Data-driven insights have exploded in every sector and Human Resources is no exception. Technological advancements like Cloud-based HR systems, advanced analytics, Artificial Intelligence (AI), chatbots, Virtual Reality (VR), Augmented Reality (AR), gamification, automation, blockchain etc., are transforming the way businesses work, but when it comes to HR, arguably it’s people analytics that’s impacting day-to-day decisions the most.
What is People Analytics or HR Analytics?
People analytics or HR analytics, refers to analytics that can help managers and executives make better management and business decisions about their employees or workforce. It is often integrated with a Human Resource Management System (HRMS) and has eased the transition of HR from being transactional and reactive administrative arm to a strategic and proactive one.
Shifting to data-based people management:
Organizations everywhere are perceiving it as business function focused on using data to understand every part of a business operation, aiming to become digitally powered people-centric enterprises based on real-time actionable insights. As per a study conducted by Deloitte, 71% companies see people analytics as a high priority in their organizations and 31% rate it as very important.
Today’s businesses value evidence-based insights as it enables better decision-making in all HR tasks, starting from recruiting to compensation, workforce planning to retention. Besides, as people costs often surpassing 50% of corporate variable costs, it is only sensible to manage such large expenditures analytically vs subjectively. Google had implemented people’s analytics long before it had become a trend and also uses feedback to optimize various aspects of its people processes and create a unique and rewarding work culture.
So, how exactly is people analytics benefiting businesses?
Strengthen Decision Making:
At it’s very core, people analytics aims to provide organizations with more data, enhancing clarity in perspectives and empowering definitive decision-making. It enables organizations to manage their employees more efficiently and effectively by providing options for viewing, understanding and acting on talent data across the entire employee lifecycle.
HR professionals won’t shy away from admitting that there is a fair amount of instincts involved when hiring an employee, which may or may not be proven right in the long run. People’s analytics can take this guesswork out of the hiring process, analyze the possibility of a candidate being the right fit for an available post and even predict a tentative by skills, interests and actions. When hiring a candidate personality and skills are just as important qualifying factors as the candidates’ academic credentials and professional experience. Data analytics helps to meet the exact criterion an employer might have by crunching numbers more accurately. To give an example, JetBlue Airlines previously emphasized niceness’ as the most important attribute for flight attendants. However, after conducting a customer data analysis with the Wharton Business School, they found that ‘being helpful’ trumped niceness and henceforth shortlisted candidates more effectively.
Additionally, sourcing, hiring, training and nurturing talent are all time-intensive Human resource processes. People analytics allows you to identify the people and programs that are appropriately aligned with your business enabling you to optimize the time and investment thereby saving time.
Establishing an organization as an employer brand:
Establishing a strong employer brand is a necessity today. A recent study found that 84% employees would not hesitate to switch jobs (along with a minimum salary hike) if their new employer has a stellar reputation. But how can people’s analytics help businesses to avoid such a situation?
Once an organization pens its brand strategy from an employee shareholder viewpoint and confidently differentiates itself from competitors, analytics can help to understand how the current brand stand compares with reality. Analysis of the findings from regular sentiment analysis, internal surveys, employee participation rates in community activities reveal how happy employees are currently. One crucial point to remember is that people’s analytics is not only about keeping current employees satisfied but also to make the business appear attractive to outsiders, including ex-employees. Taking everyone’s opinion into consideration also helps to understand how an employee, current or ex, is likely to recommend the employer to others.
Employee acquisition costs more than retention. And People Analytics offers an answer. Its predictive modeling can help to identify flight-risk employees before they consider leaving. Accordingly, the management can take proactive steps to encourage them to stay.
Till now stakeholders have had limited insight into individual employee performance and had to depend on manual review and reports for the same. Analyzing long reports are time consuming, with ample scopes of human error. Now, with people analytics, data visualization has enabled access to easily understandable insights that can be acted upon easily and instantly. Transparency of information has also increased accountability on both employees’ and HR’s parts.
Improving employee experience:
One area that HR constantly struggles with is designing compelling user experiences for employees, especially ones that support engagement and improves loyalty. People’s analytics can enable HR design activities that would successfully improve experiences for their employees, and in an ideal situation, others too. For instance, in an attempt to improve employee wellbeing after considering employee feedback about work-life balance, Google in Ireland started the “Dublin Goes Dark” initiative. In this campaign employees were encouraged to leave their devices at work to help them truly disconnect and switch off. On the other hand, this Japanese company pays its employees to get a good night’s sleep and not overwork, inevitably compromising their health. Many Japanese companies have been encouraging employees to take time off to rest in an attempt to change Japan’s overworking-to-death culture, named Karoshi.
The role of Human Resources has been evolving and people analytics, understandably, is an integral part of this shift. With the growing demand for high-performing, specialized talent, HR leaders now leverage analytics to seek answer to critical questions about workforce planning, skills gap and employee retention, which are ultimately enabling them to add value to their organizations.
Robotic Process Automation (RPA):
Robotic Process Automation (RPA) is a fast-emerging practice, expected to be a game changer in enabling financial institutions step up their digital transformation initiatives. It helps to accelerate operations by executing previously programmed algorithms across varied ranges of structured and unstructured data. RPA not only enables faster and more-informed decision-making but also simplifies compliance and regulations for banks, auto-generates reports and facilitates operational cost reduction. Growing at an exponential rate, RPA is expected to reach $2.9Bn by 2021, a huge jump from the $250Mn of 2016.
Artificial Intelligence (AI):
Artificial Intelligence (AI) is becoming increasingly important both for enhancing capabilities of BFSI institutions, as well as meeting business needs. In recent years, there’s been explosive growth in the availability of technologies like Cloud Computing, Blockchain, AR and VR, Machine Learning, etc., all of which have led to a constant influx of structured and unstructured data. That, coupled with increasing competition and demand for innovation, has necessitated the use of AI in financial services. AI’s reach is all encompassing, impacting strategizing to marketing, compliance to security and customer experience.
“86% of bank executives agree that the widespread use of AI provides for a competitive advantage beyond cost.” – Accenture
Open Banking API:
While Open Banking was initiated in 2018, banks are understanding its true potential only today. By enabling customers to securely share their account and payment data with third parties through application programming interfaces (APIs), banks are looking at expanding their services. This open banking revolution speaks of greater collaboration and may soon lead to the creation of a more inclusive banking ecosystem that may comprise of many other businesses besides financial services, all aiming at making customers’ experiences more fulfilling. While customer consent is the bedrock of this technology and the market still has a long way to go till maturity, the technology has definitely started improving on precision.
PWC predicts that 71% of SMEs will adopt Open Banking API by 2022, while 64% of adults will already have started using it by 2022.
The impact of smart machines, including virtual customer assistants, virtual personal assistants, smart vision systems, smart advisors as well as a wide variety of natural-language technologies, is becoming more and more evident. Both banks and customers are increasingly depending on virtual concierges for hassle-free operations and better engagement. Understandably, customers will soon be preferring banks offering maximum convenience with minimum friction.
Most financial organizations understand that there is an acute need to leverage these technologies in order to enhance their core competencies. What they also need to understand that each implementation must first be centered around improving human experiences, both internally and externally. Only then can the organizational growth be truly sustainable.