and performance by uncovering the practices of the company’s best managers and used them in coaching sessions to improve the work of low-performing employees. Google is now among many to take the same approach in addressing HR needs through people analytics.

People analytics may also save companies money, increase efficiency, and cut down on wasted time in recruitment efforts. By applying people analytics to the hiring process, you can remove human biases by isolating objective traits in applications and identify candidates with the right backgrounds. 

People analytics can also help identify patterns in the recruitment life-cycle, helping companies plan for more efficient recruitment spending based on their hiring cycles. Another benefit is identifying what talent pipelines produce the most results, allowing organizations to properly allocate money towards them.

With all the potential benefits, it’s no surprise that companies are investing in people analytics. A 2017 survey by Bersin found that 69% of participating companies are integrating data to build a people analytics database, whereas that number was 10-15% in prior years. Another survey found that over 70% of companies say that people analytics is a high priority. Companies properly using analytics report an 82% higher three year average profit than those who have no analytics strategy.

Sadly, most companies do not have a good understanding of what talent dimensions drive performance, and it may be due to their narrow approach to analytics. While most of the data they gather are about individual employees, they should instead focus on the interactions among people at their organizations. To do this, HBR suggests gathering and analyzing relational data at your organization. 

Relational data is the communications between people in different departments.

This data is found inside different methods of communication, like email and chats, which can be mined to detail the flow of communication within your organization, thus creating digital social networks. These workplace social networks give massive insights into the patterns of how employees work with and relate to each other.

The same HBR article found that employees who interact with others outside of their department are more inclined to become idea-generators and problem-solvers. This is known as the ideation structural signature in relational analytics. This kind of information allows companies to understand who their problem-solvers, idea generators, and influencers are for human resource decision making. Relational analytics requires people analytics teams to take a step back from the individual employee data and look at the overarching structures the teams create with the data that is hidden in your digital exhaust. Relational data will help your company estimate the likelihood of an employee or entire team to accomplish business goals.

With the rapid rise in employee discrimination lawsuits, a growing number of human resources departments find themselves being asked to justify their decisions based on measurable outcomes. This pushes business decisions to be driven by analytics, rather than personal judgement. Combined with the explosion of data that employees are creating every day, it is easy to see why people analytics is increasing in popularity.

As a Research and Sourcing Specialist at Objective Paradigm, Jazmin grows her financial tech knowledge in the recruiting industry to attract top talent to their chosen career. At OP, she has the opportunity to apply industrial and organizational psychology principles for crafting job descriptions and training, as well as blogging about the latest trends in the recruitment and IO space. She is always looking to connect top talent to their chosen career path and share industry knowledge. Connect with Jazmin on LinkedIn.