We recently hosted Stacia Garr, co-founder of RedThread Research, for a fireside chat about people analytics and why it’s mission critical for organizations today. Stacia shared her insights on the four “layers” of people analytics and why businesses need to level up to get the most out of their data.
In this article, we’ll share some of the takeaways from the talk. You can listen to the full fireside chat here.
The four layers of data for people analytics
People analytics has become critical for businesses of all sizes. According to Stacia, there are four layers of change that have taken place within human capital management (HCM) and these have had a major influence on people analytics.
Think of the layers starting from the ground up and building upon each other. The base layer is where we started in HCM several years ago and layer four is how businesses who are on the leading edge are thinking about their data:
Layer 1: Data for specific use cases
Simple, transactional analysis. Companies would measure data like:
- What’s our succession pipeline?
- How many people have completed a learning course or have completed performance reviews?
Layer 2: Data for monitoring
A top-down approach to understanding employees’ needs. Companies would measure data such as:
- Employee engagement (through surveys)
- Event driven activities.
Layer 3: Data for decision-making
Requires more data sources to gain a better understanding of drivers to outcomes and improved prediction capabilities.
This is where data moves to a place where it’s starting to be really powerful. We can start looking at patterns in the data which can help make informed decisions.
Layer 4: Data for action-taking
This fourth layer means feeding the data back into other company systems, allowing for action to be taken based on patterns and insights.
“The only way that people can make great decisions is if they have high quality data to make those decisions and they have an understanding of the general framework within which to make those decisions.”Stacia Garr, co-founder of RedThread Research
According to Stacia, HCM vendors were thriving in layer one and two for years. They could give basic transactional information, within a simple dashboard and that was enough. Most companies were satisfied with this level of monitoring. But as our world has changed and business needs have grown, there’s been a demand for better people data–and data that can do more to support the other areas of the business.
This demand created tension for companies, in deciding whether they should build their own in-house tool to meet these data needs or seek out an external solution in a time when the options were limited.
Stacia has seen companies attempt to build a more sophisticated analytics capability within their HCM only to realize that people data is challenging, especially if it’s not the businesses’ core capability.
“I think that’s why—because of that tension—that we’re seeing this real opportunity for embedded analytics. We now have the capability to integrate something like a Visier into a system, where all the hard work around people data is being taken care of by that system. And you’re able to provide the insights right within the context of the HCM system.”
A shift to a greater focus on people data
Stacia outlines three big reasons why the shift to more (and better) data is happening:
1. Personalized experiences
We have an increased expectation that our enterprise software will be personalized to who we are, what we do, and what we need. And that only happens if you have a broad set of data that can be used to feed into the system. People expect data to be delivered like this now.
2. Diversity, equity, inclusion, and belonging
The pandemic put an even greater focus on this area. Leaders want and need data that allows them to drill down deeper into DEIB data by location, department, or job to ensure there aren’t any hidden red flags.
3. Increased scrutiny of human capital
We’ve moved from an economy where the primary investment was actual items of capital to our most important capital asset being our people. Naturally, there’s a greater desire to understand what’s happening with our people. Pair that with the new SEC reporting requirements that came out in November of last year, and now business decision makers need greater insight into what’s happening with their people.
“Data is going to be where companies compete in the next three to five years. There’s a lot of things that have been commoditized. Experience is increasingly being commoditized, but data is not.”
The ability to deliver high quality insights to individuals who need it when they need it is going to be a significant and longstanding differentiator for companies of any size. As companies move to the “fourth layer” of data for people analytics, choosing a solution that empowers them to easily make business decisions is key.
Stacia Garr is a seasoned researcher and thought leader on people analytics and HR technology. A frequent speaker and writer, her work has been featured in Fortune, Forbes, The New York Times, The Wall Street Journal, as well as in numerous HR trade publications. Prior to starting RedThread Research, she led talent and workforce research for eight years at Bersin by Deloitte. Before Bersin, Stacia conducted research and created learning content for the Corporate Leadership Council, part of CEB/Gartner.