Companies love data. So much, in fact, that International Data Corporation (IDC) predicts big data analytics will see growth at a rate of about six times that of the overall information technology market, reaching heights of $41.5 billion through 2018. Analytics firms are constantly finding new ways to crunch numbers and statistics so that companies can use this information to improve their sales and efficiency.

People analytics is a fairly new subset of big data, but it’s quickly become quite the rage as many companies learn of the positive impact it has on the overall business. In short, people analytics allows a company to view its staff from a data point perspective, granting them the ability to make educated adjustments based on numbers and percentages.

From a strictly business standpoint, using people analytics to make staffing decisions that result in a more efficient operation and increase revenue makes perfect sense. However, there are also some downfalls that come with relying on people analytics to manage staff.

The benefits of data-driven decision making

People analytics enable HR managers to present data-driven ROI information to company executives. This data can include statistics about attrition rates, the success and failure of recruitment efforts, factors making an impact on employee performance, and insight about what makes people stay with the organization.

The Global Human Capital Trends 2016 report from Deloitte explores the five areas where people analytics can have the most influence for a business. These areas are:

  1. Sales performance and recruiting
  2. Productivity
  3. Retention
  4. Compliance and risk
  5. Company culture

Not only do people analytics provide a data-driven window to past and present info, but it can also use historical data to make predictions about the future. You can compile the data on a specific individual and merge it with historical data to determine whether or not that person has potential beyond their current role. Will they make a good leader? Is it likely that they will stay at the company long term? In the case of a layoff, which retained employees will remain the most productive and efficient? Does anyone have transferable skills that could be a fit in another department if there was an opportunity to redeploy workers?

Proponents of implementing people analytics as an influential component of HR believe that people are predictable and thus able to be fully examined from a data point perspective. But have people really become so calculable that we’re now able to value you them based solely on a collection of numbers, statistics and percentages?

The drawbacks of a strictly quantitative approach

Businesses interested in adopting a people analytics approach to HR management should be cautious that the practice isn’t foolproof. The tech and methodologies behind people analytics are still in their infancy and, therefore, early adopters should approach their numbers with a grain of salt.

The biggest variable is that many of the predictions people analytics allows us to make aren’t 100 percent correct because people aren’t as predictable as some may believe. As the author of this Wall Street Journal article points out, adopting people analytics as a part of your corporate culture takes the humanity away from your employees. No longer are they people, merely points of data. Focusing solely on the parameters set by people analytics could result in a company to potentially miss out on hiring someone who would have actually made a great employee. Or to withhold a promotion from another who would have actually made a great leader, just because their data didn’t match up with the requirements set forth by the analytics.

Leveraging HR with people analytics

Overall, people analytics offers companies unique insights that have previously been unavailable. Companies that implement people analytics as a part of their HR practices have the potential to see its value, especially when it comes to staff management and allocation—as long as it’s carried out in the context of a more holistic and qualitative view of the company’s talent ecosystem. Has the introduction of people analytics affected how you approach your human resources? And where do you see it fitting in with your future talent management initiatives?

24 March 2016

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