9 Best Practices to Implement a People Analytics Strategy

By Alex Larralde
May 13, 2022
8 minute read

Technology is integrated into every aspect of human resource management today, and that technology generates millions of data points that can inform your workforce decisions. To make the most of out of that data, you need a people analytics strategy.

People analytics refers to the practice of using HR datasets to generate insights and quantify the effectiveness of your workforce. You can pull data from people processes such as performance management or talent systems such as your applicant tracking system. When combined with organizational data and interpreted accurately, those insights can help your organization take a data-driven approach to solving workforce problems. 

People analytics requires specialized HR systems and procedures to generate useful and actionable insights. Meticulous planning, an open mind, and the flexibility to change course all go a long way in helping an enterprise HR team take full advantage of the insights afforded by people analytics.

Here are nine big data analytics best practices for designing and executing your people analytics strategy.

Encourage Data-Based Decision Making

In the era of big data and analytics, your organization now has access to a wealth of precise, real-time information to base business decisions on. The statistical insights gleaned from business data provide the objective backdrop that business leaders need to support strategic decision-making.

Uninformed decisions are risky, especially in a constantly changing workplace climate. Your choices can make the difference between engaging the talent you need and winning market share – and falling behind.

Your people analytics strategy allows you to experiment with talent management processes. Individuals and teams can use hypothesis testing to make informed business decisions and learn from mistakes. Even when taking a data-driven approach, not every decision you make will be the right one. But with a record of your decisions, you can tweak processes over a period of time to produce the best possible outcome.

You can track and improve performance management processes using data science, for example. Use objective and key results (OKRs) to gauge individual, team, departmental, and organizational performance. Clarifying what you’re working toward (objectives) produces a much cleaner dataset as you achieve your key results. Track trends and make real-time changes to your processes according to what you learn from the data analysis.

For each talent analytics case study, use a core set of three or four key results as the basis of HR’s strategy and decision making. Actively monitor and analyze key metrics like attrition, absenteeism, recruiting, or any other quantitative measures that affect the workforce and your organization.

Practice Better Data Management

Before you can make the most of your HR analytics dataset, you have to prepare for effective and compliant data management. Most big datasets are stored in data warehouses, which are digital repositories for collecting and integrating data pulled from various sources. You’ll need someone to maintain these warehouses to preserve the integrity of your data.

Establish data management, or governance, policies that define individual responsibilities for managing data. Train anyone collecting or engaging with workforce data to maintain the accuracy, uniformity, and reliability of your company’s warehouse. 

Data management for your people analytics strategy goes beyond HR alone. Other stakeholders include IT, finance, accounting, security, and any other department that is reliant on specific subsets of data. Establish clear rules for organizing data in your warehouse and how it shows up in your workforce analytics dashboard. Since you’ll likely collaborate with IT to maintain the people analytics systems, work with the different stakeholders to equip IT with the resources needed to align the different datasets and definitions to each of the proper stakeholders.

Consider safety and compliance when developing policies for governing data. Because HR data can contain sensitive information about employees, work with cybersecurity and legal counsel to build in protective measures.

Find an Effective Mix of Analytical Tools

Experiment with different modern tools, and take advantage of free trial periods to minimize the financial risks involved with this important business decision. Many vendors will work with you to determine whether their software is the right fit for your organization. You can also contract with a knowledgeable consultant to assist you with selecting HR analytics tools.

An up-to-date enterprise resource planning (ERP) platform is a good place to start. An ERP unites all of the business’s key functions, producing an integrated dataset. Choose an ERP with adaptable, scalable HR modules.

Ideally, you’ll find people analytics solutions that can address multiple needs, like data mining and data analysis, within a single platform. But you may not find every capability you need in one platform, so be aware of how your ERP integrates with other tools. Make sure that the platform can readily communicate with the rest of your HR tech stack and people analytics tools.

Look for comprehensive solutions from reputable vendors with good track records and excellent customer service. When reviewing people analytics software options, bring additional stakeholders into the conversation. IT and security will be monitoring these systems, for instance, so be sure to ask for their input as you make this decision.

Place particular consideration toward the software’s user interface. Choose solutions that are user-friendly, and don’t create undue barriers to user adoption. Your investment will go to waste if business leaders and HR professionals don’t use your workforce analytics tools simply because the interface and functions are confusing.

Use Questions and Unknowns as a Guide

The more data you collect and integrate across the company, the stronger your dataset will be. But on the way to reaching that point, you’re likely to encounter unknowns, or elements of the data unfamiliar to your machine learning algorithm. These gaps in knowledge, or known unknowns, can help you find a starting point for your people analytics team.

When you know that you have gaps in your HR data, you can apply resources to solve for those gaps. Think of unknowns as variables in an experiment. You’re aware that one element is producing different results, and armed with that knowledge you can use trial and error to find the variable that produces the best results. 

Perhaps you hypothesize that lack of communication is driving down employee engagement, for example. Create a control group where communication maintains the status quo, as well as an experimental group where you introduce more frequent and consistent communication. Evaluate engagement data for both groups to determine whether increased communication was the right business decision.

This methodical process will help you develop a stronger relationship with your HR data points and the meaningful insights they can provide to guide business outcomes. Start with two or three central questions or unknowns that are responsible for talent pain points. 

Eventually, you can use the data to gain insights into increasingly complex questions, such as:

  • Does my workforce contain the talent needed to reach organizational goals?
  • Which current employees have the highest ceilings for development?
  • How much is attrition costing the organization?
  • How are employee engagement and experience affecting individual and enterprise performance?

By starting with your questions and unknowns first, you can apply meaningful insights to have a significant impact on business outcomes.

Conduct Efficient Research

In today’s interconnected world, collecting data isn’t a problem. Millions of data points are available in every software tool we use, and each use builds adds to that repository. But endless reams of information won’t do your business much good if that data isn’t targeted to meet your needs. Be selective in the data you collect and analyze.

For people analytics purposes, concentrate on data and processes that can drive business outcomes in some way. Identify the data points that are easiest for your people analytics team to turn into the greatest impact on your HR metrics. 

Consider performance management, for example: What data points are managers adding to your performance management system? Is the system prompting the most useful inputs, like performance progress over time or each team member’s skills and competencies? Are those conversations happening frequently enough to provide the data needed to pick out meaningful insights into your overall process?

Use key performance indicators (KPIs) and other quantitative tools to make sure that all data analysis efforts address areas that need to be monitored and improved to add value. Don’t waste time tracking HR metrics that don’t add value to the business. For example, tracking performance management data is less about recording individual team member performance, and more about the success or failure of your performance management systems.

Look at the business data you have and the organizational goals you’re trying to solve. Align your relevant HR data points with corresponding business data points to produce data-driven insights into the business’s overall performance. 

Transform Data into Action

To benefit from people analytics, your data has to tell a story. It fills in the blanks for the first and second acts of the narrative and, if interpreted correctly, provides a distinct direction for the final act. Data that sits idly by and never gets transformed into action is just as pointless as not collecting data at all. HR and other stakeholders can substantiate their business decisions regarding personnel or other facets of the workforce with pertinent data that leads to action. 

But to transform data into action, you have to be able to build a narrative and communicate your findings to leaders and other stakeholders. Only after the data has been compiled in narrative form can you glean meaningful insights and determine the right course of action to take. Putting raw data points in a context and form that everyone understands allows you to use data-driven insights to make better business decisions.

Assuming you’ve effectively gathered your people data, workforce analytics will reveal the most effective next steps in the process.

Set Realistic Expectations

Implementing HR analytics isn’t a magic bullet for solving all of your business’s HR problems. Analytics solutions drive great value in assessing where you stand and how you can improve HR processes to continue supporting the business better. But it takes time to make the most of your HR analytics solutions.

Before you can conduct data analysis, much less plan a course of action or drive business outcomes, you must put several key elements into place. The right technology, redesigning internal processes to collect the best data, and an informed, cohesive perspective among different stakeholders all need to be activated before you can use statistical insights for strategic decision-making.

Your people analytics team will spend the majority of its time on determining the scope, direction, and techniques that work best for analyzing data against HR metrics, as well as the details of the HR data collection itself.

All of these components take time and effort, so it’s important to set your expectations accordingly. On the bright side, HR analytics processes become faster and more streamlined with practice. If you’re deliberate in your implementation of an efficient, purposefully designed people analytics framework, your patience will be rewarded.

Constantly Monitor for Compliance

All industries are subject to data and information regulations, but for some, those regulations are more stringent than for others. No matter what industries an enterprise serves, there must always be an internal vetting process that ensures an organization’s data collection, analysis, and use falls within compliance standards and guidelines.

Develop a committee of stakeholders to oversee your business data. This committee should include representatives from HR, IT, security, legal, and operations. These interested stakeholders can collaborate to design governance policies protecting workforce data from misuse or breaches.

Drive the Process With Continuous Feedback

People analytics is dependent on sound, insightful data to drive the entire process. Unfortunately, the people data stemming from an organization’s workforce has traditionally been viewed as subtle and qualitative — difficult to integrate within a quantitative system that is dependent on KPIs and other metrics for guidance and transparency. 

However, those traditional notions are no longer limiting to an effective people analytics strategy. People data can now be gathered, analyzed, and transformed using targeted, immediate feedback that reveals even nuanced data points within an employee base. 

This may be slow going in the beginning as you redesign systems to assign numerical values to your HR processes. It’s hard to quantify an agile talent acquisition process, for example. But you can quantify the number of new hires recruited from an existing talent pipeline, representing the function’s ability to move quickly.

With a process in place to transform qualitative data into actionable HR metrics, you can continue to refine the data you collect to clean up that dataset over time.

Employers that fully leverage such abilities are those that collect feedback from users on a continuous basis, not just once or even sporadically. When an enterprise is constantly collecting and transforming feedback to gain insights from business data, it is perpetually driving action and growth, as well.

Insights From Your People Analytics Strategy Drive Business Outcomes

Though rooted in HR, the data and processes stemming from your workforce have a widespread effect on every level of an enterprise. The science of people analytics can help you understand that impact so you can make better, more informed decisions to drive your business forward.

Learn how to leverage workforce analytics for your business.