When hearing about People Analytics, we usually think of how the use of analytics can have a positive impact on the company and its HR department. In other words, how can the employers use data to gain new insights on people topics and affect their organization? But what if the employees could also use and benefit from the insights and outcomes of People Analytics practices?
I am not saying it is a bad thing to use People Analytics from an employer’s perspective! Analytics is a great method to maximize the effects of human capital on critical business objectives. Let’s consider three real examples of People Analytics success.
- Example 1. A subsidiary of a large Dutch retailer in FMCG used People Analytics to research the effects of investments in training and development on business outcomes. The researchers found that training the employees of a shop has a positive impact on the financial performance of that particular shop. E.g. After one year, the return-on-investment of one training was more than 400%.
- Example 2. PostNL, a Dutch postal company, used People Analytics to design the ideal profile of a mail carrier. Thanks to this analysis, PostNL optimized its recruitment process and reduced its recruitment costs. They are now able to target, from the beginning, the right people for this job. Fun fact: the ideal profile is actually the one of an older man with a dog because he would be strong, fit enough, friendly and would not mind being outside, even during bad weather.
- Example 3. Retailer Clarks is our third example. This shoe company used People Analytics to analyze the relationship between engagement and organizational performance. They discovered that a 1%-point score improvement in engagement equals to an increase of 0.4% in business performance, measured in financial turnover. In addition, the studies found that other factors, such as the size of the team, also influence (positively or negatively) engagement and performance. (More cases like Clarks can be found in this report on Strategic Workforce Analytics by Corporate Research Forum)
Fig 1: Successful examples of using People Analytics
All these examples show that People Analytics can make a significant contribution to an organization. But where are the benefits for the employees? What is the added value of People Analytics for the individual? And what does this mean for data management?
People-centric HR and analytics
I believe we are headed towards a form of HR where customization (or personalization) is key. Some call it ‘consumerization of HR’. Accenture calls this ‘Workforce of One’. I like to refer to it as ‘HR for one’. It’s a logical next step in the evolution of HR, where business-driven HR goes hand in hand with people-centric HR. Let me explain.
Numerous organizations use People Analytics from an organizational perspective. How can we ensure more financial turnover or productivity? How can we increase customer satisfaction in the retail sector? These are common research questions that businesses ask themselves.
By using People Analytics, you can provide answers to these questions and adopt appropriate policies to ensure that you create a positive impact on your business. Very often, these policies are aimed at large groups within the organization.
I believe that in the (near) future, these policies will be much more focused on individual employees. If you want to impact your business, you need to make sure that you adopt the results of your analysis to the specific needs and situation of your individual employees.
Fig 2: From People Analytics to People-Centric Analytics
As can be seen in the diagram above (source), people-centric analytics can provide customized products and services, which meet the needs of both the employee and the organization. From the perspective of the employee, this is also known as the consumerization of HR. This term refers to employees’ expectations that their technology experiences at work will be similar to their technology experiences as consumers. People Analytics plays a crucial role in enabling this.
The more data about people you have access to, whether it comes from outside or inside the company, the richer and more diverse data you can plug into your People Analytics model. This will open the door to profiling possibilities on an individual level. Soon, People Analytics will reach a point where we will be able to tell in great detail how the workforce is built and what individuals need to be engaged, to learn, excel and grow. We will also be able to tell which products and services are effective for which type of employee.
Some examples below:
Training & Development:
- As an employee, I want to grow and learn about the topics that appeal to me in the way that suits me best.
- As an organization, we find it important that our people continue to develop their craftsmanship.
- Using analytics, employees can create personal profiles based on their preferred learning style and development ambitions.
- Action proposed: as soon as a new suitable training becomes available, the employee is notified on his/her smartphone.
- As an employee, I want to be happy with my role and have a positive energy at work.
- As an organization, we want our people to be engaged and encourage them to perform well.
- Using analytics, factors that influence the level of engagement can be mapped.
- Action proposed: managers regularly receive customized reports with tips and recommendations to help their team members feel more engaged and function more effectively.
- As an employee, I would like to be aware of potential opportunities within the organization that fit my ambition.
- As an organization, we want to use our existing internal talent as much as possible to fill in our critical positions.
- Using analytics, ideal matches between employee profiles and internal vacancies can be established.
- Action proposed: as soon as an internal vacancy is available, the employee(s) which needs and ambitions meet the position will be notified about it by email.
Sounds great, but what about data?
Apart from advanced tooling and analytics capabilities, you need to have sufficient and reliable data and data management to execute people-centric analytics properly. Unfortunately, because of the current state of data availability and quality, most organizations can’t even conduct simple People Analytics projects. The figure below shows the average data quality and availability of different organizations that we have recently helped to make their first steps in People Analytics.
Fig 3: HR data categories availability and quality assessment
In most cases, organizations manage to cover basic data categories. But when it comes to the most interesting data categories, the availability and the quality of the data are too mediocre to perform meaningful analyses.
It is therefore imperative to start improving and enriching data in a structured and consistent way. But most organizations don’t know where to begin.
Simply start by asking yourself the question: on which strategic HR themes do I want to collect or improve my information? The word ‘strategic’ is fundamental here. You need to concentrate on HR themes where People Analytics would have a profound business impact.
In our 2017 study on People Analytics among over 200 organizations worldwide, respondents ranked HR themes and their business impact as follows:
Fig 4: Perceived impact of HR drivers
Of course this picture is different per organization, but in general, when you compare the impact score to the data quality/availability of these HR themes, it shows that there is still a lot of work to do. The data of the top 3-4 HR themes with the highest potential business impact are often not at an acceptable level in terms of availability and quality. Hence, how is HR able to make any data-driven efforts on these themes?
So what about privacy?
When we talk about profiling people using data analysis, the concept of privacy immediately comes to mind. This is a frequently discussed topic in HR analytics, especially since recently, the General Data Protection Regulation was established in the EU. This law entails that any collection and use of personal data requires adhering to strict rules and regulations. Therefore, dealing with data protection and privacy currently tops the agenda in many data-related departments.
The good thing is that GDPR regulations create focus. The purpose of collecting and processing data is crucial and indicating why you want to collect certain information is more important than ever. Make sure that you think about it thoroughly and record why you collect and capture the information you want and at what level you need to do this.
We are moving towards a world where data about anyone is collected in various ways by different entities for the sake of profiling. More and more applications, such as Crystalknows (check it out, it’s pretty amazing), provide easy-to-use tools to profile employees. Not to mention the upcoming Internet of Things technologies that open up a whole world of behavioral analysis.
A vision of the future of People Analytics has been outlined right above. For the moment, it is essential to organize strategically relevant data and to provide (self-service) tools where employees can obtain important information about themselves. It is also fundamental to ensure clear agreements and communication about the use of information between the parties concerned. Respecting the GDPR checklist is not enough. We highly recommend keeping communication about any employee information-related actions regular and simple.
We are still facing important questions that need to be answered in the future:
- How can we make it interesting for (potential) employees to share data?
- Who has ownership of the employee data?
- Can we use new technology, such as blockchain, to help employees decide what information they share with companies?
Ultimately, it comes down to a simple interaction. If the organization ensures that it can provide tailor-made solutions based on profiling and the employee wants to benefit from this customization, he/she will have to share personal data with the organization (on areas such as job preferences, vitality, and development). It is a simple trade-off in which privacy and communication are fundamental.
Written by Rob van Dijk & Tony Brugman
Tony Brugman is an HR business analyst at Bright & Company, a Dutch HR consultancy. He is researcher people strategy and people analytics and writes on HR analytics.