Human Resource departments are progressively becoming people analytics departments. According to Harvard Business Review, 70 percent of the companies now say they are considering people analytics to be a high priority.
Firms in a variety of industries are exploring how to use people’s data for improving recruiting, hiring, employee training, and development, employee engagement, performance management, etc.
Growing Use of People Analytics
Research by Bersin found that 78 percent of big companies have termed people analytics as urgent or vital. On the other hand, only 7 percent of the organizations have rated it strong for HR data analytics capabilities. The early adopters that successfully leverage analytics will get to outperform and compete with their peers in talent acquisition.
Any company can use people analytics regardless of its Industry. I work at the customer service department of Optimum cable and the company is using people analytics, big data and other analytic tools to hire the right candidates for their sales campaigns.
How Is People Analytics Useful?
People analytics is a reliable way of looking at large sets of data to find superfluous spending, patterns, and inconsistencies. A healthcare organization was losing money by overstaffing employees in hours during which staff was statistically not needed. They used people analytics for staffing more efficiently and saved 4 percent of their payroll.
Apart from optimizing conversation, recruiting the most talented employees and more, people analytics has been very effective in improving workforce diversity issues. It requires an organization to take a massive amount of data before, during, and after the recruitment process. Then, it turns data into actionable information. Organizations usually analyze 3 main types of talent-related data:
- People Data
It includes demographics, engagement, and skills
- Performance Data
This is related to performance ratings and data captured through the use of succession programs and other assessment tools.
- Program Data
This includes employee attendance, participation in training and development programs, and outcomes to assignments and other key projects.
15 Ways to Use People Analytics for Managing Workforce Diversity
HR units can help leaders to truly leverage the power of People Analytics to manage a diverse workforce in lots of ways. Let’s review them:
1. Reduce Unconscious Bias
Unconscious bias is a common problem among companies. It has a problematic effect on the judgment of people. Tackling the issue of bias during recruitment is challenging. Data sets can offer company leaders information on the benefits of a diverse workforce. The HR department can then implement strategies for reducing bias whether it is something related to receiving resumes of applicants or setting diversity goals.
If you end up hiring too many employees who think and react similarly, this can hinder performance and productivity. With data sets, HR can identify and choose diverse applicants.
2. Identify Existing Diversity Gaps
To actually and recruit a diverse workforce, an organization must first identify its existing diversity gaps. People analytics help the HR team have a holistic view of the current workforce composition. With this information, it can extract people based on age, gender, and ethnicity. The HR team will then have a broader picture of the diversity gaps across leadership and other organizational functions. These insights let you determine your hiring funnel and reframe the diversity agenda.
3. Design Equitable Compensation Structure
If narrowing the gender gap is the key concern in your company, analytics can help you. The analytical tools let you extract data on employee salaries, performance, and bonuses. With this unified view of data, you can identify patterns of bias within your organization and redesign an equitable compensation structure.
4. Reduce Diversity Retention
Usually, diversity retention is the major reason why voluntary turnovers happen. Analytics can help determine the turnover rate, the drivers of turnover, and segments. With such crucial data, you can create a tailored program for diversity retention. It will help you know where to focus your efforts.
Using people analytics, you can segment employees by demographics for pinpointing signifiers that indicate someone is thinking to leave. HR can then implement an initiative for solving those issues.
5. Optimize Employee Engagement
The productivity of the employees depends on their engagement level. According to the Gallup report, one-third of the American employees are engaged in their jobs. 50% of them are just and not interested in what they are doing. 16% are actively disengaged, hunting for a new job or distracting their co-workers.
Leaders must be proactive in trying to understand employee engagement levels. Analytics can provide data on this and help the company successfully engage its employees.
6. Identify Patterns
Hiring the right people is important but managing human capital goes beyond that. With people analytics, you can extract historical patterns of demand for a diverse workforce. You can run simulations based on economic scenarios for predicting short-term and long-term staffing needs.
7. Smarter Recruitment
Analytics can also help predict the likelihood of a candidate accepting a particular job offer. Based on this information, employers can edit the job offer such as bonuses, compensation, etc. to increase the chances of attracting a specialist.
8. Bypass Biases During the Recruitment
People analytics is very useful in identifying the behavioral traits and core values of a candidate. Saberr, a survey company, uses an algorithm to determine behavioral compatibility, fundamental values, and diversity for predicting the potential strength of the interpersonal relationships between applicants and potential employers.
Applicants are evaluated on core values rather than credentials and skills to determine if they will feel welcomed in the company. This bypasses initial bias during the hiring process.
9. Set Priorities
The most impactful use of analytics is to present visual data for demonstrating an issue and influencing decision-makers. Statistical reports and graphs enable leaders to understand the information and take action.
Let’s say 45 % of the potential candidates are people of color, but your company takes 5% of minorities only. A graphical display of the facts will make the leaders understand the problem and implement a solution.
10. Pay Equity
Another common issue related to diversity is equal distribution of pay between workforces. Some organizations are surprised to find out such high pay equity gaps within their systems. This requires digging below the surface to pinpoint the cause. Here, analytics come into play.
Compensation assessment by gender is not enough. You need to perform a multivariable regression analysis for understanding what’s driving the outcomes. Then, you can start altering the policies and practices.
Even if your organization has established a pay transparency system to monitor pay fairness, analytics lets you determine whether the existing processes are enough.
11. Training and Evaluation
After hiring a candidate comes the responsibility of guiding them through the professional training programs. They also need assistance for adapting to the corporate procedures and learn details about their position.
Once the training phase is over, then comes the part of improving their skills through courses and other learning programs. It is hard to determine the benefits of such initiatives. For many companies, the cost of training is higher than the profit received.
Analytics let you examine employee learning and conduct a cost-benefit analysis for each course. Through this evaluation, a company can modify the courses for making them productive.
12. Financial Compensation (Bonuses and Benefits)
Pay equity is not the only problem when it comes to managing a diverse workforce. Determining a fair financial compensation is another dilemma. When employees are looking for a job, the first thing they see is the salary.
People analytics along with Big Data can help design a financial model for each employee. It’s a huge task for large corporations with international branches. They find it hard to balance salaries on all levels of the organizational hierarchy.
Some companies reward employees (bonuses, benefits, and other allowances) on different proportions based on their performances. They can easily get confused and overpay. Analytics can help HR units determine the right financial compensation.
13. Shortlist Quality Candidates
Analytics removes human biases throughout the hiring process. It promotes diversity within the company by letting you find applicants with the right skillset and work experience instead of simply focusing their background. This ensures that you find the candidate that’s the best fit for the job.
14. Identify the Top Performers
Whenever you are looking to bring a new employee on board, you would want them to follow the footsteps of successful team members. People analytics can play a valuable part here.
Data points when aligned with performance can help establish who the top-performing employees are. With this information, you can construct a profile of candidates your HR team should go after. For instance, the best performers in one role might be a female who has come through ranks and promoted through a specific junior position. You can use this information for targeting professionals in a similar role.
15. Measure Diversity as a Blanket Number
It’s not enough to say that diversity within your organization has increased by 12%. To promote diversity and inclusion, it’s equally important to keep track of the success rate for hiring a diverse group of employees.
If your company’s goal was to hire more African-American employees, you need to be able to show how many of them you had hired successfully. Using analytics, you can separate the diverse candidates by a group. This will make it easier to determine the success rate.
Real-Time Examples of People Analytics
Google started using people analytics back in 2006. It was the time when they hired Laszlo Bock as the SVP of people operations. He believed that data can help unlock ways for improving the workplace.
Microsoft also used people analytics to determine what early attrition means at the company. They concluded that it’s less than 2 years. The cause was a high relative investment of a new hire. The cost of attrition was at 150 percent of the salary. Therefore, if a candidate left before 2 years, the cost of that candidate was 150 percent of the salary that Microsoft paid. It’s because the company lost an opportunity.
The Challenges of Using Analytics
People analytics is enabling HR to access data without manually preparing it. It’s a tool that offers a shortcut to analytical abilities. Then why is it still being met with skepticism?
The HR executives talk about this every other day at my company. Cable companies are using analytics to find gather data about customer behavior. Queries like which cable providers by zip code do customers prefer in Los Angles. Unfortunately, they still aren’t using people analytics to streamline internal processes.
The biggest hurdle – leaders tend to make decisions that are more socially acceptable. They don’t make decisions based on data or an algorithm.
Some HR departments don’t use data-based approaches because they feel it will undermine their expertise. They forget that smart people are still required to assess the data and use their judgment to make sense of the information.
Choose Your Approach
A competitive, high-performing and diverse workforce leads to better business outcomes. HR executives and line managers can make evidence-based decisions to manage diversity within the organization. The ball is in your court now. What approach do you want to choose for managing diversity within your company?
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Rosie Harman is a Senior Content Strategist who specializes in technology. She holds a Master’s degree in Business Administration from The University of Texas at Arlington and has spent the majority of her career working in technology companies across Texas. When she’s not helping the content team, Rosie enjoys adventuring with her two children around her hometown.
