Firms are increasingly turning to people analytics to achieve better efficiencies from employees
By Vidya Hattangadi
People analytics, consists of data analytics, which uses computer skills, mathematics and statistics with descriptive techniques and predictive models to gain valuable knowledge. The insights from people analytics data is used to recommend action or to guide decision making rooted in business context. People analytics is also known as talent analytics or HR analytics. It helps managers to make decisions about their employees or workforce. It is a form of big data—worker-related data to see and predict patterns. In particular, HR departments use people analytics to make better decisions about all aspects of HR strategy, with the goal of improving business performance.
People analytics is a broad area that encompasses all aspects of acquiring and managing employees, and has largely come to replace its predecessor term, HR analytics, though that term is still in use. Besides HR analytics, talent analytics and, in some cases, workforce analytics may be used synonymously with people analytics.
FedEx Corporation is a company with a track record of being successful in this regard. FedEx believes that its success lies in the hands of how efficiently its employees perform. FedEx Express’ volumes vary day-to-day. The delivery routes are designed to meet a specific demand, but the couriers must expand or reduce route coverage based on volume changes. A heuristic-based vehicle routing approach is used to solve this problem. All deliveries for a specific day are verified for a facility. The delivery routes are then optimised based on volume and drive time.
The solutions are provided to the delivery couriers. A classic location analysis model is used to solve this problem. The number of shipments to and from every customer needs to be determined. Those packages must be divided into courier routes. The distance to begin each route as well as the return to building for each route must be determined. The company discovered that well-treated employees are top producers, resulting in positive company growth. In 1973, FedEx developed, and still practices, its “People-Service-Profit” philosophy, denoting excellent care of its employees. The company tracks employee satisfaction with its annual Survey-Feedback-Action, and uses people analytics program. Post-survey, management and employees meet to discuss the analysis results, address problems and interpret how to resolve them. FedEx uses people analytics successfully.
People analytics is beginning to help more companies in their recruiting, performance measurement, compensation and most importantly retention efforts. People analytics can help organisations to understand which candidates to hire, which employees are doing well, who’s receiving sufficient compensation and how employee retention can be improved. Ideally, people analytics can improve on instinct and gut feeling; for example, showing that, in some cases, a diploma certificate makes for a better employee than a master’s degree holder.
However, an upsurge of interest in people analytics points to its expansion into new territories, especially with the use of predictive analytics. Its use is moving beyond HR into other functions such as finance, marketing, operations, logistics and research and development.
In addition, tools are being developed to expand the use of analytics. Increasingly, companies are looking up to vendors rather than building their own tools as analytics models become more extensive. For instance, some enterprise resource planning (ERP) vendors are including people analytics platforms meant to help senior executives understand attrition rates, employee costs and employee engagement profiles for specific segments and managers. People analytics are also increasingly used to analyse teamwork and organisational relationships, which may take on finely tuned meaning as companies replace hierarchical models with more collaborative ones.
Sometimes the insights from HR data can be simple, but effective. Xerox is extensively using this to find out how to retain its customer service employees. Employees who stuck with their jobs longest tended to be the ones who lived nearby and had reliable transportation. Findings like these helped Xerox decrease its attrition rate by 20% in a pilot program, which was later extended.
IBM has also experimented with business applications for workforce science. In 2012, it spent $1.3 billion acquiring recruiting and training company Kenexa, which has a large store of data from surveying and assessing 40 million job applicants, workers and managers a year. One of the results of analysing all this data was that IBM came to a new understanding of what makes a sales person successful.
Traditionally an outgoing personality has been seen as a key trait, but IBM compared worker surveys and tests with manager assessments. It found that the most important characteristic for sales success was emotional courage. Successful sales people may or may not be outgoing, but they do need to be persistent, and not take no for an answer.
People analytics helps in measuring people behaviour (new candidates, employees at different levels) and analyse them to improve people and business performance. This is done with use statistical methods. These strategies help make better hiring decisions by predicting candidate success, they prevent talent from quitting their job by predicting employee turnover, test which employee policies are effective and which ones are not, identify and quantify work accident risk, analyse future workforce requirement, and optimise the employee experience.
Not only businesses benefit from such an approach; employees are also happy as it helps make a better fit between their wishes and needs and the organisational demands. It helps them effectively utilise their potential. They grow as better individuals.
(The writer is Management thinker and blogger)