The value of people analytics is different for each organization. However, the financial impact of having this data is something that organizations can’t afford to ignore. Customer research shows there are moments that matter that drive value from people analytics. These are the employee lifecycle activities from hiring to retention, as well as organizational effectiveness activities from optimizing planning to optimizing productivity.
The Financial Impact of People Analytics: Journey of Visier Customers to Business Impact report describes how organizations that adopt Visier achieve quantitative value from their investment in people analytics. It’s based on over three years of research into customer stories that include a financial saving or revenue expansion–real hard dollars. Read on to learn more about what the report covers.
Why do we need people analytics?
When organizations take advantage of workforce data to inform their people decisions, research shows that they outperform those that don’t. One way to measure the overall performance of companies at the aggregate level is by tracking and comparing two key financial metrics: return on equity and revenue per employee. When a company earns a return on equity in excess of its cost of capital, it adds value.
For the fourth quarter of 2019, the average return on equity across all industry sectors in the U.S. was 15.4%. For publicly-traded Visier customers, the average return on equity was 23.6%, more than 50% higher.
Aggregate performance can also be measured by revenue per employee. Visier customers generate an average of $775,364, outperforming the average revenue of $650,797 of all U.S. organizations by 19%.
Some of the ways Visier customers have either increased revenue or cut costs with HR analytics include:
- Finding more top quality hires to increase revenue by $37.5 million.
- Reducing turnover by retaining new hires, top performers, managers, and other key roles, saving as much as $15 million.
- Optimizing workforce planning to remove fat from workforce staffing projections and the need for open requisitions yielding savings up to $100 million.
For a deeper dive into these findings, view the full report here.
The journey to analytics value starts with three steps
Prior research in 2017 showed Visier customers were on a journey to value:
- Adopting Visier and achieving technology cost efficiencies compared to other technologies and saving existing reporting and analysis labor costs as they scale their efforts by moving away from heavy data handling to more strategic and analytical roles;
- Then focusing on analytics that make HR more effective that improve its processes, its programs, and its key metrics, and then;
- With that experience, going after achieving business outcomes and metrics critical to the C-level where they achieve hard-dollar improvements in profits, revenue or industry-specific metrics such as improved patient satisfaction.
The 2008 economic downturn showed that during a recession, revenue growth is replaced by profit sustainability and for some, profit growth. Profit is impacted by cost savings and this report shows Visier customers achieve extraordinary cost savings. So, whether we are in a recession from crisis, budgets are tight, or the economy is growing, people analytics helps organizations outperform.
Moments that matter that drive financial value
In 2020, based on a continuing deeper look at the quantitative value achieved by organizations, looking at their challenges, analytics used, insights gleaned, and actions taken to achieve results, we see significant moments that matter that drive value from people analytics and workforce planning:
- Across the spectrum of the employee lifecycle of attracting, developing, and retaining talent all deeply impacted by employee experience work
- Across organizational effectiveness activities of optimizing planning, optimizing structure including span of control and spans and layers, and optimizing productivity
The strategic value beyond these areas is also substantial. Enabling Visier customers to keep their employees safe, engaged, and productive during the COVID-19 pandemic is inestimable. Likewise, enabling business leaders and people managers to make more informed decisions about hiring, compensation, internal movement, and promotions can mitigate risks, ensure compliance when coupled with learning options, and ultimately, enhance competitive advantage and innovation.