How to Measure the Value of People Analytics
If you’re reading this blog, you already work with HR data-driven analytics in your organisation. After all, people analytics is a growing trend, and our Insight222 research proves that year after year, more companies are investing in this field to gain valuable insights into their workforces.
But not all companies are equal when it comes to people analytics. Some organisations have been at the forefront of this movement for years. Of these, Leading Companies have seen great success in using data-driven strategies to improve HR processes and drive business outcomes. Leading Companies in people analytics are often the ones that have been featured in our research, and their case studies serve as valuable examples of how the right approach to data analysis can add real business value to an organisation.
Consider LG Electronics, for example. In their quest to enhance their B2B sales relationship process, the company meticulously analysed all of their sales data. They examined every deal in their pipeline alongside their people data.
This comprehensive data-driven analytics approach allowed LG to discern crucial patterns in sales performance. This ultimately unveiled the distinguishing traits and skills of top-performing salespeople. Armed with this knowledge, they were able to refine their recruitment and development initiatives, fostering an environment of continuous improvement within their sales teams.
Where Does People Analytics Add the Most Value?
As seen in the case of LG Electronics, people analytics can be incredibly valuable in helping organisations make data-driven decisions that directly impact their bottom line. But what exactly are these areas where data-driven analytics adds the most value?
Our 2022 People Analytics Trends Report identified five key areas where people analytics adds the most business value.
Measuring the Business Value of People Analytics
While many organisations acknowledge the significance of people analytics, quantifying its business value remains challenging for most. In our latest Insight222 People Analytics Trends 2023 Report, "Investing to Deliver Value: A New Model for People Analytics", we identified four distinct types of value that people analytics can deliver:
1. Improving Workforce Experiences: People analytics goes beyond traditional HR approaches by using data to enhance employee experiences, including engagement and well-being.
2. Driving an Analytics Culture: People analytics fosters a data-driven analytics culture within organisations by democratising access to people data. This results in improving data literacy and spreading analytics throughout the organisation.
3. Improving Business Performance: One of the most significant contributions of people analytics is its ability to boost business performance by optimising workforce planning, increasing productivity, and ultimately delivering improved profits.
4. Creating Broader Societal Benefits: People analytics contributes to broader societal benefits by championing inclusivity, diversity, and sustainable people practices.
Intriguingly, while these areas represent the true potential of people analytics, our research unveiled that only a portion of organisations effectively measure the business value in these domains.
In the research, it was found that 70% and 71% of companies measure value in the first and second areas, respectively. However, the survey revealed that only 39% and 34% of companies actively measure improved business performance or create broader societal benefits through their people analytics activities.
Demonstrating the Commercial Value of People Analytics
Our research found that those organisations that successfully measure the commercial value of people analytics display distinct characteristics that differentiate them.
1. Influence
Companies that measure commercial value tend to have more senior-level involvement. Leaders of People Analytics in these companies often engage regularly with top executives, such as the CEO and CFO. These leaders establish crucial connections that drive the implementation of data-driven strategies.
2. Business Priorities
Organisations that measure commercial value focus on aligning People Analytics projects with people and HR strategy and with the broader business strategy and C-suite challenges. This ensures that data-driven initiatives are directly linked to the overall organisational objectives.
3. Skills
Successful organisations prioritise building teams equipped with key People Analytics skills. Such teams favour people analytics consultants, data scientists, and behavioural scientists. These skill sets are essential for leveraging data effectively and driving meaningful insights.
4. Measurement
Companies that measure commercial value actively collaborate with finance executives to calculate the value of scaling People Analytics insights and recommendations. Building strong relationships with finance executives is crucial for demonstrating the financial impact of People Analytics initiatives.
Where Does Your Organisation Stand?
With the growing importance of people analytics in HR and its potential to drive business value, organisations need to assess where they stand in measuring this value. This is where our Insight222 Leading Companies diagnostic tool can be incredibly beneficial.
By using our Leading Companies diagnostic tool, your organisation can discover where you are regarding your people analytics maturity level. It also identifies what characteristics you need to develop or enhance to drive impact through data-driven strategies.
However, we understand that measuring and optimising People Analytics's value can be challenging. However, our Insight222 People Analytics Program® can provide greater support. It offers a unique opportunity to enhance your skills and network, providing access to resources and events that will help you and your team succeed in demonstrating the commercial value of People Analytics.
You can learn more about our Insight222 People Analytics Program® and how it can assist your organisation in measuring by visiting our Insight222 website.
People Analytics as the Future of HR and Organisational Success
In conclusion, People Analytics is not just a trend - it's a transformative force that empowers organisations to make data-driven decisions, improve workforce experiences, foster a data-driven culture, enhance business performance, and contribute to broader societal benefits.
As organisations continue to navigate the evolving landscape of HR and People Analytics, measuring the commercial value of these initiatives is key to demonstrating their actual impact. Utilise our diagnostic tool and explore our program to ensure you're on the path to realising the full potential of People Analytics in your organisation.
ABOUT THE AUTHOR
Naomi is an experienced business professional with over 15 years’ experience, mainly in the financial services industry. She has undertaken roles as a HR business partner, HR chief of staff and as a commercial banker during her time at Barclays Bank. In the last six years Naomi has dedicated her career to people analytics, with particular expertise in consulting with business executives, HR leaders and other stakeholders. Naomi took a career break in the mid 2010s to travel around South America to learn Spanish and immerse herself in the Latin American culture. In her spare time, she loves to watch professional athletics, having once been a junior national athlete herself. She currently lives in the UK.