How to Optimise Your People Analytics Team Size?
Over the past three years, our team has conducted extensive research on the topic of people analytics teams. Each year, we investigate the optimal size of a people analytics team ratio in leading corporations, and through our research, we have gathered valuable insights and data that shed light on the most effective operating model for people analytics teams.
We conduct this research annually not only to trace the upward trajectory of the people analytics industry and its profound influence on business outcomes but also to furnish a well-informed response to a recurring query we encounter in our consultancy. Every year, People Analytics leaders and CHROs seek our expertise in defining the optimal size for their people analytics team. However, our research has shown that the answer to this question is more complex than one may think.
Our findings reveal no 'one-size-fits-all' approach to determining the optimum size of a people analytics team. Instead, it depends on various factors such as company size, industry, and organisational goals.
What is Insight222's Ratio for People Analytics?
At Insight222, we approach understanding the optimum size of a people analytics team by comparing it with the total employee headcount. This method, we believe, provides a more holistic evaluation than merely comparing the size of the people analytics team with the size of the HR function, a model often mistaken as the most logical approach.
The rationale behind our method lies in the guiding purpose of the people analytics function, which is to deliver value to the entire business, not just the HR department. Therefore, by linking the people analytics ratio with the total workforce, we ensure that the focus stays on leveraging people data for broad business objectives, enhancing overall organisational performance, and driving business value.
How Has The People Analytics Ratio Changed Since 2020?
Our research reveals that the team ratios to the total employee headcount has undergone significant changes over the years.
Growth of the People Analytics function from 2022-2023. Source: Insight222 People Analytics Trends 2023 Report
In 2020, the average people analytics team size was one member for every 4,000 employees. However, our research shows a significant increase in this ratio to 1:2900 in 2021, reflecting a growth in the size of teams. Impressively, this ratio was maintained through 2022. However, by 2023, the ratio stood at 1:2800, marking a 43% growth in the size of people analytics teams between 2020 and 2023.
This growth is noteworthy as it signifies the escalating value that businesses attach to people analytics, a trend maintained even in the face of economic downturns, global crises, and pandemics.
In fact, in our most recent report, we discovered that over the last 12 months, a staggering 90% of companies either increased or maintained the size of their people analytics teams. This trend is expected to continue, with 98% of people analytics leaders predicting their function will either increase or remain the same in size over the next 18-24 months.
Interestingly, our research has consistently shown a pattern in the investment strategies of various organisations towards their people analytics teams. Organisations with well-established people analytics functions over a year old tend to invest more in scaling their teams. In contrast, organisations with teams established for less than a year tend to invest less in expanding their people analytics capability.
However, this year, our research unfolds a new trend in the size of people analytics teams. We discovered that developing teams, those established for a year or less, are more likely to experience an increase in size. A striking 71% of people analytics leaders in these settings predict a growth in their team size within the next 18–24 months. Interestingly, more mature teams forecast maintaining their current size rather than expanding.
Yet despite this shift, it is no surprise that people analytics teams with a longer tenure boast a stronger people analytics ratio. We established that companies with a people analytics function that has been in place for a year or less have a ratio of 1:3400. This figure contrasts with an impressive ratio of 1:2400 for companies with a people analytics team that has been a part of their operating model for 10 or more years.
How Does The Ratio Differ In Leading Companies?
Historically, leading companies have consistently demonstrated more significant investments in people analytics, with larger PA teams than others. For instance, in 2022, the ratio for Leading Companies was 1:2300 compared to 1:2900 for all companies. This has strengthened from 2021, when the people analytics ratio was 1:2500 for leading companies.
ABCD Leading Companies Model. Source: Insight222 People Analytics Trends 2023 Report
This year, we observed a similar pattern. Leading companies continue to invest more in the people analytics function compared to their counterparts. As we categorise the maturity of people analytics in our ABCD Leading Companies Model, 'A Teams', also known as Leading Companies, have a people analytics team ratio of 1:1100. This is significantly lower than the ratio of 1:4000 for 'D Teams', companies that are trailing in people analytics.
However, despite the ratio of Leading Companies, there is no 'one-size-fits-all' approach when determining the optimum size of a people analytics team. In fact, our research shows that the size of people analytics teams varies significantly across industries.
Financial services and technology companies, for example, maintain larger teams relative to their total employees compared to retail and FMCG sectors. This difference can be attributed to the various budgets, resources, and priorities of these industries. However, regardless of the size, the main take-home point is that all companies are investing in expanding their people analytics capabilities.
For more details on the state of people analytics team ratio per industry, please refer to the full report.
Steps You Can Take to Scale Your People Analytics Teams
As evident from our research, the trend towards increasing investments in people analytics is here to stay. Therefore, it becomes increasingly crucial for organisations to adopt efficient strategies to scale their people analytics teams effectively.
Here are some steps you can take:
Start by focusing on projects that deliver business value: The success of these projects on business outcomes will gain more buy-in from the C-suite and subsequently secure a larger budget for team expansion.
Align your people analytics function with other organisational functions: This is what Guru Sethupathy calls "vertical integration". On the Digital HR Leaders podcast, the Head of People Strategy and Analytics at Capital One emphasises that:
"Vertical integration is the idea that, oftentimes I hear in companies that the people analytics function is actually separate from the reporting function, the consulting function, the strategy function, and the data function. We are all of those pieces. And that is really, really important."
Expand on the capabilities of your function: As your team grows, it becomes vital to expand on its capabilities and skillsets. For instance, when scaling his people analytics team at Capital One, Guru advised that:
"We hired a lot of specialists, IO psychologists and other people who have a real specialisation in this degree, but also data folks, really to improve the quality of people data and HR data."
Productise your solutions: With a growing team, it is essential to streamline processes and create systems that make data accessible to the larger organisation. This can be achieved by developing self-service tools and dashboards that enable HR business partners and people managers to leverage insights from people analytics in their decision-making processes.
As a rule of thumb, we recommend that you start with smaller, less complex projects such as descriptive analytics and gradually scale up to prescriptive and predictive analytics as your team becomes more mature.
5 . Invest in technology: With the increasing amount of data available in organisations, it becomes important to have the right technological infrastructure in place. This means investing in tools that make it easier to collect, analyse and visualise people's data. Discussing how he scaled his people analytics function at National Australia Bank, Thomas Rasmussen advises:
"You can not scale it without technology. So that is really where you need to work with great vendors, have a great ecosystem, work with the architecture, work with your technology colleagues so you have that big solution really scaled across the 34,000 people at National Australia Bank. That is really how you go from insights to behaviour that has the positive impact."
6. Consider initiating a cross-functional partnership model: For those who may not have the luxury of building out a large team, you could follow in the footsteps of Jimmy Zhang, Head of People Strategy and Analytics at Vertex Pharmaceuticals, and look to initiate a cross-functional partnership model. On the Digital HR Leaders podcast, he explains how he achieved this:
"We kept some of the sensitive capabilities like Employee Listening, ONA, Workforce Planning, on the People Analytics team while engaging with our Internal Data Science and IT Teams on capabilities like Machine Learning Models, Self-service Analytics, Data Management, to round out the core capabilities that we need to build out."
7. Create a dedicated people analytics at scale team: For organisations that can expand their teams significantly, Dawn Klinghoffer, Head of People Analytics at Microsoft, shares valuable advice on creating a dedicated people analytics at scale team:
"I thought to myself, what can we do in the people analytics function to also focus on solutions at scale? And that's when it hit me that we needed an analytics at scale team.
Okay. So now I will have a very clean COE analytics team, a very clean line analytics team. And then I will have an analytics at scale team and that analytics at scale team will have our program and project managers it will have our tier one support and it'll also have our cross-company analytics.
So that team is going to be responsible for intake. So that we can prioritise across, It will also be responsible for basically creating a repository for my team. A library if you would of all the analytics that we do, because what was happening is there was a lot of duplication of effort because not everyone was talking to one another."
Opportunities That Arise From Having The Right Ratio
Having the correct people analytics team ratio and operating model can bring numerous opportunities for organisations. With a well-functioning operating model for your team, along with the right strategies in place, organisations can:
Make faster and more informed decisions: With access to valuable insights from people analytics, organisations can make data-driven decisions swiftly, reducing the time spent on decision-making.
Improve business outcomes: As discussed above, focusing on projects that deliver business value can help improve overall organisational performance. By scaling their people analytics teams effectively, organisations can achieve better business outcomes and drive growth.
Create a culture of continuous improvement: Having a dedicated people analytics team encourages a culture of continuous improvement and data-driven decision-making. This can help organisations to stay ahead of the curve and adapt to changing market conditions.
Enhance employee experience: With access to people data, organisations can gain insights into their employees' needs and preferences, enabling them to create a more personalised and engaging employee experience.
Key Strategies for Scaling Your People Analytics Team Effectively
In conclusion, having an optimum size for your people analytics team is critical for its success and the organisation as a whole. However, the optimum size of a people analytics team is not a one-size-fits-all concept. It's a dynamic parameter that adapts to your organisational needs, culture, and goals.
By following the tips shared in this article, you can ensure your people analytics team is well-equipped to drive business value and achieve organisational goals. So, take the time to evaluate your current people analytics ratio and operating model and make any necessary adjustments to set your team up for success.
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.