Sir Richard Branson once said that he relies on “gut instinct” rather than analyzing “huge amounts of statistics” when making business decisions. It’s hard to argue with his methods —the entrepreneur founded a multinational conglomerate (the Virgin Group) of some 400 companies and has built a net worth of more than $5 billion.
However, Branson’s track record also illustrates why gut instincts aren’t always dependable. Along with the successes, he has also backed a string of colossal flops — Virgin Cola, Virgin Clothes, Virgin Money, Virgin Vodka, Virgin Jeans and Virgin Cars, to name just a few.
Instinct and intuition are important elements of the decision-making process, but they shouldn’t be the only parts. Insights gleaned through the use of data analysis can provide important details that dramatically improve the reliability of decisions. This is why more and more human resources (HR) organizations are adopting so-called “people analytics” to improve the way they identify, attract, develop and retain talent.
Creating Business Value
People analytics is also known as HR analytics, workforce analytics or talent analytics. As the name suggests, it is the practice of using predictive analytics applications to extract insights and conclusions from HR data sources regarding employee recruitment, career progression, training, productivity, performance reviews, staff turnover rates, and more.
The Society for Human Resource Management (SHRM) has said that HR professionals must increasingly use HR and organizational metrics and analytics to provide business leaders with actionable information about the workforce. In fact, SHRM in December announced a new people analytics certification program designed to ensure HR professionals have “the foundational knowledge and analytics literacy to examine relevant, real-world business issues and effectively communicate data-supported recommendations to their organizations.”
The goal is to enable companies to make data-driven personnel and staffing decisions in much the same way they use data to make decisions about investments, inventory, marketing and more. According to McKinsey and Company, companies that employ people analytics are 80 percent more efficient in recruitment, 25 percent more productive and increase staff retention by 50 percent. Google is among the pioneers in the use of people analytics and reports that it has helped the company improve hiring, onboarding and training processes, identify and address employee flight risks, and improve staff retention.
Deloitte has identified a sharp rise in the use of workforce data to analyze, predict and improve performance. In its 2018 Human Capital Trends report, the firm reports that 69 percent of organizations are building integrated systems to analyze worker-related data from a variety of sources, including social media, surveys, and integrated data from HR and financial systems. In its 2017 report, Deloitte reported that leading ERP vendors are integrating people analytics dashboards to help senior leaders understand a variety of workforce metrics by geography, business unit and manager.
Companies with more advanced analytics programs are moving beyond recruitment and retention to gain insight into many other operational issues. For example, HR analytics can enable a deeper understanding of how an HR organization’s SharePoint self-service portal is being used. Because portals are essentially content management systems where users store, organize, share and access a broad range of information, an analytics platform can create detailed snapshots of how users are accessing, creating, using and modifying that information.
Gut instincts based on intuition and experience will always have a place in the decision-making process. However, the use of people analytics tools to examine a wide range of workforce-related data can help improve the process by generating qualitative information that creates a clearer view of organizational characteristics and drives a better understanding of where to make operational improvements.
Written and composed by Lyndsay Soprano, Director of Marketing