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4 ways people analytics will change the way human resources operates

People analytics are the latest trend in big data for HR. However, people analytics run the risk of taking the ‘human’ out of Human Resources.

Source: State Library of NSW

Human resources is about to get a new set of big data metrics. The measurement of people, both candidates and employees, is changing recruitment and succession planning for HR.

People analytics have drawn as much praise as criticism from many HR professionals, however. Some experts feel people analytics will give HR concrete data for strategic decisions, whilst others feel people analytics will take that vital human element out of Human Resources.

Whichever side of the fence you fall on, how your organisation approaches people analytics will affect your employees. A strong use of people analytics promises to empower you with the right people data to make strategic decisions. However, poor implementation and use of people analytics can lead to too much micromanagement and reporting for line managers and employees.

Here are the 4 ways people analytics are changing HR – and how to implement and use them correctly:

1. Easily sort through candidates with people analytics (but keep the recruitment experience human!)

Source: State Library of NSW

Everyone in recruitment wants to find those ‘purple squirrel’ candidates – the applicants with that rare set of skills perfect for your organisation.

People analytics won’t find your purple squirrel for you, but it will help you work out what the key characteristics of your high-performers really are. People analytics can be used to find candidates who have the right quantifiable knowledge and experience within a threshold (for example, number of years experience in a particular role, performance rating and so forth). These are candidates that meet the minimum requirements for the position.

Overuse of People analytics has the potential to make recruitment too automated. Candidates with unexpected skill sets are often filtered out despite being a good fit for the role. Surprise star performers can be removed from contention, without consideration. As such, it’s important to use the data to guide your recruitment process rather than control it.

After all, you may not have enough data to know which attributes or competencies are most important for a role.

Purple squirrels will have very distinguishing competencies – most likely, the skills you don’t know you need. Distinguishing competencies are those left-of-field attributes that can give your organisation a real competitive advantage. Because an algorithm only works in patterns, and will remove purple squirrel candidates if settings are too strict, human intuition is needed pick out the distinguishing competencies that potential high-performers possess.

Heavy reliance on people analytics will give you solid candidates that fit the description perfectly.. The only way to find those ‘purple squirrels’, however, is with real human analysis.

2. People analytics can measure and build a culture better than Google

Companies like CultureAmp allow managers to survey their employees on culture. These surveys are short, and several can be completed over a short span of time.

The data from CultureAmp surveys slowly builds up over time, turning into analytics for managers. Analysis of this data would take an entire team of specialists to properly understand but it helped turn managers into people experts.

Culture and engagement become measurable, making HR more influential in the decision-making process.

3. People analytics can suggest promotions, but the decision should still be left to old-fashioned people power.

people analytics promotions
Source: State Library of NSW

Algorithm limitations are the reason Google use people to pick promotions. Algorithms work on patterns and can’t always predict the future. This reliance on routine is why Google uses people to promote, rather than people analytics.

Certain traits can be discriminated against. Valuable skills can be missed. Biases in algorithms can cause diversity discrimination. Everything outside of an algorithm is ignored completely, so if you aren’t measuring the right variables, you won’t get useful insights. Remember – only measurable qualities can be assessed by an algorithm.

One area that is often difficult for an algorithm to measure a person’s leadership skills or their collaboration. These are the soft skills that can truly qualify an employee for promotion. A poor algorithm will only nominate the most productive employee, who may not want or be suited to the promotion.

In many ways, one of the best indications of an employee’s future behaviour is their past performance. Interviews with employees who have worked with the candidate are the best assessment of past performance, as it’s a difficult metric to accurately measure (outside of your own organisation).

Talk to people, find out who they think deserve a promotion. The development of employees is a people decision. People analytics can be used to measure performance, but development should be decided by people.

4. People makes employee productivity ‘data currency’.

Lack of data is the biggest strategic challenge for HR. Many metrics in human resources have been difficult to measure: employee engagement, productivity and culture.

People analytics makes the measurement of human resources metrics possible. HR now has data it can bring to the table to support strategic decisions.

Decisions that were once gut led can now be data supported. Strategy can be put in place to increase engagement and productivity. Engagement and productivity can then be measured for return on investment.

Surprisingly, you can even make a business case for employee happiness with people analytics. Organisations have long known happy employees are productive. People analytics makes it possible to prove happy employees are more productive.

Finance and sales executives have had data to back up their decisions for decades. People analytics give human resources executives the same facts to take to the C-suite, giving you the same authority as finance when directing strategy.

Factoring HR into more strategic decisions means business decisions will inevitably become more people focused. Culture will become an important part of daily operations, and employee happiness will become one of the most valued metrics (if it isn’t already).

People analytics are a tool to support human resources, not a replacement.

People analytics are best used as a support tool. The ‘warm and fuzzy’ feelings that power HR can now be supported with data. Instinct and intuition can be supported by data, then used to drive change.

Too much reliance on people analytics removes the human element of HR. People that work well in the system are given preference over people who work well with others. New ideas are dismissed for more of the same. The characteristics that drive culture are lost.

People analytics should be used to make human decisions faster. Have you started using people analytics in your organisation? If so, comment below with what have you implemented and how are you using it.