People Analytics uses collected data from different areas (e.g., HR, finance, production, customer service, management) to reliably answer essential and complex company questions. Because decision-making is based on facts rather than gut feelings and guesswork, it is more reliable and transparent.
Questions are answered like:
- Which HR programs work (with intended effect)?
- Which HR programs are not working (with intended effect)?
- What improvements would make HR programs work even better (better effect)?
- Is the organization focused on clear objectives?
- Where is the organization aligned, and where is it not aligned?
- What can the HR department do to achieve the organization’s goals?
- What challenges affect the ability to implement goals and strategies?
- Which employees are at risk of burnout?
- How do we link HR activities to the goals and strategy of the organization?
- What investments do we need to optimize to improve the desired business results?
- What motivates employees to go the extra mile?
- What programs and policies need to be prioritized to reduce costs while achieving better results?
- What drives employee satisfaction, commitment, dedication, performance, and productivity?
- What organizational barriers and problems prevent employees from performing at their best?
- Who are our problem managers who are displacing good employees and talents or not optimally developing/employing them to inhibit their work performance?
- When are employees willing to share their knowledge with the team?
This list can be extended with countless questions on a wide variety of topics.
As mentioned before, a holistic view of the company is necessary, as people analytics combine different subject areas and their insights; Social, motivational psychology, business psychology, behavioral science, corporate management, data science, and big data, to name just a few.
Since the beginning of the Covid-19 pandemic, people analytics teams worldwide have been challenged to gain insights quickly and use facts to answer urgent questions from managers and experts in order to make decisions and remain competitive in this new work environment.
My way to People Analytics
Human Resource Management has fascinated me since I first got more information about it. A few years later, I got to know all areas during my extensive undergraduate study.
At least that’s what I thought.
I only came into contact with people analytics after completing my undergraduate study. Fascinated by this area, I found out more about it and completed several online trainings to satisfy my first thirst for knowledge. Because as a factual person, it is natural for me to rely on facts and figures when making decisions. Therefore, specializing in people analytics is only the next logical step.
During my master’s degree, I focused on applying what I had learned as a people analyst and how I can measure the measures taken. After completing my master’s degree, I am currently acquiring programming skills (currently R, then Python) in order not only to use the existing software tools but also to adapt statistical calculations.
Difference between HR Controlling and People Analytics
HR Controlling monitors the value-added contribution and documents the employee structure’s development over many years and how HR activities have affected this development. In contrast, People Analytics enables the targeted influencing of the development and, thus, the active control of HR activities in order to achieve the desired goal.
In short, instead of being an observer, you are an actor.
HR Controlling records key figures such as fluctuation rate, sickness rate, operating personnel costs, qualification structure, age structure, the average cost per overtime hour, salary structure, average recruitment costs, personnel productivity, cost per employee hour, training rate, and the average return on investment, to name just a few KPIs (Key Performance Indicators). Monthly, quarterly, and annual reports are created in HR controlling to show the respective key performance indicators’ development. In other words, HR Controlling is oriented towards the past and the present.
In comparison, People Analytics is future-oriented. With statistical analyzes and advanced data analysis, the cause-effect relationships are revealed, and the causal relationships are demonstrated. It also shows which HR activity has which effect and the extent of this effect. This enables activities to be set in a more targeted manner and developments to be managed proactively.
HR / People / Workforce / Human Capital Analytics
Regardless of how you call it, HR analytics, people analytics, workforce analytics, or human capital analytics, I am convinced that this area is essential. No company can afford to let this resource and the associated potential and opportunities go unused.
Personally, I do not differentiate between these four groups because you have to have a holistic view of the company and consider every part of this complex interaction in order to make sustainable decisions for the company in a rapidly changing world of work.
In the same way, every employee must be seen as a whole person. S/He has a life outside the company (people analytics) and brings value to the company (human capital analytics). Processes and workflows can be perfect in theory (workforce analytics) and yet not work in everyday life. Likewise, improving and perfecting HR practices and HR analytics have only a limited effect. Employees interpret processes differently from planned, develop further and question the necessity of individual parts. Furthermore, the performance fluctuates over the day / the weeks / the months / the years; machines and software change, just like the company and its goals change over time.
That is why I refer to all four groups when I write/say People Analytics.
Both employees and the company are inseparable. The employees are the company, and the company is its employees.
Which knowledge and qualifications a people analyst needs is difficult to answer, as it also depends on the existing team, the division of work within the group, and the respective company. However, some skills are essential. This includes analytical skills, an understanding of complex relationships, communication and presentation skills, knowledge of scientific methods, detail-oriented, process-oriented, and structured working methods. Furthermore, skills in data analysis, Microsoft Office (especially Excel), programming knowledge, and experience with various analytics programs. What training companies expect varies.
Companies expect a university degree in economics, business analysts, data science, HR management, statistics, or communication.
As shown above, subjects such as social and motivational psychology, behavioral sciences, business psychology and corporate management are combined in people analytics. Therefore, I am convinced that you have to have a deep understanding of Human Resource Management in order to be able to interpret the data and analyze it correctly. Just because variables correlate doesn’t necessarily mean that they affect each other directly. Without a deep understanding of Human Resource Management, misinterpretations, and expensive wrong decisions can easily occur. Which is why I am convinced that the skills and experience of a data scientist are critical and useful, but mainly for analyzing the data and less for interpreting the results.