What is People Analytics? Unveiling the Future of HR Intelligence

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What is people analytics?

People Analytics is the strategic process of leveraging employee and workforce data to inform decisions and drive positive business outcomes. This process integrates HR data and business metrics to analyze trends, inform conversations, and ultimately, help the business make better decisions related to its workforce. People analytics is an essential piece of the HR transformation puzzle, and it’s relatively just getting started.

People analytics helps ensure that management strategies align with (and contribute to) broader business objectives. Ultimately, it helps organizations succeed while also creating a winning workplace culture. High-fives all around! ✋

Now, you may be asking yourself, ‘’What’s the difference between HR analytics and people analytics?’’ and the answer depends on how you look at it. Some practitioners will argue that there are clear distinctions between HR analytics, people analytics, workforce analytics, and even talent analytics.

An image of peole working purple and blue writing that reads, ''What's the differenc ebetween HR and People Analytics?'' there is also a button in orange that says ''keep reading''

While these arguments seem convincing on paper, in practice, they all refer to the same ways of working: leveraging employee data to enhance efficiency and unlock organizational success.

The importance of people analytics in HR

Today’s dynamic (and sometimes volatile) business landscape poses many challenges for leaders. Once considered nothing more than a place to earn a paycheck, workplaces are now seen as micro-communities: places to grow, learn, connect, and contribute to something bigger. 

As organizations navigate the complexities of global competition, social movements, and rapid technological advancements, HR must become increasingly agile. The ability to make swift, informed decisions based on data is becoming more than a nice-to-have—it’s non-negotiable.

For many organizations, HR analytics software is their workforce’s secret sauce. One that helps:

  • Boost the efficiency of HR and people analytics teams
  • Eliminate time spent on manual work
  • Keep employee data safe and secure
  • Empower HR to drive business conversations with confidence

People analytics is not just important to HR, it’s a business imperative.

What business questions can people analytics help solve?

We always say that adopting people analytics starts with a business question. Unlike reporting tools, insights from people analytics software allow you to dig into the metrics. These tools help you decipher hidden patterns. The why and the how. To pave the way for more accurate decisions that can impact engagement, retention, equity, and more. 

While there are no limits to the insights you can unfurl, below are the top 10 business questions that people analytics helps solve: 

💡 What are the main drivers of employee turnover in our organization?

💡 How can we predict and reduce absenteeism? 

💡 Do we have a gender pay gap? At which levels? 

💡 Are our diversity and inclusion efforts making an impact? 

💡 Are we promoting high-performing individuals with the skills needed to future-proof our organization?

💡 What skills do our employees lack? Where do we have an abundance of particular skill sets? 

💡 Which factors contribute most to high-performing teams?

💡 Which departments excel at promoting women in leadership positions?

💡 How does employee engagement impact productivity and turnover?

💡 Which recruitment channels yield the highest return on investment (ROI)?

Tools and technologies for people analytics

As with many other HR technologies such as HRIS, recruiting software, employee engagement, and recognition and rewards, the people analytics space is a crowded one. If you’re just getting started, it can be difficult to understand your options.

Get the guide to choosing the right people analytics solution for your team today

When it is all said and done, there are four common solutions available today for people analytics:

1. In-house Development: This solution appeals to those organizations that prefer to utilize existing tech stacks and bypass vendor selection. While offering customization, the downsides include being labor-intensive and often not user-friendly.

2. Core HR Systems: These systems may provide generic dashboards and some customization capabilities but can come with additional costs.

3. Data Science People Analytics Platforms: Ideal for teams needing flexibility in data handling and the ability to create bespoke models. However, their complexity can limit usage to data experts, and they often lack ready-made analytics features.

4. Enterprise People Analytics Platforms: Known for comprehensive functionality and support, platforms like Crunchr are designed for ease of use across HR and management teams, ensuring broad adoption. While offering robust data security, the trade-off includes variability in costs, implementation time, and platform flexibility.

Selecting the best people analytics software for your team requires an understanding of the business problems you hope to solve, what resources are available, your budget, the skillset of the team, and the timeline to completion.

The right people analytics platform should make your life easier. It should help streamline the people analytics process cycle, ensuring your team runs more efficiently.

The people analytics process cycle by Crunchr. Stage 1: ask questions. stage 2: data selection. Stage 3: data cleaning. Stage 4: Data analysis. Stage 5: Interpretation and execution. And stage 6: Monitoring and refinement

No matter whether you choose to build a people analytics solution in-house or opt for a ready-made technology, you need to understand the criteria, capabilities, and security measures required. The four options mentioned above, although they are different, all share the same challenges. Challenges such as:

  • Scattered data across systems
  • Manually updating and merging fields 
  • Permission-based views
  • Turning data into insights
  • Adopting new compliance rules

With an enterprise people analytics platform, most of these challenges are addressed by your service provider. This is why organizations are turning to #4 as the best choice for adopting people analytics technology. When you decide to invest in an enterprise solution, you get more than just data, you’re getting a strategic partnership dedicated to your success.

Data privacy and ethics

No matter which route you choose to embark on, you’ll need to consider how to protect employee data privacy. 

For people analytics to have a profound impact, it must be accessible across the organization. This approach, while recommended, has the potential to breach data privacy if not handled correctly. 

There are three areas we recommend considering when it comes to handling employee data with care:

1. Awareness and Education: This can include both company-wide training on the do’s and don’ts of privacy, as well as deep and focused training on GDPR compliance.

2. Access Control: Companies should implement a Role Based Access Control (RBAC) system to prevent unauthorized access to data. This system requires careful management to get role permissions correct and accurate. Permissions should not be too broad, or heavily detailed. Getting this right ensures you will be well protected from risk or privacy breaches. It’s a necessary step and it’s one that requires heavy manual lifting.

3. Carefully Choosing a Solution: Organizations in the process of selecting a people analytics solution must consider GDPR compliance at every stage of the employee lifecycle. Some tools that do not specifically specialize in people analytics may miss this step, putting your organization at risk.

Measuring the Impact of People Analytics

Now that you know what people analytics is and you’ve decided on a solution, it’s time to explain the return on investment (ROI) to the business. When and how you’ll do this depends on several different factors.

Build v. buy 🏠

Was your platform built in-house or did you decide to purchase a pre-built SaaS technology from a trusted vendor? 

When purchasing a pre-built solution, the up front and monthly fees are clear. However, when building in-house, there are hidden costs that many organizations overlook including:

  • Annual cost of current systems plus add-on subscriptions required
  • Cost of middleware
  • Labor costs
  • Opportunity costs
  • Internal data analyst/HRIS resources
  • Median pay rate for HRIS/data analysts
  • Consultant costs
  • Engineering resources
  • Median pay rate for engineers
  • Additional technology investments as needed

Speed to implementation 🚄

How long did it take for your people analytics platform to be fully operational? The longer it takes to gain insights, the less time you have to prove value. 

Data democratization 📊

Where does this stand in your organization? Do you still have scattered and manual HR reporting? Or has your team begun to grow their data storytelling capabilities, sharing insights cross-functionally and driving towards the same strategic objectives? 

Another way you can gauge your progress in this area is by user adoption. If users embrace the tool, this is a good indication that data democratization has spread across the organization. Usage indicates there is alignment on how to get the most out of people’s data and insights. It signifies inherent value from time spent within the product or platform.

Once you understand the total cost to set up your people analytics platform, you can begin to measure what matters: business impact. Some ways to articulate this value are through:

  • Reduced turnover costs and savings from decreasing failed hires
  • Increasing efficiency in HR
  • Efficient compensation planning

By comparing the total amount of cost savings and increased efficiencies to your upfront costs, you’ll be able to show the ROI of people analytics to your stakeholders.

Major findings on the state of people analytics
The State of People Analytics Report 2024

People analytics empowers HR

People analytics, once seen as a supplementary field within HR, is the future of HR intelligence. And while the adoption of people analytics is still in it’s early phases for many, this symbiotic relationship between employees and the business is a tale as old as time. 

As the focus on hiring, retaining, and growing the right talent continues to rise across industries, so will the need for people analytics. This critical business strategy is the key to empowering HR to drive business conversations rooted in insights and confidence

FAQs for People Analytics

What is people analytics?
People Analytics is the strategic process of leveraging employee and workforce data to inform decisions and drive positive business outcomes.

What are the key benefits of implementing people analytics in an organization?
The adoption of people analytics within an organization offers numerous benefits, including improved decision-making, enhanced employee engagement, and better business outcomes. By analyzing workforce data, organizations can identify trends and patterns that lead to more strategic hiring, effective talent management, and increased efficiency. People analytics also plays a crucial role in addressing challenges such as employee turnover, performance management, and diversity and inclusion. All of this contributes to a more efficient, equitable, and productive workplace.

What challenges might organizations face when implementing people analytics, and how can they be addressed?
Implementing people analytics can pose several challenges, including data privacy concerns, the complexity of data integration, and the need for cultural change within the organization. To address these challenges, companies must prioritize transparency and educate employees on how their data will be used and protected. Selecting the right technology is key. Plus, the organization must be committed to building a data-driven culture that demonstrates the value of strategic decision-making.

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