What Is People Analytics and How Do I Get Started?

Organizations use people analytics to turn raw data into meaningful insights that improve the ways they make decisions and grow the business. People analytics platforms pull data from many business sources into one place and show the data as intuitive charts, graphs, and questions. People analytics are now a must-have for every organization. Let’s take a deeper dive.

In this article, you'll learn:

• What is people analytics?

• Why is people analytics important?

• Can you use generative AI with people analytics? (Spoiler: yes!)

• How people analytics works

• The three main components of people analytics

• How to use people analytics to make decisions, plus six examples of how to apply people analytics to your business

• How to get started with people analytics in three steps

• How much HR data you need to get started with people analytics

What is people analytics?

People analytics is the practice of collecting and transforming HR data and organizational data into actionable insights that improve the way you do business. You'll also see people analytics called HR analytics or workforce analytics—they’re the same thing. 

The term “analytics” is often used interchangeably with other terms like “reports” and “business intelligence,” but these aren't the same thing.

A Deloitte and Visier survey of 500 business leaders revealed that leaders had low confidence in addressing some of their most pervasive, everyday business and people topics. However, with better access to people data, 70% of executives say they could make better decisions, faster. 

Why is people analytics important?

People are the center of the business. Employees create products, deliver services, delight customers, and solve complex problems. People analytics gives you the information you need to make data-driven decisions that impact your organization’s most important areas: your people and the bottom line. 

People analytics teams help HR, business, and people leaders make data-driven decisions to maximize employee potential and business results. But, you don't have to be a people analyst to use people analytics. The most successful organizations put these insights in the hands of every leader in the company. 

Organizations that use people analytics well outperform those that don’t. Visier customers have a higher return on assets, profit margins, and return on equity than industry benchmarks.

The People Analytics Maturity Value Report revealed experienced practitioners of people analytics gained business advantages.

Real outcomes of businesses using people analytics

• Providence saved millions of dollars in turnover through targeted pay increases

• Sunstate Equipment used insights to reduce turnover by 50%

• Royal DSM regained 80% of the time previously spent gathering data

Generative AI and people analytics

Generative AI (GAI) is rapidly changing how work happens and continues to evolve daily. For instance, customer service teams use GAI chatbots and virtual assistants to deliver 24/7 support, marketing teams create content and images, and development teams generate boilerplate code. People analytics and HR teams are benefiting from generative AI, too.

HR teams use genAI to streamline tasks like writing job descriptions and creating personalized learning and development (L&D) programs. Generative AI for people analytics is rapidly increasing the availability of self-serve analytics for users across the organization. Generative AI makes it easy for people analytics teams, frontline managers, HR leaders, and executives to ask questions in conversational language, track essential HR metrics, and access critical, detailed insights instantly.

How does people analytics work?

People analytics pulls raw data from the digital HR tools your organization is already using and applies algorithms, calculations, and machine learning to create charts and graphs that every leader can use to make talent decisions. The most robust people analytics platforms act as a hub for disparate people and business data.

What's the difference between analytics and transactional reports? The ability to use and process new and historical data, apply AI to it, and produce actionable insights. Reports can show basic HR metrics but can’t provide insight into why a problem is happening and how to fix it. The takeaway: Analytics provides actionable insight, while reports simply provide data.

The three main components of people analytics are data, analytics, and insights.

1. People data

What’s people data? It’s all the information an organization collects about its employees: data points like age, tenure, gender, job role, salary, quits, performance ratings, and more job-specific data like sales quotas or closed support tickets, for instance. 

People analytics software pulls this information via API from your digital HR tools (HRIS, HCM, ATS, payroll, etc.), applicant tracking, onboarding, compensation, talent management, and payroll systems and transforms it using data science. 

People analytics software pulls data from all of your digital HR and business systems into one unified view.

2. Analytics

Your people analytics platform operates like your own in-house HR data analyst. The data is processed, cleaned, and organized so the platform can apply complex equations, algorithms, machine learning, and analytics. This is how your raw data becomes something much more digestible: insights.

Building an analytic data model is also a critical step in this process. The data model creates relationships between different data points, making the data more useful to businesses. Without this capability, leaders can’t ask multidimensional questions like: 

• How should we reorient our production operations to ensure we have enough people to meet our targets? 

• What impact will resignations and wage inflation have on our operating costs?

People analytics takes disparate data points about employees and turns them into useful insights that can positively impact the business.

3. Insights

Your people analytics platform presents insights in a consumable way. Rather than looking at raw numbers, you’ll see charts, graphs, questions, answers, and guidebooks that are easy to understand and act on.

In the past, HR professionals and business leaders needed the IT department to start a business intelligence project when they wanted to perform data analysis. With people analytics platforms, users have access to simplified views so they can analyze data on their own—and much quicker, too.

Use a people analytics platform to answer questions such as, "Who is at high risk of resignation?"

How do you use people analytics to make decisions?

So, what exactly can you do with people analytics? Every day, decisions are being made across your organization that impact your people. With people analytics, leaders have access to the insights they need to back up their instincts with facts and data-driven strategies that help their organization grow.

People analytics shows your data in one view so you can answer and act on important questions, and answer questions you haven't thought of to avoid unintentional biases that contribute to bad business decisions. Here are some examples of questions people analytics can help answer:

• Does the organization need to hire more people?

• Who needs a promotion?

• Who might be at risk of quitting? 

Protective Life Corporation, an insurance company, rolled out people analytics to users throughout their organization. HR was able to provide more facts and data, which evolved the perception of what the department can do, and what it’s capable of. Their goal was to foster participation among frontline and mid-level managers—the ones with the power to enact real change.

6 ways to apply people analytics to your business

People analytics enables business leaders and people managers to make better-informed people decisions during hiring, compensation reviews, internal movement, and promotions. It can also mitigate risks and ensure compliance when coupled with learning and development options.

Common recruiting metrics, such as “time-to-fill” and “offers accepted rate,” don't answer strategic questions about the quality and value of the people being hired. A true analytics tool goes further, enabling you to change and improve many aspects of your business, such as:

1. Improve talent acquisition: Identify what candidate attributes produce quality talent to hire smarter.

2. Tackle turnover problems: Identify employees and specific groups at risk of leaving and take action before they walk out the door.

3. Meet DEIB goals: Track the metrics that matter to you, such as diversity ratios at every single stage in the hiring funnel, so you can share your progress and get ahead of areas of risk.

4. Measure performance rewards: Track movement within the company and correlate it with total rewards, compa-ratio, and performance levels to determine if you are effectively rewarding performance.

5. Plan career paths for success: Analyze career paths to develop existing employees to meet future needs and consider your total cost of workforce to accurately plan for the future.

6. Maximize your learning investment: Analyze how long employees take to become productive, which training programs are best, and which need improvement.

How to get started with people analytics in three steps

1. Get stakeholder buy-in

A people analytics platform can have a significant impact on organizational success and business outcomes, but a tool is only as impactful as the people using it. If your organization isn’t fully prepared to make changes and adopt the technology, you might not be ready to invest in an analytics platform quite yet. 

Becoming a data-driven organization takes a core team of strategists and technical experts, backed by champions and sponsors from within and outside of HR. Many people analytics leaders feel the need to lead the charge in the transformation to people analytics themselves. That isn’t true. In fact, the process becomes much easier when you have the right people around you and the right level of support.

Seeking and securing buy-in from executive leadership—both inside and outside of HR—early on is key. Getting stakeholder buy-in helps to ensure that you are building a data-driven organization arm-in-arm with other departments.

2. Find your data champions

Making the business case to your company’s leadership team for people analytics isn’t always easy. Building a data-driven culture requires a full organizational shift and change management plan. Fellow internal data champions can help you build your business case, and navigate the organizational change required to fully put people analytics to use. 

Do people managers need to become statisticians to use people analytics?

No! The right people analytics platform makes it possible for everyone to adopt a more analytic approach to people data. When you put insights in the hands of leaders at every level, they can take swift actions to make better decisions that improve talent and business results.

Data scientists and analysts are still invaluable for more advanced analytics work. With a people analytics solution that has pre-built best practices, your data scientists and analysts are freed up to focus on advanced problems and models for unique circumstances.

3. Define your questions

People analytics relies on strategic, relevant questions. While you’ll still be able to draw insight into your organization without clearly defined questions, you won’t see the same level of impact and organizational change.

Define how HR and your workforce fit into your big-picture goals, then work back to the types of questions you’d like to answer to move the needle on that goal. Once you’ve identified your key questions, it’s time to select the right people analytics solution for your company.

People analytics enables you to go beyond typical HR questions to understand the “why”

• Why are you overspending on your overtime budget?

• Why did you lose a key employee or department, and is overtime required to compensate for this?

• Why are your total rewards not aligned with the actual needs and wants of your employees?

How much HR data do you need to get started with people analytics?

To get started with people analytics, you need to collect at least seven data points for each employee who will be included in the analyses:

1. A unique employee ID

2. Start date

3. Job title

4. Department name

5. Location

6. Identifiers for DEI purposes

7. End date (if applicable)

These foundational HR data points will help answer basic questions related to critical issues such as employee turnover and the representation of people from certain backgrounds in key roles. You can use HR and business data from your core HR systems like your payroll and recruiting tools, data from your talent and employee experience systems like your career pathing and engagement applications, and any relevant business operations and finance data. 

The more data your organization puts in, the greater the insights and return on investment you'll get in return. Look for a people analytics platform that can unify people data with business data from systems like your CRM, sales tools, and ERP. When you can combine this data together, you can generate in-depth insights that drive significant change and strategic decision-making in the organization.

People analytics connect people data with business outcomes

People analytics is the key to understanding the connection between people and business goals, revealing the fundamental questions and actionable truths to elevate your employees—and your business—to new heights. With access to the right people insights, HR can deliver actionable guidance to the business that moves the needle in big and bold ways.

People analytics FAQs

What is people analytics?

People analytics is the collection and transformation of HR data and organizational data into actionable insights that improve critical talent and business outcomes. 

Are people analytics and HR analytics the same thing?

Yes, the terms people analytics and HR analytics refer to the same practice of gathering and transforming people data and HR data into actionable insights for to improve critical talent outcomes like improving manager effectiveness, measuring performance rewards, and improving employee turnover, as well as financial outcomes and overall business success. 

What is the role of people analytics? 

People analytics help HR, business, and people leaders make data-driven decisions to maximize employee potential, reduce bias, and improve business results.

Learn more about people analytics

• New research shows the causal link between people analytics and improving the business performance of enterprise organizations. Read the highlights and download the full report for all the details.

• People analytics is the practice of collecting and transforming HR data to improve the way you do best. Here’s how to do it in four steps.

• Learn how KeHE used people analytics to generate business-impacting insights in four months and improved people analytics workload efficiency by 25%.