Technology, big data and analytics have become important items in the strategic decision-making toolkit. One reason is that business value drivers have changed dramatically over the past 30 years. In the past, the business value was tangible. Think about warehouse stock, money in the bank, real estate, etc., they were all accounted for on the balance sheet. 

Nowadays, business value can be related to having a highly talented workforce that disrupts markets and brings radical innovation. Just think about Amazon as an example. Their valuation is skyrocketing, but is that because of their warehouse operations or the real value of its talented workforce?

Companies are actively looking for reasonable measures to capture this workforce value. There have been initiatives, such as the Embankment project, to even account for the workforce on the balance sheet as an intangible asset. Whilst companies are more aware of the value and potential of their workforce, they are searching for metrics and methods to maximize the effectiveness to optimize business outcomes. This is exactly what people analytics is about and why companies are actively exploring how to implement and embrace this. 

The History of People Analytics

The terminology and the practice of people analytics have evolved over the years. According to David Green and Jonathan Ferrar’s acclaimed book Excellence in People Analytics, there are five ages of people analytics starting with the early 20th century:

The Age of Discovery: 1911 – 2010

The Age of Realisation: 2010 – 2015

The Age of Innovation: 2015 – 2020

The Age of Value: 2020 – 2025

The Age of Excellence: 2025 – 2030s

As you can see here, we’re currently in the ‘Age of Value’, which Green and Ferrar indicate is characterized by rapid technological advancements, exponential growth in people data, new models for work, and more. During this time, it’s expected that the terminology will ebb and flow, however the way work gets done remains the same. So, while people analytics may once have been referred to as HR Analytics during the ‘Age of Discovery’ and workforce analytics during the ‘Age of Realisation’, these terms all essentially refer to the same thing.

How HR Analytics, People Analytics, and Workforce Analytics are potentially different. 

While these terms all essentially refer to the same idea of strategically leveraging employee and workforce data to inform decisions and drive positive business outcomes, some could argue otherwise. So what are the key differences between HR analytics and people analytics?

Theoretically, HR analytics captures and measures the functioning of the HR team itself – for example, analyzing KPIs (Key Performance Indicators) such as employee turnover, time to hire, etc. Such analytics, one could argue, are only relevant to the HR team. They are the ones who would be held accountable for driving such metrics. With this in mind, it is essential for us to understand the limitless scope of people analytics. True people analytics aims to encompass HR, the entire workforce data, and customer insights. People analytics inculcates the approach of measuring and analyzing all this information and knitting it together to improve decision making and business performance. Nevertheless, it is essential to understand that workforce analytics encompasses the entire group of workers (not just full-time employees) and allows for the future inclusion of AI and robots that will potentially replace current jobs within an organization. Workforce analytics, therefore, is more descriptive when it comes to making a holistic workforce strategy. 

A managerial implication: how can People Analytics be used to deliver business outcome(s)?

Deloitte (2018) reports that people analytics not only assists organizations in comprehending the changing workplace but also provides insight to drive customer behavior and engagement. Furthermore, a recent survey by CIPD (2018) confirms that using people data improves business outcomes.

Nevertheless, it’s important to understand that a crucial barrier to attaining people analytics is the absence of a people analytics strategy—let alone a coherent one that aligns with the business strategy. 

For the business to prosper with people analytics, it is important to have a well-thought-out strategy that focuses on what really matters to the overall business; this should ultimately align with people actions and behaviors. Therefore, people analytics should enable a business to not only measure and track progress in relation to the business strategy but also assist HR to manage the overall people strategy by prescribing future actions to ultimately reach strategic business objectives. 

Frequently Asked Questions

What can people analytics do for an organization?
People analytics can optimize business outcomes by leveraging workforce data to inform strategic decisions and drive innovation.

How does a people analytics solution enhance decision-making?
A people analytics solution synthesizes employee data to predict trends, improve engagement, and tailor strategies that align with business goals.

What is the key difference between HR analytics and people analytics?
While they are essentially the same in practice, some could argue that HR analytics focuses on HR department metrics, while people analytics uses broader workforce data to influence overall business strategies.