Traditionally, the lack of effective data collection, sanitization, and analytical tools has led to data compartmentalization across HR functions. And it has prevented managers from unlocking the full potential of their talent. Over the years, there’s been an evolution of analytics in the people function – from descriptive, diagnostic, predictive, or prescriptive, people analytics has helped draw actionable insights on several people and business challenges. 

The benefits of data-driven people management include not only higher employee engagement and productivity, but also better hiring, enhanced company culture, and effective customer service. But adoption of these advanced technology tools has been slow – partly because of the lack of leadership involvement, the need for specialized talent, and integration challenges with technologies. 

However, with the shift towards a mostly remote working environment, these challenges are being overcome. And companies that were earlier sceptical of adopting new technology, are now showing more openness towards experimenting with the view to help the HR function make the most of people analytics.  Here’s a starter guide to lay down the framework of people analytics in your organization:

People Analytics: A Step-by-Step Guide

Set Clear Objectives:

Defining the objective and clearly framing the questions that need to be answered using people analytics is vital. This step will not only give an overarching direction and purpose to the entire process, but it will also help identify the key metrics and also determine the criteria for success. Setting clear macro objectives helps decide which key metrics to track. For instance, if the end-goal is to improve employee retention, metrics like employee satisfaction, happiness, turnover, and resignation rates need to be measured alongside other factors like retention rate per manager and diversity.

Build the Right Team:

To make people analytics and an integral part of the organization’s workforce management and decision-making, there needs to be a team in place to lead the effort. While the size of the team can vary depending on the number of people in the organization, it must have a C-suite leader (like the CHRO) leading the process, data architects to ensure data reliability, data scientists to analyze the data, and HR experts to help interpret the insights and devise a relevant action plan.  

Set Up Data Collection Processes:

Once the right metrics have been identified, and the team is in place, the people analytics team must lay out the framework to collect reliable and accurate data. While some systems like applicant tracking system and payroll management system may already collect data, there’s a need to integrate them with other tools including engagement tools and productivity measurement systems. It is critical that HR acts as the focal point between different departments and coordinates with various stakeholders to ensure that intuitive data collection processes are devised.

Invest in the Right Tools:

While very large organizations have the liberty and specialized teams to develop a custom product, the need of the hour are cloud-based products that do not demand a hefty upfront investment and can be used right away. These SaaS products not only come with a shorter learning curve but also usually allow the transfer of data from one system to another. 

Implement the System:

With the essential architecture ready, the next step is to actually implement it by providing training to employees or HR, if needed. While launching, the focus must squarely be on achieving objectives that can be achieved in the short-term. As the analytics team and HR begin generating insights from the data collected, start making changes to existing processes and systems to notice measurable impact and change. Demonstrating the benefits of people analytics using short-term impact can help strengthen the advocacy of the same and support higher business buy-in for expansion and long-term usage.

The Future:

There is little doubt among experts and leaders that the use of people analytics will intensify in the coming decade. Organizations will invest heavily in gathering insights from data extensively to improve critical processes like recruitment, engagement, learning, and retention. There will also be a discernible shift from descriptive and diagnostic use of people analytics to predictive and prescriptive usage. However, along with these innovations and developments, HR will have to ensure that robust data privacy and protection mechanisms are in place too.

This article was first published in People Matters.