The importance and benefits of people analytics

Publish date1 December 2022

The importance and benefits of people analytics

Employees are a company’s most important asset. A good and productive workforce allows you to respond to changes in market demands, shifting customer desires and digital innovations in a rapid and adequate manner.

But building the perfect workforce and managing the employee lifecycle are often big challenges for organisations. Instead of relying on analytics, they put their trust in one-dimensional workforce metrics that do very little to deliver true insight into the root causes of problems. This can lead to a plethora of problems and complications, such as bad hires, cost overruns, productivity problems and regrettable attrition.

People analytics allows you to tackle these problems. It replaces guessing by making solid, data-driven decisions. According to DDI, organisations that excel at people analytics are roughly three times more likely to outperform their competitors. But what is people analytics? And why is this particular approach to HR and people management such an important driver of business and HR success? Read on to find out and discover the many benefits of proper people analytics.

What is people analytics?

To understand the value of people analytics, we must first define what the practice actually entails. People analytics is a method that uses data to improve the way you manage human resources and improve critical business outcomes in your organisation. It applies the science of understanding and actively leveraging data to important and common human resource challenges. Data-driven insights into talent and workforce processes allow you to develop actionable insights that improve the performance of individual employees and your organisation as a whole.

People analytics is all about using a data-driven approach to inform and improve people practices, programmes and processes. Analytical techniques, ranging from reporting and metrics to predictive analytics and experimental research, help you uncover new insights, solve people problems and (re)direct your HR actions. People analytics also allows you to promote positive employee experiences. This improves your chances of acquiring and retaining talented employees, a strong asset in the tight job market that companies currently have to deal with.

Although the terms “people analytics” and “HR analytics” are often used interchangeably, there is a subtle difference between the two. In contrast to HR analytics, people analytics goes beyond human resources alone. The scope is broader and often also includes business domains such as finance, customer relations, marketing and IT. People analytics should be based on a holistic view of your organisation and the industry in which it operates.

The benefits of people analytics

People analytics has multiple benefits for organisations that apply the practice in the right way. Last year’s Human Capital Trend Survey by Deloitte shows that many organisations are increasingly focused on people analytics, a trend that has gained more traction due to the pandemic and the rise of hybrid working, but also because of new trends in people data. Time to take a closer look at the most important benefits of people analytics.

Employee retention

People analytics is all about data-driven decisions and evidence-based HR. Crunching the numbers and conducting thorough analyses of hiring data and talent retention percentages can greatly increase recruiting efficiency (up to 80 percent) and seriously lower attrition rates. On a broader scale, the data-based nature of people analytics enables organisations to translate information into action and employ evidence-based practices that help improve the overall organisational strategy.

Improved performance and productivity

People analytics allow you to make dashboards that highlight specific problems and bottlenecks. These barriers often hinder personal and organisational productivity, but also decrease employee satisfaction. Common issues include collaboration problems, unbalanced workloads, lack of workplace diversity and inclusion, and safety risks. People analytics allows you to address and resolve these in a correct and efficient manner!

Cost savings

People analytics helps you to reduce employee turnover and optimise workforce planning. This means that it opens up an exciting window for significant cost reductions. Successfully retaining talent means that you can cut back on hiring and training costs for new employees. High employee retention rates also contribute to long-term business continuity and stability.

Closing skills gaps

Skills gaps often prevent a successful match between your business goals and actual in-house capabilities. People analytics allows you to bridge talent gaps within your organisation because it allows you to identify a worker’s actual, present-day skills and the future skills that you need to achieve your business goals. You can build a pipeline of talent and create development and training programmes based on the future needs of your business.

Increasing diversity on the workfloor

People analytics can answer important questions about the state of diversity throughout an organisation, but also across your employee lifecycles. This allows you to create a more diverse and inclusive working environment. Merck KGaA used people analytics to continuously track progress on diversity and inclusion. By the end of 2018, women occupied 32% of leadership roles (manager-level and above) within the organisation.

Achieving fair play

Companies can use people analytics to assess proposed candidate offers, then counter-offer considerations and promotions in a fair way. This allows teams to instantly compare compensation profiles, incentive scores, performance ratings, and attributes of employees to others on the same team or in similar positions. Promotions, salaries and rewards are based on hard data and evidence-based statistics instead of subjective personal preferences and gut feelings.

Performance boosts through regular feedback

People analytics provides managers and people on the workfloor with the regular feedback they need to boost performance. It allows for strategic planning that gives both employers and employees the opportunity to grow.

Improving employee relationships

People analytics also enables you to monitor and improve the relationship between your workers. Employee behavioural data often holds the information needed to anticipate and combat issues like workplace harassment, unhealthy rivalry and bias.

How to use people analytics in your organisations

But how do you create an effective people analytics strategy that allows you to reap the aforementioned benefits? Let’s find out.

Evaluate your needs

The first step towards a data-driven company that harnesses the power of people analytics? Determine what your organisation needs. Do you have trouble retaining employees? Then you should focus on improving working conditions or creating a learning environment that gives workers the opportunity to extend their skillsets. Is recruitment your Achilles’ heel? Then focus on your advertising and onboarding strategies.

Define your analytics strategy

Defining your analytics strategy is the next step. Align your people analytics strategy with your business strategy and most important business needs. This will help you understand what you need to know and what insights you need to gain. It allows you to prioritise one or more of the seven main pillars of people analytics:

  • Workforce planning
  • Talent sourcing
  • Talent acquisition and hiring
  • Onboarding and engagement
  • Employee lifetime value and performance
  • Talent attrition and retention
  • Employee wellness, health and safety

Data sourcing and collection

We have seen that the right data is the foundation of a proper and effective people analytics strategy. After evaluating your needs and defining a clear-cut people analytics strategy, it is time to start sourcing and collecting data. What kind of data you need to collect, select and analyse depends on your focus area.

Is improving your recruitment process your main goal? Then you could begin using a data-driven selection assessment as part of your hiring process. Assessments can help you evaluate candidate competencies and provide valuable information about the personality, reasoning ability and risky character traits of candidates. If your main concerns are employee happiness and company culture, you could distribute satisfaction surveys via your human resource management system.

Obtain and use the right tools

Effective data collection only works if you have the right tools at your disposal. Maybe you already have a tracking system or analytics software in place. Or maybe you have already made a cautious start with collecting data from employee surveys. Once you have mapped the people analytics tools that are already in place, be sure to expand on that and build a strong analytics infrastructure.

Data analysis, visualisation and modelling

Raw data can be (but is not necessarily) useful. Cleaning (getting rid of inaccuracies or duplicate data) and organising information is often necessary if you want to derive real value from it. Tools like Power BI and Tableau help you to optimally model, visualise and present data and make the information available for every employee and stakeholder within the organisation.

Building a data culture

To make the most of people analytics, the data-driven approach towards decision-making and implementing improvements should be ingrained in your organisation’s DNA. This boils down to creating a so-called data culture. You don’t just collect data (everybody does), but use verifiable information to make and cement business and HR decisions.

Professionalising people analytics with Reworc

People analytics is becoming an increasingly important part of the modern human resources framework. Many organisations know this and do collect some data, but they still don’t have the right tools and procedures in place to leverage this data to its full potential.

This is where Reworc enters the equation. We can help you build and implement an efficient people analytics strategy tailor-made for your organisation. We deliver an industry-leading workforce and workplace assessment based on research-backed analysis to connect your people, places and processes. Learn how data analytics can show you how to support your employees in being happy and effective. Our SpacePro solution can instantly translate data insights into action. Interested? Just give us a call at +31 348 486 580 or send an email to

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