People analytics: the future of HR management

In the face of rapid upheaval, HR is increasingly turning to digital measures to improve talent acquisition and retention.

The skills market is changing dramatically, so much so that recruiting and retaining the right people is more important than ever. Successful organisations are using social networking and people analytics to attract the right talent and affect and monitor organisational change.

According to Deloitte’s Global Human Capital Trends 2017, “Data about people at work has become more important than ever but the focus of people analytics has changed. Formerly a technical discipline owned by data specialists, people analytics is now a business discipline, supporting everything from operations and management to talent acquisition and financial performance.”

The survey found that 78% of HR and business leaders considered people analytics to be a “very important” trend in 2017 for the UK. The survey also found that over the next three to five years, 45% of organisations plan on leveraging new AI and predictive analytics technologies throughout the recruitment process.

One area seeing a lot of work currently, says Dr Antoine Vernet, research associate at the Business Analytics Centre at Imperial College Business School, is that of analyses and tools to identify how the workforce of a company is likely to change over the next three to five years. Dr Vernet says: “The transformation brought by the rise of machine learning makes it crucial for firms to know how their workforce will be affected. Several companies we work with have progressively put in place extensive HR data warehouses and reporting tools that greatly improve their ability to monitor change in the organisation.”

Proactive, not reactive

Changing the role of HR is the foundation for the use of people analytics, says John Ryder, CEO of Hive HR, an employee engagement company that provides analytics for businesses such as Aveva and Premier Foods. “Much of HR is still delivered in a transactional way,” Ryder says, “delivering a service reactively rather than proactively helping shape the business.

“A lot of organisations collect a lot of people data and metrics, but are not currently using it to make correlations and develop their ability to predict trends. The first thing is to be clear about what you are collecting. Stop collecting things that create an industry, but add no value.”

It can be easy (and tempting), agrees Isla Wilson from business growth consultancy RubyStar Associates, to miss the point of people analytics. “The challenge with data is that the result you get will depend on how good your questions are,” she says.

“On the one hand, data can give an objective view of what is happening, but some of our unconscious biases can creep in when it comes to how we use it. So, for example, if the data reveals that your most successful managers are older males, but the organisation has a poor record on gender diversity – it wouldn't be a smart move to simply recruit more older males on the basis of the data.” She adds: “It can also be a challenge to ensure that you are collecting analysable data which can drive decision making.”

The value in people analytics is more how you implement it rather than strict adherence. “People analytics often works best when it is a starting point for honest and effective conversations about what is working well in an organisation,” says Wilson. “The analysis is the important part – not just the data. I've seen companies use data and analytics about their people to uncover great examples of best practice which were previously undetected; biases which can then be addressed and teams where management needs additional support in order to improve performance. All of these generated very positive outcomes.”

However, she warns: “I've also – thankfully, less often – seen data misinterpreted or misapplied or even used as confirmation of existing perceptions without sufficient further analysis to unpick what the data was really telling them.”

People analytics: the future of HR management

Hitting the bottom line

Of course, the real value of people analytics should come from being able to improve the business, says Sarah Dowzell, Assoc CIPD, COO and co-founder of Natural HR which offers a fully integrated HR software platform.

“Whether it’s sales, productivity, customer service or hiring, HR needs to make that connection to be able to really deliver value. We have customers who have been able to very clearly articulate business value and improve bottom line through analytics – for example, the ability to find direct links between business performance such as sales and ‘HR’ metrics such as salary, gender, performance review scores, last pay rise and so on.”

Additionally, says Dowzell, “the ability to use real data to allow them to predict where their best hires come from allows them to target competitors or use specific recruitment channels which give the best return on investment.”

The main thing to consider is where your data sits and do something about it. “If your data is spread across multiple systems then the process of integration is much more complex,” says Dowzell. “For example if you are using an HR system with a separate recruitment/ATS, separate performance management, separate expenses system – which we see a lot of – then the integration is much more complex, time-consuming and, frankly, expensive.”

Another voice in the room

Tom Marsden is CEO of people analytics company Saberr, whose products are used by the likes of Virgin Hotels and Unilever. Saberr’s two main products are Base and Coach, which deal with team design and ongoing team performance respectively.

Base was built with Big Data at its heart. Marsden says: “We were looking at large patterns in online dating about how people find relationship matches. We found that certain questions, such as ‘If you were playing someone at table tennis would you smash them or let them win?’ predicted where they found their match. When we analysed the fundamentals, they were probing values.”

The academic research, says Marsden, shows that if a team is solving a complex problem you need high cognitive diversity but a shared tolerance of each other’s values. “Base provides an impression of those two factors and predicts performance outcomes,” he says.

Saberr’s other tool, Coach, gathers data about engagement and dynamics via a chatbot interface – replicating the experience a coach would have with a team.

There used to be a sense that people analytics was a shortcut and no match for the traditional recruitment process. But, says Marsden, that response is becoming less common. “People are realising that this isn't replacing human judgement, it's augmenting it. It’s another voice in the room.”