People Analytics: Data-Driven Human Resources

Human Resources is generally perceived as an area where soft skills thrive – feelings, impressions, and relationships drive decisions. But Human Resources is often a sensitive division – one research group, Chartered Global Management Accountant (CGMA), reported that 43% of chief executives, CFOs and HR directors believed poor human capital management had kept their companies from reaching key financial targets in the previous 18 months.

As new quantitative tools and analytics become available, HR is rapidly being disrupted by quantitative data on people. Companies now have access to information about their employees’ behavior and the business culture. One company, Sociometric Solutions, replaces work badges with meters that can capture a large range of data including who talks to whom at what times of the day, the pitch of voices, how people move and their work posture.

People analytics such as these allows HR to increase employee productivity, identify and develop the next generation of leaders (either within the company or with new recruits) and track behavioral improvement. For example, a Bank of America call center used people analytics to find that employee productivity increased 23% when lunch breaks overlapped and a subsequent support group was created. Through people analytics, Google has created algorithms for hiring practices and employee retention, and they use predictive modeling to find people management problems and opportunities. The “people operations team” at Google (they don’t use the term HR) acts as internal consultants and influences people to change based on the powerful data and the action recommendations that they present.

Although most companies are currently collecting data on their employees, the overwhelming majority do not know what to do with that information. The analysis is what brings value out of data – translating the numbers into business and behavioral improvements. A report from the CGMA offers four tips for companies to keep in mind when dealing with big data on professionals:

  1. Big data presents HR with a unique opportunity to demonstrate value: A company should review the type of data it has about employees and candidates. It should then link the data to relevant business outcomes to better measure effectiveness.
  2. Only the right data will lead to the success of talent initiatives: Not all data is useful. Companies should prioritize what they collect to make sure it objectively measures performance and to make sure HR is not buried by numbers.
  3. Embrace innovation that improves how talent is recruited, but with caution: Very few companies have formal policies on the use of social media in recruiting. Organizations should specify which information is fair game in evaluating candidates.
  4. Consider mobile technology for competitive advantage, not to follow the crowd: Very few companies have a mobile platform for talent management. Companies should consider the appropriateness, security and potential value of a mobile tool for candidates.

People Analytics is a powerful tool that when used correctly, can greatly benefit any company. By quantifying the social aspects of work life, companies can look for correlations between employee behavior and productivity in order to find what works, discover what needs to be changed, and improve behavioral and business performance.